Structure 08 Recap: Yo Founders! There’s Gold in Them Clouds! - GigaOM

Structure 08 Recap: Yo Founders! There’s Gold in Them Clouds! - GigaOM.

In enterprise software, the advent of monthly subscription pricing from SaaS vendors likewise disrupted the license and maintenance pricing model of conventional software. But now companies like Amazon are threatening to disrupt the monthly pricing model with a “by-the-drink” model, where users only pay for the computing or storage capacity they use. While the economics of a pay-as-you-go approach are extremely compelling for most users, the approach actually reintroduces an element of uncertainty, because it’s very hard to predict what your computing consumption, and therefore your spending, is going to be. In wireless handset terms, it’s like going backwards from the safe harbor of “bucket pricing” to risky “per-minute” plans again. Here’s a graphic: Users like saving money. But they also like predictability. This suggests that what the world needs now is a monitoring and provisioning tool: a service (or a ware) that allows users to forecast their likely usage of computing infrastructure resources that they’ll purchase “by the drink.” Such a tool would also help predict their likely savings, as compared to the traditional on-premises software or SaaS models. Think of this tool as a tech innovation to help measure, and manage, the business model innovation that is cloud computing.