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Understanding Cloud Computing Competition, Environment and Finance

November 24, 2011 • Climate Change, Finance & Economics, STRATEGY & MANAGEMENT, SUSTAINABILITY & ETHICS, TECHNOLOGY

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By Federico Etro

Cloud computing allows firms to rent computing power and storage from cloud computing providers, and to pay on demand; this improves productivity and at the same time has a positive environmental impact, creating new businesses, investments and jobs.

Cloud computing is going to reshape business in Europe and worldwide. It has been defined by the US National Institute for Standards and Technology as “a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” It is a general purpose technology able to improve productivity in all sectors and, at the same time, to have a positive environmental impact. Through cloud computing, firms will be able to rent computing power and storage from a service provider, and to pay on demand, as they already do for other inputs such as energy and electricity (the price of using a computer for a thousand hours is the same as that of using a thousand computers for one hour). This article examines some issues related to the diffusion of cloud computing: its general role in section 1, competition policy issues in section 2, environmental issues in section 3 and macroeconomic issues in section 4.

 

Introduction


A new general purpose technology such as cloud computing can provide huge cost savings and more efficiency in large areas of the private sector (especially in fields such as services and selected manufacturing sectors where ICT costs are relevant), and also of the public sector, including hospitals and healthcare, education and the activity of government agencies with periodic spikes in usage.

Case studies in the private and public sectors suggest that cost advantages can be substantial. A few examples from a specific sector, the health sector, can exemplify the point (let us start from the most simple applications to move toward more relevant ones). One of the leading Italian hospitals, the Children’s Hospital of Bambin Gesù in Rome, has recently switched to an online solution for the email services of its 2500 employees (the switch took place in 2010 in less than four months, created large cost savings and allowed IT specialists to focus on other more relevant tasks for the hospital). Similar experiences are planned by the USL of Asolo in Veneto, which is also trying to use cloud computing to help operative tasks. The Swedish Red Cross has improved the coordination of its intervention by adopting a cloud computing solution, which has reduced costs of about 20 % and enhanced communication in real time between its employers. A Russian cardiovascular centre, Penza, has adopted a cloud computing solution to coordinate activities, diagnosis and decisions on treatment and surgery between doctors around the country, with crucial gains for the patients. During the H1N1 pandemic, a global cloud computing tool was build and made available in a few days (based on the Microsoft’s Windows Azure platform) to centralize and provide information on the diffusion of the flu.



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