Some things are here to stay — like desktop computers, wireless networks, and cloud computing. We can debate which of these technologies has impacted life the most, but it would be difficult to pick a conclusive winner. So, we won’t debate this. Instead, no one will deny that major technology leaders such as Amazon, Google, Microsoft, Alibaba, Salesforce, Workday, ServiceNow, Cisco, IBM, SAP, Oracle, and Dell (via VMWare) have one thing in common: They all have fast-expanding cloud plays, telling us there must be something special about cloud. This is not surprising. Over the last 15 years, cloud technology has moved from being a novel idea to a catalyst for innovation, then to becoming the epicenter of business disruption, and now it is the commonly accepted foundational model for IT infrastructure. Cloud is so deeply entrenched that Gartner says that by 2025, 51 percent of IT spending on application software, infrastructure software, business process services, and system infrastructure will move to the public cloud. But there is unease in the air. Cloud costs are rising, making enterprises anxious. Could this set the stage to force further innovation in cloud models? Could the uberization of cloud be one such model for enterprises that want cost-effective alternatives?
The idea is more plausible than it initially seems. Let’s look at some drivers that could lead us to a future where cloud infrastructure and services are uberized.
Rising costs are here to stay. IBM has been the latest to hike its price for IaaS and PaaS services. They announced the price revision on 1 January 2024. Other providers have been doing so for some time now. According to the Bureau of Labor Statistics’ Producer Price Index (PPI) for January 2024, there has been a 0.6% month-over-month increase in data processing and related services (this category includes cloud computing). The year-over-year increase stands at 3.7%, and the PPI traces rising cloud costs back to September 2022.
Adding to the cloud tab are several other factors, the most obvious being overprovisioning and underutilized or poorly optimized on-premise applications that were hastily migrated to the cloud and are now leading to overspending. In the coming months, generative AI will play a significant role in helping determine — quickly and precisely — which applications to retain on-premise and which to refactor for cloud. The technology will also help analyze application code performance, resulting in optimization and savings in terms of cloud costs.
But the irony is that generative AI itself will become a factor adding to cloud costs. Enterprises that want to leverage the technology will need high-performance infrastructure, such as Graphics Processing Units and Tensor Processing accelerated servers, to support their generative AI workloads. In addition, the fact that generative AI depends on massive datasets will lead to a spike in storage demand. Neither processing power nor storage (with its attendant security) will be cheap.
All said and done, cloud users should prepare themselves for hefty bills.
This brings us back to where started: Could rising cloud costs make uberization the next cloud business model innovation?
Uberization of an industry or business introduces a transparent, democratic, on-demand, market-driven buying process to meet a broad diversity of needs. Uberization puts the user in the driving seat (so to say) with many more choices and in control of what, when, how much to buy, and from whom. It also helps diverse providers, big and small, find markets with equal ease. Airbnb uberized hospitality, Betterment did it to investing, Porter did it to freight, Wyzant to the education business, and HealthTap to healthcare. The story these examples tell us is subtle but relevant — that uberization need not be restricted to low-skilled services (such as a taxi ride). Given the pressing need, cloud infrastructure could easily be next.
Here is a scenario based on uberization: Imagine an app that notes your business needs, analyzes the compliance requirements of your region/industry and then instantly shows you the most optimal cloud options to pick from. The app steadily learns from your past interactions, maintaining a record of your security, identity management protocols, authentication, on-boarding and off-boarding needs, policy enforcement, employee training, activity monitoring and reporting, etc. As usage needs change, the app uses generative AI to make new recommendations, allowing access to the most optimal (and available) services that manage porting your data and application. The app is seamlessly integrated with a payment system, and users can opt for monthly, weekly, and daily payment cycles. Finally, the app allows users to rate each service, pushing providers with superior ratings to the top.
With 5G coverage improving, we can expect many more industries to have an “uberized” option or an industry segment opting for uberization. In the cloud business, uberization will help enterprises find their sweet spot between business strategy, maintaining service levels, and keeping cost in control. By all indications, uberizing cloud infrastructure and services, especially in the light of generative AI, is an idea worth thinking about.
