Cloud as a service is a business model that combines the cloud infrastructure delivered to customers as a subscription-based service, where the customer can access a cloud infrastructure without running it on-premise. Therefore, the whole premise of the cloud as a service business model is to offer a more agile cloud infrastructure at a fraction of the costs compared to on-premise software, and that can be scaled up according to the need of the business.
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The new software paradigm: from proprietary to on-cloud premises
By the early 2000s software paradigms shifted. From on-premise, heavy software infrastructure to online-based, cloud infrastructure. Indeed, the web enabled companies to start building a cloud infrastructure that could host other servers.
This is part of the agile transformation. Where software infrastructure is hosted online, much lighter, and based on continuous updates so that it can be quickly iterated, and improved, based on users feedback loops.
This, in turn, brought also in the business world, to the phenomenon defined as continuous innovation, where business transformation is led by quick feedback loops between the company’s operations and its customers.
A further progression of this evolution is from a software-centered approach, where continuous innovation plays a key role, to a customer-centered approach; where continuous innovation coupled with continuous intelligence, dynamic technological stack, and continuous deployment and delivery become critical.
The cloud industry in a nutshell
With the advent of the Internet, and the fact the web scaled globally, cloud computing became the main paradigm.
Cloud computing expresses itself in three main business models: IaaS, PaaS, and SaaS.
These models ended up creating a new trillion-dollar industry, which is behind most of the digital and tech companies existing in today’s business panorama.
This paradigm proved much lighter and way more scalable than the previous, on-premise, software paradigm. However, it’s important to remark that while the cloud enabled many small businesses to run very heavy software operations by relying on massive cloud infrastructures.
These cloud infrastructures are managed centrally, by a few key players (like Amazon AWS, Microsoft Azure, IBM Cloud, Google Cloud, and a few others). Therefore, the whole cloud infrastructure, powering up an entrepreneurial ecosystem worth trillions of dollars is also centrally managed by a few key players. Thus, making the whole system fragile.
Every software company will be an AI copany
As new algorithms are integrated within software products, an important trend is sharing the software world. of the 2020-the the 2030s is the transformation of software into AI-based workflows, in what has been called Artificial Intelligence as a Service:
In this new model, cloud players (like Microsoft, Amazon, Google, and IBM) integrate AI features within their platforms, so that whoever is picking up their services will also be able to leverage on an AI platform. This, in turn, is leading to the transformation of the “as a service” industry toward a consumption-based one. Where customers, beyond a subscription plan, will have the option to pay as they go. Thus, paying the use of the infrastructure, based on the consumption of the platform.
Cloud As A Service business model case studies
C3.ai
Microsoft Azure
As you can see from the visualizations above, cloud players are manufacturing models and algorithms, that becomes an integrated part of their cloud-based offering and platform. This is what attracts more AI developers and companies to become part of the ecosystem, thus, in turn, consuming more cloud infrastructure.
Google Cloud
Amazon AWS
IBM Cloud
Beyond Cloud As A Service and into decentralized data storage
The main weakness of the current paradigm is the centralization of the whole cloud-based industry (which today represents pretty much most of the digital and tech landscape) in the hands of a few, centrally managed players.
That is why blockchain-based business models are working toward a software paradigm that moves from centralization to decentralization. One example is Dfinity.
Whether or not this will prove viable, it’s important to work toward cloud-based models which can have a higher degree of diffusion to prevent the collapse of the whole cloud ecosystem, as it’s placed in the hands of a few players.
Read More: Cloud Business Models, IaaS vs PaaS vs SaaS, AIaaS Business Model.
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