Cloudonomics: The Business Value of Cloud Computing, + Website

Chase Demand or Shape It?

Given that variable demand is a given in virtually any business, the question is what to do about it. One strategy is called “chase demand” (i.e., assume that the demand is what it is, and attempt to use a mix of fixed and variable capacity to meet that demand). The other approach is to shape the demand to meet the capacity of the system by smoothing the peaks and filling the troughs.

Users often exhibit emergent aggregate demand smoothing, for example, leaving the house early to avoid rush hour. Businesses and governments shape demand to maximize revenues and profit or to disincent use during peak periods through dynamic pricing. Hotel rooms in Las Vegas on fight night and airline fares during spring break and Christmas are higher than average; some cities charge congestion fees to reduce rush hour traffic.

During periods of light use, demand can be incented. Promotions, such as sales and special offers, can increase discretionary demand. You may not have had any plans this weekend, but if an all-inclusive airfare plus hotel deal to Palm Springs is offered at the right price, that could rapidly change.

Also, certain deferrable workloads can be executed when exogenous demand is low. For example, network connections can be used off-peak to update digital signs or preload caches with content that is expected to be accessed, voluminous data can be backed up.

It is important to realize that various workloads have differing priorities and different degrees ...