Reducing Information Asymmetry in Cloud Marketplaces

Reducing Information Asymmetry in Cloud Marketplaces

Vladimir Stantchev, Gerrit Tamm
DOI: 10.4018/jhcitp.2012100101
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Cloud Computing is emerging as a predominant paradigm for obtaining and providing computing functionality in the enterprise. Organizations that are planning to use cloud computing offerings struggle with the question “How do I choose the right offering?” Cloud offerings exhibit a variety of pricing models and different levels of service and functionality. In this article the authors define first Cloud Computing in the context of IT Governance. Then they set criteria to compare different offerings at the level of Software-as-a-Service (SaaS). This is an important precondition for the reduction of the verifiable information asymmetry and uncertainty in the cloud market. Besides deficiencies on the supply side, regarding configuration, display and communication of service bundles, the limited knowledge of potential buyers is main reason for the modest adoption. The authors apply strategies derived from information economics to reduce this asymmetry by integrating information substitutes in the service marketplace description, thereby transforming experience and credence qualities into search qualities.
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Cloud Computing, It Governance, And User Expectations

While various definitions for the term “Cloud Computing” are existing, the US National Institute of Standards and Technology (NIST) provides one of the most comprehensive definitions:

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models (Mell & Grance, 2009).

Depending on the type of service, a distinction is made between

  • Infrastructure-as-a-Service (IaaS) : Rent processing, storage, network capacity, and other fundamental computing resources, e.g., rent space on the Internet,

  • Platform-as-a-Service (PaaS): Deploy customer-created applications to a cloud, e.g., provision of developer tools on the Internet, and

  • Software-as-a-Service (SaaS): Use provider’s applications over a network, e.g., use of an application via the Internet (Petruch, Stantchev, & Tamm, 2011).

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