Chapter 6

Building a Cost Model

Cloud computing is about moving IT to a utility model, where you pay for the services you consume on a usage or rental basis. Nicholas Carr makes a great analogy in his book The Big Switch: Rewiring the World, from Edison to Google (W. W. Norton & Company, 2009) whereby he contrasts the technology industry (and thus the provision of computing resources) to the way electricity was originally delivered in the early days of electrification.

In short, when companies first started to realize the benefits that electrification could bring to their manufacturing operations, there was no utility supply; if a company wanted to use electricity, they had to generate it. This meant significant investment in electricity-generating ...

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