Cloud Computing as a Supply Chain


remember the “IT doesn’t matter” article of 2003 (see That time it shocked the whole IT world. The real fear behind that was the guts feeling: it might be true somehow.

Well, it is true somehow. But only for parts of the IT. There are some basic services like mail and document storage that do not mean a competitive advantage anymore. It is certainly true on the other side: No one can live without it. But having it does not guarantee to be ahead of the competition.

So how can we improve here? Just learn from the others. In the manufacturing industry it was a basic lesson that keeping what differentiates you and get loose of what is common. So for example a car manufacturer will certainly keep the design of the cars body in house. This is what differentiates the company in the market. But designing or even producing screws?? They are certainly extremely important elements but for sure no real differentiators.

In the end this is called a supply chain* and the industry learned to build such and optimize it. Today it goes even so far that it is said that not your products are the real competitive advantage (because they can easily be copied) but your processes are. The industry also learned that there are certain aspects to it (like: you need to trust your supplier in a certain way) that needs attention and management - Supply Chain Management. You get the idea.

In the course of my studies at Walden University I did a paper which draws a comparison between Supply Chains and Cloud Computing. In my opinion cloud computing is really about building a supply chain for IT. You can find the paper here (XPS - PDF).

Maybe this helps a bit explain cloud computing to your manager or controller ;-)

[Warning: This paper is done in APA style! I personally find this style not really adorable but it is how the university expects those papers.]

[Warning: This paper was not peer reviewed.]


[UPDATE: I received some questions around the definition of supply chain. I know that there are some definitions out there that very much focus on the physical exchange of goods. But there is also an extended version – to which I relate to:

(Mentzer, DeWitt, Keebler, Min, & al, 2001), defines a supply chain “as a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer” (p.4). Obviously the term is applied not only on physical goods but also on services like finance or information.

Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., & al, e. (2001). Defining Supply Chain Management. Journal of Business Logistics , 1-25.]



I need to give a round of applause to my colleagues Karin Sondermann and Holger Sirtl for helping me shaping the paper!!






* Supply Chain: A chain of three or more entities within the value enriching process of manufacturing goods or offering services.