Cloud Computing AWS-EC2(Elastic Computing Cloud) Example Analysis

Sources:
  • http://www.clubcloudcomputing.com/
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  • https://www.forbes.com/
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    The Business Model Canvas

    Key Partners

    • Hardware Vendors
    • Data Center Building
    • Open Source
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    Key Activities

    • Highly automated fulfillment
    • Optimization

    Value Proposition

    • Rapid self-service provisioning of virtual machines with pay per use billing
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    Customer Relationship

    • Startup
    • Software companies
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    Customer Segments

    • Customer conference
    • Analytics
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    Key Resources

    • Hardware
    • Fulfillment sofware
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    Channels

    • Self-service
    • API
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    Cost Structure

    • Assets, such as servers and data centers
    • services such as electrical power and telecommunication
    • people for developing and managing the systems

    Revenue Streams

    • Hourly fees per virtual machine. The bigger the virtual machine, the higher the hourly rate
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    SWOT

    Strength

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    Weakness

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    Opportunities

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    Threats

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    Porter's 5 Forces

    Threats of New Entry

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    Threats of Substitute Products

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    Competition
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    Bargaining Power of Customer

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    Bargaining Power of Supplier

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    PESTEL

    Politic

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    Economy

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    Social

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    Technology

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    Environment

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    Legal

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    Business Model Canvas

    Value Proposition

    • The value propositions reflect the customer’s problems and needs. This is the central element that describes why a customer would ultimately pay for the product or service. The value proposition of cloud computing centres around its five essential characteristics. For example, in the AWS EC2 case, the core component of the value proposition is rapid self-service provisioning of virtual machines with pay per use billing. For each individual customer this translates into different business advantages. An example is reduced capital expenditure and reduced risk of over-investing or under-provisioning.
    • Types of cloud services: IaaS, PaaS, SaaS Most cloud computing services fall into three broad categories: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (Saas). These are sometimes called the cloud computing stack, because they build on top of one another. Knowing what they are and how they are different makes it easier to accomplish your business goals. Infrastructure-as-a-service (IaaS) The most basic category of cloud computing services. With IaaS, you rent IT infrastructure—servers and virtual machines (VMs), storage, networks, operating systems—from a cloud provider on a pay-as-you-go basis. To learn more, see What is IaaS? Platform as a service (PaaS) Platform-as-a-service (PaaS) refers to cloud computing services that supply an on-demand environment for developing, testing, delivering and managing software applications. PaaS is designed to make it easier for developers to quickly create web or mobile apps, without worrying about setting up or managing the underlying infrastructure of servers, storage, network and databases needed for development. To learn more, see What is PaaS? Software as a service (SaaS) Software-as-a-service (SaaS) is a method for delivering software applications over the Internet, on demand and typically on a subscription basis. With SaaS, cloud providers host and manage the software application and underlying infrastructure and handle any maintenance, like software upgrades and security patching. Users connect to the application over the Internet, usually with a web browser on their phone, tablet or PC.

    Revenue Stream

    • Revenue streams are the result of value propositions that are successfully offered to customers. The structure of revenue streams is where cloud computing differs from earlier IT service models, as they are usage based rather than asset based. AWS basically charges hourly fees per virtual machine. The ‘bigger’ the virtual machine, the higher the hourly rate.
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    Cost

    • All business model elements result in a cost structure. In more traditional IT service models the revenue streams are tightly coupled to the cost structure. The cloud computing innovation is also about decoupling these. At AWS the main cost elements are in assets such as servers and data centres; in services such as electrical power and telecommunications; and in people for developing and managing the systems.

    Key Resources

    • Key resources are the assets required to offer and deliver the previously mentioned elements (e.g. value proposition, customer relationships). AWS owns massive amounts of hardware, estimated at 1 million servers or more. That is housed in dozens of data-centres worldwide. But there is more; the service can only be delivered through advanced and unique fulfilment software and processes. Amazon must have invested substantially in that.
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    Key Partners

    • Some activities are outsourced, and some resources are acquired outside the enterprise. AWS buys immense amounts of hardware, and uses a lot of (open source) software. Building of data centres is also likely to be outsourced.
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    Key Activities

    • The key resources perform key activities. At AWS the key activity, delivery, is highly automated. But at the scale of AWS, oversight and resource planning is still a serious effort. Optimizing assets versus utilization is essential in the IaaS business model. Through economies of scale, AWS is able to spend a lot of effort on these activities.

    Customer Segments

    • In the Business Model Canvas, “Customer Segments” are the groups of customers that the company ultimately serves, i.e. the ones that consume and pay for the services. In the AWS case, although basically anybody with a credit card can spin up a virtual machine, it looks like Amazon is primarily targeting software developers and (startup) SaaS providers as its main customers. Historically, Amazon development teams were the first customers. External customers were initially added as an afterthought.
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    Channels

    • Value propositions are delivered to customers through communications, distribution and sales channels. It is often assumed that cloud computing relies solely on self-service direct sales, but the reality is much more diverse. SaaS providers in particular are developing extensive partner programs. AWS primarily employs a self-service direct model, where the delivery is through APIs. AWS also provides a web user interface to those APIs. Interestingly, that interface used to lag in functionality behind the main AWS services, but these days most new features are announced on the API and the Web UI simultaneously. The model is enhanced by premium support.
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    Customer Relationship
    • Customer relations are established and maintained with each specific customer segment. One of the ways that AWS maintains relationships with its customer segments is through conferences. The 2013 re:Invent developer conference attracted 9000 visitors. Additionally, there are vibrant online communities. Finally, though details are scarce, we can assume that AWS does extensive analytics on the activities customers engage in on the platform.
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    Monopoly Characteristic

    Proprietary Tech

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    Network Effect

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    Econ. of Scale

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    Branding

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    7 Questions of Business

    Engineering Question

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    Timing

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    Monopoly

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    People

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    Distribution

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    Durability

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    Secret
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