Is Cloud Computing a Commodity?
I recently read an article about how cloud computing will ultimately become a commodity. This got me thinking about whether we should a) view cloud as a commodity, and b) whether cloud is any different from managed services.
Not long ago, I wrote about how managed services should never be viewed as a commodity. For many of those same reasons, I have come to conclusion that cloud computing is not and never should be viewed as a commodity. Let’s examine why.
If I may, many who have wanted to claim managed services (and perhaps now cloud) is a commodity are those who want to see IT become so common and accepted that it is viewed as a normal part of our lives. I would say we have arrived at that point.
IT is everywhere. But, IT does not have to be a commodity in order to enjoy widespread acceptance.
What is a Commodity?
According to Dictionary.com, a commodity is defined as an article of trade or commerce, especially a product as
distinguished from a service.
This definition, perhaps more than others, really underscores the difference of commodities from services such as managed services and even cloud computing.
Characteristics of a Commodity
What are some of the characteristics of a commodity?
Uniformity – commodities are fungible. This means they are not identifiably unique…wheat is wheat. This is demonstrably not true with managed services or cloud computing. If you strip it down to the least common denominator, an argument could be made that cloud computing related to power, connectivity, and availability is a commodity. Beyond those characteristics, cloud computing has nothing in common with a commodity.
Price – For some reason I’ve heard a number of people (not many MSPs though) who believe managed services should be a commodity because pricing would then become easier. I disagree.
In two decades of working in this profession, I have never come across a standardized pricing model for anything related to managed services. Geography, experience, customer base, and service offerings, all factor into how a MSP creates its pricing. From MSP to MSP, these prices vary greatly.
Natural Resources – Commodities tend to be natural resources. In fact, I’m hard pressed to come up with an example of a commodity which is not a natural resource like gold, oil, wheat, oranges, etc. Managed services are not natural resources. Even the underlying cloud computing power and connectivity is not a natural resource.
Cloud involves many of the same characteristics of managed services, including management of the infrastructure, security, redundancy and availability, and the protection of the most prized asset of all, the data residing on the cloud infrastructure. All of these point towards cloud being less a commodity and more of a professional service, which is precisely how many MSPs feel about their own managed services offerings.