An Over Simplistic Utility Model

Brynjolfsson, E., P. Hofmann, et al. (2010). “Economic and Business Dimensions Cloud Computing and Electricity:Beyond the Utility Model.” Communications of the ACM 53(5): 32-34.


This paper argues that technical issues associated with innovation, scale, and geography will confront those attempting to capitalise on utility computing. They take the utility model of computing (i.e. that cloud computing is analogous to the electricity market) and identify key challenges.

In particular they identify the following technical challenges:

1)    The pace of innovation of IT – managing this pace of change requires creative expertise and innovation (unlike utilities such as electricity which, they argue, are stable).

2)    The limits of scale – Parallelisable problems are only a subset of problems. Scalability of databases has limits within architectures. APIs e.g. using SQL are difficult for high-volume transaction systems. Further large companies can benefit from Private Clouds with little advantages, and greater risks, if they go to the public cloud.

3)    Latency: The speed of light limits communication. Latency remains a problem. For many applications performance, convenience and security considerations will demand local. [While not mentioned in the article it is interesting to note that this problem is being attacked by who specialise in reducing the problems of network latency through their specialist network]

They also identify the following business challenges:

1)    Complementarities and Co-Invention: “Computing is still in the midst of an explosion of innovation and co-invention First that simply replace corporate resources with cloud computing, while changing nothing else, are doomed to miss the full benefits of the new technology” (p34). It is the reinvention of new services which are key to the success of cloud. IT enabled businesses reshape industries – e.g. Apple quadrupled revenue by moving from perpetual licence to pay-per-use in iTunes, but this demanded tight integration of EPR and Billing which would have been difficult within the cloud given their volumes.

2)    Lock-in and Interoperability: Regulation controlled energy monopolies, and electrons are fungible. Yet for computing to operate like electricity will require “radically different management of data than what is on anyone’s technology roadmap”. Information is not electrons – cloud offerings will not be interchangeable. “Business processes supported by enterprise computing are not motors or light-bulbs”.

3) Security – We are not concerned about electrons as we are with information. Regulators, laws or audit is not needed. New security issues will need to be faced (see  (Owens 2010) for interesting debate on security).


Owens, D (2010) “Securing Elasticity in the Cloud”, Communications of the ACM 53(6) 48-51 doi:

Google Atmosphere

Google Atmosphere Event

I attended this great event at which Nicholas Carr, Werner Vogels and Geoffrey Moore presented.

My notes on the meeting were (and these are not verbatim – mistakes may have been made).


Nicholas Carr:

Drawing on his book ( he argued that the Mainframe was “impersonal computer utility” and that “the power works [that is the belts and pullys of steam power] in the 1900 factories is the ERP/Oracle/SAP solutions of today”

Christensen’s innovators dilemma is introduced to argue that Cloud is a distruptive technology which will punch through our exiting models of IT trajectory.

The rest of the talk was very much aligned with the book – though no less useful because of this. I will not summarise this here though.

Werner Vogels: CTO/VP of Amazon argued that their involvement is not to sell unused server capacity (as often suspected of a company which has massive demand at certain peek periods). Rather it is because Cloud capitalises on their focus on providing scaled reliability at low cost/high volume. This is the essence of all Amazon business he argues.

As such he states that the 2008 Gartner definition misses the point – Cloud is about “on demand services” and “pay as you go”.

Amazon provides an enterprise platform (which Marks and Spencer and Mothercare are using) for eCommerce. It is not new to enterprise applications. By doing this these companies can scale up their sales operations during the key periods.

Amazon also announced its provision of Virtual Private Clouds (subnets of a companies data-centre hosted by a cloud provider and accessed by VPN).

Another interesting example of the use of AWS was the Guardian newspapers review of MP expenses. Their competitor (the daily telegraph) had had lots of time to do detailed analysis. In contrast the Guardian hosted it on the cloud then invited individuals (the wisdom of the crowd) to look at their individual MPs expenses. This led to very quick response and analysis.

Finally Indiana Speedway provides a multimedia streaming of its races using AWS when the race is running – other times it remains dormant.

Other companies using AWS: EPSN, Playfish, Autodesk, Pfizer (using VPC) NetFlix and LiveStream. Finally Intuit (a tax services which scales on April Tax day).

In response to questions of security the answer is “how secure is the corporate data centre” – use of cloud to respond to a Denial of Service Attack better than corporates. Security innovation is moving ahead in the cloud – e.g. Subnet Direction.

Amazon is providing tools to users to allow them to know the location of their data. And they have provided seperated datacentres to store EU data not outside.


More Soon