Cloud Computing and American Competitiveness

In today’s economy, an effective information technology (IT) infrastructure is essential to the proper functioning of almost every organization.  Cloud computing expands the potential of this effectiveness by facilitating automatic syncing of a user’s devices and by creating borderless IT networks.  In 2008, The Economist cited cloud computing as possibly being “the ultimate form of globalization”.  It allows users to rent virtual storage space for their information on an off-site multi-tenant server and access that information externally through the internet.  In this way, cloud computing conserves time and money and has the potential to revolutionize the organization, syncing, storage and sharing of files—all tasks that increase productivity and operational efficiency, which can help to make America more competitive in the global market.

Cloud computing can also act as a facilitator for entrepreneurship by lowering barriers to entry such as those associated with financing an IT infrastructure.  According to an article published in The MIT Entrepreneurship Review, cloud computing “provides start-up companies with access to enterprise-class servers and systems without [the] excessive up-front costs associated with traditional hardware and software licenses.”  The article also asserts that cloud computing creates opportunities for the next generation of “technopreneurs” similar to the opportunities that were created by the internet that resulted in the e-commerce boom of the late 90s.

In his article “Can Cloud Computing Save The American Economy?” Art Coviello writes that cloud infrastructures offer economies of scale, flexibility and efficiency, which “will not only save organizations massive amounts of capital and maintenance costs but emancipate them to apply and use information as never before.”  Through its use of shared infrastructure, cloud computing takes advantage of the aforementioned economies of scale and thus can provide savings for entrepreneurs who are launching startups while also allowing them to streamline their performance via cloud technology.

Entrepreneurs are not the only ones that can benefit from cloud computing; the U.S. government has been looking into the gains in competitiveness associated with this technology as well.  The February 2011 White House report titled Federal Cloud Computing Strategy cites cloud computing as a fundamental shift in IT since it enables these  systems to be “scalable and elastic”.  Furthermore, this report says that cloud computing improves existing systems by shifting resources towards higher-value activities as a result of efficiency improvements.  It also asserts that cloud computing simplifies IT and makes it more productive, accelerates data center consolidation, and encourages a culture of entrepreneurship through the reduction of risk and the minimum required investment.

The growth of cloud computing has, however, been accompanied by new security concerns.  Nonetheless, there is a silver-lining:  security initiatives such as the Cloud Computing Act of 2011 (drafted by Senator Amy Klobuchar) are meant to create standards and enforcement tools to ward off and prosecute hackers and promote online security.  If such security concerns are reconciled, cloud computing is poised to take U.S. IT systems by storm and make America a more efficient and competitive player within the international economy.  In the words of Coviello, “The time for cloud computing is now. We need government and industry to accelerate broad scale adoption of cloud infrastructures so we can reap the rewards of a true information based economy.”

Posted by:  Erica Pincus

Sources:  The Economist,,The MIT Entrepreneurship Review,  Twin Cities Business, The White House

Photo Credit: IBM Cloud Computing courtesy of flickr user


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