Cloud Computing - Outsourcing 2.0 or a new
Business Model for IT Provisioning?
MARKUS BÖHM1, STEFANIE LEIMEISTER2, CHRISTOPH RIEDL1, HELMUT KRCMAR1

1 Technische Universität München (TUM), Germany
2 fortiss – An-Institut und wissenschaftliche Einrichtung der Technischen
Universität München (TUM), Germany

1  Introduction ....................................................................................................................... 3 
2  The Cloud Computing Concept: Definition of a new Phenomenon .................................. 4 
2.1  State of the Art ......................................................................................................... 4 
2.2  A Definition of Cloud Computing ........................................................................... 7 
2.3  The Layers of Cloud Computing .............................................................................. 7 
2.3.1  Cloud Application Layer ............................................................................. 8 
2.3.2  Cloud Software Environment Layer ............................................................ 8 
2.3.3  Cloud Software Infrastructure Layer ........................................................... 9 
2.3.4  Software Kernel Layer ............................................................................... 10 
2.3.5  Hardware / Firmware Layer ....................................................................... 10 
3  Differences Between Cloud Computing and the Traditional Provision of IT .................. 11 
3.1  The Evolution from Outsourcing to Cloud Computing .......................................... 11 
3.2  A Comparison of Outsourcing and Cloud Computing Value Chains .................... 13 
3.2.1  Traditional IT Service Outsourcing Value Chain ...................................... 13 
3.2.2  Cloud Computing Value Chain ................................................................. 14 
3.2.3  Comparison ................................................................................................ 15 
4  Cloud Computing Business Models ................................................................................. 16 
4.1  Actors and Roles in Cloud Computing .................................................................. 16 
4.2  The Platform Business Model ................................................................................ 17 
4.3  The Aggregator Business Model ............................................................................ 19 
5  Conclusion and Perspectives ........................................................................................... 20 
5.1  Contribution to Research ....................................................................................... 20 
5.2  Contribution to Practice ......................................................................................... 21 
5.2.1  Perspectives for Customers ........................................................................ 21 
5.2.2  Perspectives for Service Providers ............................................................ 21 
5.3  Outlook and Further Research ............................................................................... 22 
6  Acknowledgements .......................................................................................................... 23 
7  References ....................................................................................................................... 23 

Cloud Computing - Outsourcing 2.0 or a new Business Model for IT Provisioning? 3


1 Introduction
The term cloud computing is sometimes used to refer to a new paradigm – some authors even
speak of a new technology – that flexibly offers IT resources and services over the Internet.
Gartner market research sees cloud computing as a so-called “emerging technology”1 on its
way to the hype. When looking at the number of searches for the word pair “cloud
computing” undertaken with the Google search engine one can get an imagination of the high
interest on the topic. Even terms like “outsourcing”, “Software-as-a-Service (SaaS)” or “grid
computing” have already been overtaken2.

Cloud computing can be seen as an innovation in different ways. From a technological
perspective it is an advancement of computing, which’s history can be traced back to the
construction of the calculating machine in the early 17th century3. This development
continued with the invention of the analytical engine (1837), the logical engine (1885) and the
tabulating machine (1890)4. The actual history of modern computing began with the invention
of the first computers (Z3 in 1941 and ENIAC in 1945)5. Since then advancements emerged
at a good pace. The sixties and seventies were the ages of mainframe computing. Central
computing resources were harnessed through terminals that provided just the input and output
devices to interact with the computer. With the development of the first microprocessor
(1969) hobbyists began to construct the first home computers, before mail-order kits such as
the Altair 8800 were sold in 1975. Other computer manufacturers like Apple, Atari or
Commodore entered the market for computer home users, before IBM introduced its personal
computer (PC) in 19816. Since then the development paced up, the diffusion of PCs increased
significantly and an increasing miniaturization lead to the development of laptop computers
and mobile devices.

Another important technology, which paved the way for cloud computing was the
development of the ARPAnet (1969), a fail-proof communications network which became
today’s Internet7. Soon, services like e-mail or the world wide web, a hypertext based
information management system, gained popularity. Technologies like Java, Ajax,
WebServices and many more supported the development of rich, interactive websites.
Eventually whole applications could be deployed over the Internet, which was around the
year 2000 referred to as Software-as-a-Service8. In analogy to the provision of software via
the web, computing resources could also be accessed via the Internet. Especially for scientific
purposes grid computing got established in the early 1990ies9. When looking at this brief
history of computing, one can easily see the different streams from local calculating
machines, to central mainframes, via personal computers and handheld devices to the new
quasi centralization trend that can be seen in cloud computing.

1 Cf. FENN, et al. (2008)
2 Cf. GOOGLE (2009)
3 Cf. FREYTAG-LÖRINGHOFF/SECK (2002)
4 Cf. BABBAGE (1864), BURACK (1949)
5 Cf. GOLDSTINE/GOLDSTINE (1946), ROJAS (1997)
6 Cf. FREIBERGER/SWAINE (2000), p. 325 et seqq.
7 Cf. FREIBERGER/SWAINE (2000), p. 206 et seqq.
8 Cf. BENNETT, et al. (2000), FINCH (2006)
9 Cf. FOSTER/KESSELMAN (2003)