The Multiplier Effects of Cloud Computing

The Multiplier Effects of Cloud Computing

“Dairy has the greatest multiplier effect for economic benefit to a community. Studies show dairy is well suited to our agriculture community and our geographic location.”
– John Hartford (1937-2001), American folk and country musician.

In macroeconomics, the “multiplier effect” is defined as follows: “A measure of the change in a country’s money supply that occurs as the result of banks’ ability to lend. The multiplier effect is dependent on banks’ required reserves, or the amount of money in deposits they are legally required to keep in-house. If a bank has a low reserve requirement, it is able to lend more of its deposit money, which in turn increases the money supply.

In simplest terms, “multiplier effect” is the multiplication of benefits along a chain of events, all traced back to a single cause. For example, as mentioned in Hartford’s quote above, with availability of dairy products, a population will have healthier children who will grow up to be healthier adults and work productively to improve the economic conditions of a community. This is in addition to direct benefits to farmers and associated businesses. Cloud computing can produce a similar multiplier effect in the community.

Consider the areas cloud computing can have a positive influence on – technology, business, education, health, travel, entertainment, etc. and you can gauge the possibility of these benefits multiplying and benefiting large sections of the global population.

See: How Cloud Computing Can Create Jobs

See: How Can Cloud Computing Help In Education?

See: Gaming as a Service – The Future of Cloud Gaming

See: Is Amazon’s Cloud Player a Game Changer in the Music Industry?

See: Cars on the Cloud: Microsoft and Toyota Join Hands in Cloud Computing Space

Now, let’s look at the multiplier effect from the other side of the table, where cloud computing is the solution and not the cause. It is an established rule of thumb that when use of a technology grows by 10 times, it is time to develop new technology. That is the reason computing shifted from mainframes to PCs, and the reason why it makes sense to move from PCs to the cloud (See: Mainframes -> PCs -> Cloud Computing? ).

When the Internet was in its infancy 15 years back, there were scarcely 10 million users logged in and perhaps a million websites. Today, there are 3 billon users (including smartphone users) and 100 million websites. It does not take a calculator to determine that growth of the Internet has been much more than 10 times, 10 times 10 times more like it. And in order to support this exponential growth in the near future, traditional IT infrastructure such as client-server architecture may fall short.

However, cloud computing with its massive scalability and built-in elasticity can support such growth. Even today, some of the most widely-used services are already on the cloud – Gmail, iTunes, etc. That is why cloud computing can be both the cause and the effect of the technological innovations of the future.

By Sourya Biswas


Sourya Biswas is a former risk analyst who has worked with several financial organizations of international repute, besides being a freelance journalist with several articles published online. After 6 years of work, he has decided to pursue further studies at the University of Notre Dame, where he has completed his MBA. He holds a Bachelors in Engineering from the Indian Institute of Information Technology. He is also a member of high-IQ organizations Mensa and Triple Nine Society and has been a prolific writer to CloudTweaks over the years...

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