Moving to the cloud to save IT-costs, or using a vendor’s scale effect should never be the reason for going to the cloud. The value of the cloud lies within the alignment of the value-added chain on increased dynamics through automation of interfaces. Anything else is marketing talk!

 If you think you are moving your infrastructure to the cloud to cut IT-costs, you are wrong!

Why is Dropbox or Apple moving away from the big cloud providers like Amazon and build their own data centers? Because there is more than ‘specialized service provider can do it better than we ever can’. They doing it because the cloud services they consume is blocking their value-added chain. That is the only reason.

The connection, interfaces and/or contracts are obvious not optimal for their value-added chain and vision for future products. The service provided by Amazon Web Services can’t solve the issues these companies have with the increased dynamics of the markets. In Apple’s case they even will build their own data centers. It should be clear that this will probably be more expensive than outsource it to a cloud service. But nevertheless Apple and Dropbox will go that way even when it will be more expensive than before.

The improved performance of Cloud computing is not based on the use of a scale effects from a vendor. Cloud computing should only be incorporated to focus your own business to the core of it’s doing.

We, as much smaller companies, have to comprehend that cloud services, independent of what kind of service, are not about saving money. Move to the cloud when a cloud-offered service helps to make your product better and let you focus more on processes you totally control. If you move to the cloud with the intension to make your product and/or service better, then you are on the right way.

But the question remains; if we move to the cloud what will we lose? How will a decision for a cloud service influence my company? If the price of a cloud service is not the essence, what is it then? The value of the cloud lies within the alignment of the value-added chain on increased dynamics through automation of interfaces. In that manner, every cloud buyer needs to deal with ‘four basic cloud service elements’:

  • Global avialability
  • Customizability
  • Privacy and Security
  • Compatibility

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The price of the cloud is that every buyer will lose one of the ‘four basic cloud service elements’ when choosing a cloud service. Each cloud service can provide only three elements at once. Since for every company that moves in to the cloud ‘Compatibility’ is the single element that supports your value-added chain, one of the other three elements can’t be fulfilled from your cloud provider.

Now it is up to you to choose which of the element you will not provide to your company anymore! Normally we tend to choose the last important for the company as a whole. Which is in most cases ‘Privacy and Security’. However, this is not the case in any project I saw, but it happened quite often.

So, what happened to Dropbox? During the transformation from a startup to major player, the last of the ‘four basic cloud service elements’ was getting more important than before. So Dropbox decided to bring that missing element back into control again. Which is ultimately leading to strategy to move away from the cloud.

 

Picture Background by Markus Spiske

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