Cloud Computing: How Much Can It Change IT?

There have been many debates on the potentials of cloud computing and how it can change the IT. Some say it’s the future of IT and everyone and every enterprise will have to go with it; others say it’s a hype and just another name for already vanished on-demand computing, utility computing.

So which will be the trend? Or should we take a middle ground between these two?

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While predicting the future, we tend to look back and try to leverage historical data. I bet you have seen many such analysis that draw different conclusions. History can be interpreted differently.

In this article, I would like to take a different approach — make an analogy between cloud computing and office rental business, and then predict the future of cloud computing from what’s today in office rental business.

Technology wise, cloud computing and office rental are two totally different things. Business wise, they are actually very similar. Whatever benefits of cloud computing can be found in office rental, for example, no initial capital investment in building either office or data center.

Although new technology companies get started and make impact on many things, the fundamentals of business haven’t changed. You still use the same balance sheets to evaluate high tech companies just like the blue chip companies. When making decisions, companies base more on business than on technology. That’s why I can make a safe analogy here.

Today’s cloud computing is very much like the office rental business long time ago. At that time, the office rental business got started and offered an option to these companies who had to build their own office buildings. Some people, especially the investors, might have asked, “Will all the companies rent offices rather than building their own in the future?” This is a very similar question as we ask, “Will all the companies rent data centers rather than building their own in the future?”

Let’s look at the “future” of the office rental. As we can find today, most SMB businesses rent office instead of building their own; most big companies own their offices. In fact, it’s mixed for big companies. They own some of the office buildings, and rent the rest. The criteria to build or rent is not capital investment, but how long it needs the space. The longer it needs it, the more likely it builds or buys its own.

So we can predict the future of cloud computing very much the same as today of office rental. Most SMB will use cloud service providers. Most big companies will continue to build and own their datacenters and infrastructure, but will leverage the cloud services on some short term projects.

There are three types of cloud services: IaaS, PaaS, and SaaS. Interestingly enough, they can be mapped to different levels of services in rental business. IaaS is like space rental, and the tenants need to furnish the space; PaaS is like furnished space rental, but the tenants needs to buy their own copier etc.; SaaS is like plug-and-play space rental, and tenants even have the administrative staffs ready to help.

More often than not, tenants rent different things from different parties. This is most likely the future of cloud computing. You rent the virtual machines from IaaS providers; rent the middleware from PaaS providers; rent software from SaaS providers.

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In this article, I would like to take a different approach — make an analogy between cloud computing and office rental business, and then predict the future of cloud computing from what’s today in office rental business.

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  1. Posted April 6, 2010 at 4:10 am | Permalink

    That is an interesting analogy. Did the office rental business affect a preceding business model? Just as cloud computing might affect the current large IT vendor space in some way.

  2. Posted December 30, 2014 at 11:36 pm | Permalink

    Hi, the whole thing is going perfectly here and
    ofcourse every one is sharing information, that’s in fact
    fine, keep up writing.

  3. Posted May 15, 2016 at 8:21 am | Permalink

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