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Authors: Nilay Oza

Category: research article

Keywords: Cloud Economics, Economies of Scale, SaaS providers, Diseconomies of Scale, Cloud Software, Oligopoly

Abstract: This paper identifies potential diseconomies of scale for cloud users. The paper questions if the scale benefit currently available to cloud users is sustainable for long term. The paper highlights specific economies and diseconomies across supply-side savings, demand-side savings and multi-tenancy efficiency from cloud user perspectives. The paper argues that diseconomies will kick in if cloud users do not maintain scale benefit. The paper offers concrete recommendations for cloud users to maintain the scale benefit by offsetting sources of diseconomies. Finally, implications for future from potential diseconomies are presented.

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reviewer574-1 says:
May 16, 2012 02:28 PM

This paper covers potential diseconomies in cloud computing from cloud users point of view. The paper is interesting and topical but requires clarification, better argumentation, and justification of the theoretical base.

Major comments:

- Introduction is very short and half of it is used to explain the content of the paper. The motivation of the work, importance of the topic, research aim, and intended contribution of the paper should be argued better. That is, why is it important to study the diseconomics of scale in cloud computing and why is it worthwhile to the reader waste his/her time to read the article. Because of the page limitation, I recommend to delete the second paragraph from the introduction, as it does not include anything important.

- The second section is not very informative. First you tell some basic facts/terms about cloud computing (we can assume that the reader of the journal already know these) and the second paragraph is very confusing. The first paragraph should present the most import and latest works related to the topic so that the reader will see that you master the literature. In the second section, sorry to say, I was really lost that who is the provider and what is the difference between user and consumer? Can consumer be also user, or can user be consumer or provider? This section requires a lot of clarification. Why do not use well accepted terms “IaaS provider”, PaaS provider”, “SaaS provider” and then consumer/customer/end-user?

- The literature that you use to refer sources of economics of scale is not very scientific. It would be more strength if you add some literature from economic studies and use those together to support your arguments related to cloud computing. This applies also to the diseconomics of scale section.

- The arguments that you present in the diseconomics of scale section are relatively weak as it do not base on an empirical study and it is not well grounded from the existing literature. In addition, diseconomics of scale (in cloud computing) seems to be related to the market situation and competition in the market. Maybe by adding some insights from Porter’s competitive advantage theory would help and make the section more plausible.

- I do not see any reason for the sub-section 4.3. It should be deleted or better integrated to the topic.

Minor comments:

- Do not use brackets in the title
- “kick in” does not sound very academic
- It would be good to refer to Table 2 before “R6”.

Nilay Oza
Nilay Oza says:
Jun 14, 2012 12:45 PM

Thanks for the comments, I will update the version and upload a revised edition.

Sini Ruohomaa
Sini Ruohomaa says:
Jun 17, 2013 06:03 PM

I randomly decided to read through the paper today thanks to an interesting title. I appreciated the recommendations and the point of view of the cloud user.

A few comments that came to mind:

- The paper seems to have a bit too much "new things" in a tight space; it may easily become a bombardment of too much new terminology or a "phonebook" rather than helping to understand the core concepts. Given the space limitations, focus adjustments may be in place.

- I think the example of 4.3 looks disconnected because of its location; an abbreviated version might serve well in an introduction or as an example case in the start of 4, for example.

- It might be easier to digest the diseconomies sources followed by recommendations if the two had a bit more obvious connections drawn between them.

- The multi-tenancy efficiency column of table 2 would have more space for additional explaining words, for example R10: multiple instances of what, or R9: giving a quick definition of asset specificity (or "definition-by-example"). R3 and R6 are in a kind of counter-recommendation format, a bit harder to understand this way around.

- Some concepts like 'failure demand', 'extending firm's boundary' and 'unmanageability' were a bit hard to understand for me (as a computer scientist, my business/economics background is limited).

- What is the role of section 6 exactly, is it predictions or different theories and what their implications would be? (It is missing the "this section is about X" part between the 6 and 6.1 titles.) If I'm supposed to read it as predictions, the claims that oligopolistic conditions are in the short term future could maybe use a bit more concrete justifications (I hear they exist), because now they sound more like "this could theoretically happen and if so then xyz follows".

Minor notes:
- The slightly colloquial term 'firm' might be generalized to 'organization'.
- Page 8 has a really long paragraph and the last paragraph of 7 looks like it's in a smaller font suddenly.
- The extensive use of subtitles for very small (one-paragraph) segments of the paper takes away space for explaining the content better, and makes the text look more 'restless'. There are better ways of helping browsability, such as paying attention to the content and form of "heaviest parts", such as first sentences in each paragraph.
- There seems to be slightly random patterns of emphasis: a lot of boldface in 2 and 3, and various terms like "Oligopoly", "Cloud user" or "Economies of scale" capitalized here and there later (they're not names as such).

I hope these help. I'm not here to review the paper as such, just in the audience.

Pasi Tyrväinen
Pasi Tyrväinen says:
Oct 13, 2013 07:09 PM

Editor decision:
New version has been looked forward for 16 months which is interpreted as the end of the review process for this submission. Thank you for submitting this discussion paper and you are welcome to submit new ones in the future.

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