Cloud Computing Value Chains: Research from the Operations Management Perspective

Abstract

Problem definition: Cloud computing has been recognized as a critical driver of Information-Technology enabled innovations. The Operations Management (OM) community, however, has not been exposed enough to the essential operations problems that arise from the management of cloud value chains. In this paper, we examine recent research on cloud value chains and explore future research opportunities from an OM perspective. In particular, we focus on major operations management challenges facing a cloud provider in three problem domains: (1) cloud computing resource management, (2) pricing in the cloud computing marketplaces, and (3) capacity planning and management of cloud supply chains.

Methodology and Results: We describe prevalent business models and management practices in the cloud value chains, discuss recent research from OM that falls into each of the three problem domains mentioned above, and point out opportunities for future research. We note that cloud computing operations are driven by demand that exhibits the distinct characteristics including complex workflow, demand redundancy, multi- featured characteristics, multi-dimensional resource requirement, and non-stationarity. On the supply side, cloud computing operations also exhibit distinct characteristics including heterogeneous resources, packing constraints, bundled supply, technology risks, and cost uncertainty. These characteristics of demand and supply are not all prevalent in other operations.

Managerial Implications: Cloud computing operations not only share many features with classic OM problems, but also bring new challenges and innovative business models. Thus, OM tools and research have the potential to provide vital insights into cloud computing operations and impact management practices in the cloud industry, which in turn can stimulate much innovative research from the OM perspective.

Keywords: Cloud Computing, Resource Management, Stochastic Scheduling, Pricing and Revenue Management, Capacity Planning, Supply Chain Management