Venyu Blog

Is it too early in cloud computing’s lifecycle to be studied, dissected and otherwise analyzed by the likes of ivory-towered gadflies determined to parse the whys from the why-nots on its influence, impact and rate of adoption? Apparently not.

As a proponent of “Behavioral Cloudonomics ― described as “the intersection of psychology, economic and the cloud” ―– Joe Weinman, vice president of corporate strategy at AT&T, believes this emerging construct can help us to explain the appeal of the cloud and understand and address barriers to its adoption.

Relying heavily on the work of Dan Ariely, a professor of psychology and exponent of behavioral economics at Duke University whose tome “Predictably Irrational” investigated the range of irrational biases in human behavior, Weinman took the most relevant of these biases and applied them to decisions about adopting cloud computing.  In fact, in 2009 Weinman actually devised a mathematical formula, found here, that empirically calculated what percentage of applications should be run on dedicated systems and which as an on-demand utility.

Against this backdrop Weinman has crafted what he terms as the “10 Laws of Behavioral Cloudonomics” (you can find the complete list here), which state that by understanding the economics of cloud computing you inform and achieve optimal outcomes for driving operational efficiencies for IT organizations, regardless of size. For example:

Law #2: Flat-Rate Bias — One effect of loss aversion is that consumers often prefer flat-rate plans even when pay-per-use would cost less. With flat rates or up-front capital expenditures, the charges are never in doubt. The cloud’s pay-per-use pricing for on-demand resources typically reduces total cost while enhancing scalability, but the pleasure of a dollar saved may not outweigh the fear of loss from auto-scaling gone awry. Flat-rate buckets, monitoring and reporting, and auto-scaling policy management with maximum capacity limits can help.

Law #7: Hyperbolic Discounts and Instant Gratification — People tend to discount future risks and benefits hyperbolically that is, more steeply than accounting texts teach: a chocolate chip cookie is much more valuable now than in an hour. This is good for the cloud, which promises instant gratification via on-demand services. Moreover, the “pain” of payment is deferred, thus discounted.

Law #8: The Zero-Price Effect -– People would rather receive a free $10 gift certificate (a $10 gain) than pay $7 for a $20 one ($13 gain). This also benefits the cloud, since up-front costs are typically eliminated.

While all of this critical thinking seems well spent I wonder whether trying to explain why IT professionals (or human beings for that matter), behave as they do in selecting or de-selecting a particular technology (or outcome) provides – at least in the short run – any real value in understanding why as a population we give something the thumbs up or thumbs down. Can it be as simple as settling on a better mousetrap when it comes along? Who knows? It might very well be part of our DNA, something set off by a latent genetic or environmental cue.

That being said, however, trying to overthink and overanalyze why cloud computing is gaining followers in some quarters and naysayers in others is, to my way of thinking, the same thing as trying to understand the efficacy of social media to incite flash mobs. In that case the outcome is, for all intents and purposes, equally if not significantly more important than the catalyst by which it was produced. So too, I believe, using something as cryptic and cumbersome as behavioral cloudonomics to explain the rising tide of organizations embracing the new “economies” of cloud computing. In short, less thinking, more clouds.