July 30th, 2009
What happens when TCO meets the cloud
Is it time for total cloud ownership? Vinnie Mirchandani thinks so and there’s a good case that cloud computing players will overturn the economics of enterprise IT industry.
Mirchandani is playing off of the total cost of ownership acronym (TCO) with his cloud pun, but his message may be alarming to established vendors.
This question leads to a lot of dominoes: Why would customers pay storage costs if cloud providers can get better rates? Ditto for servers, databases and everything else in the IT food chain. Mirchandani writes:
Cloud vendors have to take control of every aspect of their TCO. Like Google with its commoditized server chips. Like NetSuite imploring its reseller channel to deliver more services as software. Like Microsoft rethinking data center design and economics. Like salesforce going to market with smaller SIs like appirio, Model Metrics and others – not just the traditional SIs. Network costs. Systems management costs. Every aspect of the TCO.
And the real rub: These disruptive cloud vendors will eventually be compared to each other. There’s a race to the bottom of costs coming and that may not be so swell for some of the inflated profit margins being enjoyed today.
Also see: Salesforce.com: rethinking the database
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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