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Secrets From Cloud Computing’s First Stage: An Action Agenda for Government and Industry

Bill Whyman June 1, 2021
June 1, 2021
Secrets From Cloud Computing’s First Stage: An Action Agenda for Government and Industry

Introduction

What Is Cloud Computing?

Why Cloud Computing Matters to Economic Success

Cloud Economics, Industry Structure, And Market Dynamics

Where Cloud Computing Excels

Challenges for Cloud Success

A Policy Agenda for Cloud Computing

Endnotes

Introduction

Cloud computing is a powerful and disruptive technology that is now breaking out into the mainstream economy, more than a decade after launching in 2006. Millions of companies are using some form of cloud computing, often from Amazon Web Services (AWS), Microsoft Azure, Google Cloud, or other providers. Successfully adopting cloud computing will be a key determinant of which countries will prosper in the global economy. Cloud computing lowers costs, creates technical and business agility, and enables innovation and digital transformation. In 2020, the global market for cloud services was $270 billion and cloud companies listed on U.S. markets had more than $1 trillion in capitalization.[1] Hundreds of new cloud services are being introduced and thousands of new venture-backed cloud companies are being formed.[2]

Yet, cloud computing is still in its early days, given more than $3 trillion in annual global information technology (IT) spending and decades of accumulated investment in traditional IT infrastructure. In short, cloud adoption is more broad than deep. Most companies use the cloud for only a small share of their IT needs, and spending on cloud computing is just 7.2 percent of annual global IT spending.[3] It’s early in this disruptive shift, and it’s important to better understand cloud computing’s successes and challenges. Cloud computing is important not only for individual companies’ success, but also for economic growth and global competitiveness. It’s what economists call a “general-purpose technology” that is pervasively used across most sectors. The cloud is becoming a platform that drives innovation and productivity across the broader economy. It represents the digital equivalent of the electric grid, only one that is more capable and dynamic.

Cloud computing is important not only for individual companies’ success, but also for economic growth and global competitiveness.

After a brief introduction to what cloud computing is, this report focuses on the economic impact of cloud. It addresses why cloud computing matters for a country’s economic success—which has not received as much focus as the cloud’s technical and business impact. It then analyzes the economics of the cloud sector, including industry structure and market dynamics. The report recommends five areas where cloud computing excels and five challenges that need to be met to fully capture the benefits of the cloud. It concludes with a policy agenda for cloud computing. Governments will inevitably address cloud-related policy issues as cloud’s reach and power expand. Recommendations for policymakers include accelerating adoption with a federal cloud-modernization moon shot; improving security and resilience; preserving competition by encouraging application portability; strengthening governance and enabling cross-border data flows; and building workforce skills and inclusivity.

What Is Cloud Computing?

Cloud computing is a powerful technical architecture for IT, driven by technologies such as software virtualization. Just as important, cloud architecture enables new operating and business models. As a starting point, cloud computing provides IT resources (e.g., compute, storage) as a pay-only-for-what-you-use service delivered over the communications network by a third party. This is in contrast to the predominant model in which users directly “own and operate” on-premises physical IT equipment. The U.S. National Institute of Standards and Technology (NIST) states “cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources … that can be rapidly provisioned and released with minimal management effort or service provider interaction.”[4] An important capability of the cloud is that IT resources can be scaled up when demand increases, or scaled down and turned off, delivering agility gains and cost savings. We break down the cloud’s defining characteristics in figure 1.

Figure 1: What is cloud computing?[5]



This post first appeared on ITIF | Information Technology And Innovation Foundation, please read the originial post: here

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Secrets From Cloud Computing’s First Stage: An Action Agenda for Government and Industry

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