Cloud Computing – that is, software, infrastructure or technology platforms served via a web-browser, is undoubtedly an exciting technical idea but also a compelling business one. Put simply, to use technology as if it were a utility, paying for just what you use, makes good sense. And now it seems technology allows for it, which is even better. As someone who runs a business that is as technology enabled and dependant as any could be, they have my attention. I could think of nothing better than to variablise SEMA’s spend on technology, ridding of legacy and excess capacity.
So far so good.
All willing buyers soon wonder “from whom?”. Who can and will credibly provide these services to institutional clients with large to very large storage, data mobility, DR, and SLA requirements? The answer is not yet clear but obvious candidates would be the large network and data centre providers – which include our telcos. At first glance they seem to have lot to gain from offering Cloud Computing, in particular infrastructure-as-a-service. But that doesn’t mean they are ready or even that willing. And that is not that surprising because infrastructure-as-a-service presents telcos a real conundrum. If their offer allows me to variabalise my fixed costs the tradeoff is that they fix theirs’, and vice versa for revenue. We trade places essentially and my problem becomes theirs’. So long as the large telcos sell utility computing out of the excess capacity of their traditional business model its promise won't be met. They will have to reinvent their business model with new dedicated capacity if they are going to reinvent their revenue model. The strange NBN episode and the threat of functional separation of Telstra might be bigger issues. But as far as business model disruption is concerned, they are not unrelated.