On the Financification of Cloud Computing: An Agenda for Pricing and Service Delivery Mechanism Design Research

Abstract

Pricing approaches to cloud computing services balance risks and interests between vendor and client, and optimize supply and consumption in terms of cost, uncertainty and economic efficiency. They also leverage the benefits of various services delivery mechanisms for reserved, on-demand, spot-price, and re-sold services in markets that have learned how to transact in full contracts and services instances. This is like a financial market: with services supply and demand, and opportunities to supply and purchase services with spot prices, or to sell or buy contracts for the delivery of future services. Our research suggests that the financification of the cloud computing services market represents a fundamental shift from the traditional model of software sales and large contracts outsourced to services vendors, to short-term contracts and computing capacity provision mechanism designs that are evolving similar to financial markets. We develop this perspective to explain the cloud vendor market, the provision of services, and the ways in which the financification of cloud computing will shape future offerings and the structure of the market. We see these changes in the market in the many ways that vendors offer cloud services of high value to organizations, while making more profitable business models possible.