Virtualization is certainly one economic enabler, allowing a single server to hold multiple instances of an application, and thereby drive utilization, multitenancy, and rapid re-provisioning in the datacenter.
A second economic enabler is SaaS. This allows centralized management of applications, reduces the cost and complexity of upgrades and release management, and allows new generations of end user devices to have access to heretofore inaccessible computing resources and functionalities.
Finally, there is the hardware component - blade computers. As blades became mainstream, datacenters were able to scale horizontally, but without the space, power, and cooling concerns that plagued large datacenters in the era of "server racks". Now, the same footprint in a datacenter can accomodate 4-16 times the number of compute engines, (each a potential virtualization platform) and each with an acquisition cost that averages 1/4 to 1/3 of the typical cost of a rack-based server of the previous generation.
With these three technologies in place, the idea of offering on-demand computing became economically viable as a business model. The financial value proposition to the end user could be realized at a substantial profit to the supplier.
Of course there are many more technologies that were needed, and continue to be needed, but these are enhancers, in my view, not necessarily enablers. Storage virtualization, management paradigms, security, secure multitenancy, etc. are all critical technologies, but they allow differentiation, value creation, and cost optimization. While their impact is partly economic, they enhance, not enable the business model.
Your comments welcome.
Jim
