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December 6, 2010

The HPC Cloud Must Validate ROI with (Better) Econometric Models

Earl Dodd

Four decades ago, NASA faced criticism the Apollo program was costing U.S. taxpayers too much money without providing any practical returns on investment. With help from the Office of Management and Budget, NASA countered these accusations by creating econometric models showing a positive payout to the American economy in the form of valuable new technologies and commercial products resulting from every dollar invested in the space program.

The HPC Cloud industry needs to follow NASA’s lead.

Those of us inside the industry understand that high performance computing (HPC) technology in the cloud is causing a paradigm shift across the entire computing community. The cloud has put HPC within reach of organizations and market segments that previously could not afford to access a supercomputer, much less think about investing in their own. Today, HPC Cloud technology is enhancing productivity and efficiency in businesses as diverse as manufacturing, precision agriculture, and retail sales.

Since almost anyone can understand the positive impact the purchase of a personal computer has on the productivity of an employee, most people can also comprehend the increase in crop yield that results from a farmer applying fertilizer more efficiently. Unfortunately, few people, if any, stop to consider – or quantify – the macroeconomic payoff that can occur across a county, state or region if dozens of farmers can multiply their yields with the help of high performance computers and vast amounts of data.

We face much the same challenge as NASA: computing infrastructure is generally and simply viewed as a cost center instead of a strategic asset. Our call to action as professionals should be to help the general populous begin to realize that investments in an HPC Cloud cyberinfrastructure are factors of production with the potential to drive the economy, enhance competitiveness and promote prosperity at the local, regional and national levels.

In other words, we must find a way to show that every dollar invested in an HPC Cloud cyberinfrastructure – whether the investment is made by government, academia or business – yields dividends to the economy as a whole in terms of higher business profits, more jobs saved or created, and faster re-investment in classic capital goods. The bottom line is that we need these econometric models to help demonstrate that HPC, especially for the on-demand environment, is a viable tool for economic development.

Once developed, these models would produce benefits that would resonate throughout our industry and our nation. Imagine how much easier it would be to convince the local economic development council to invest in a regional HPC center if we could quantify its impact (directly and indirectly) on skilled jobs and growth within its jurisdiction over time. Likewise, what would the reaction be in a state if it could generate millions in annual savings by running its best-suited government applications on their HPC Cloud?

To the best of my knowledge, there are currently no econometric models that quantify the macroeconomic ROI of expenditures on high performance computing hardware and software. The most likely reason for this is that such models would be extremely complex and difficult to develop. Creating them, however, is not impossible. It will require us to reach out to the economists who build such models and help them to understand more thoroughly what HPC technology is and how it positively impacts classic factors of production that are basic to economic growth and prosperity.

The next logical question is “How do we make this a reality?”

My suggestion is for the HPC Cloud community at large–including vendors of hardware, software, and services, as well as operators, relevant trade associations, and government itself – to join with leading economists in a summit to build a road map that will guide us in developing these models. An unbiased and supportive party, such as the U.S. Council on Competitiveness, could play host to these discussions and ensure the dialogue among economists, HPC techies continues, and industries keep on track. 

Montana’s Senior Senator, Max Baucus, has expressed his support of this call to action: “Rocky Mountain Supercomputing Centers help us to attract business and jobs to Montana. I welcome any additional efforts to bring industry leaders together to enhance high performance computing technology and create new opportunities to move the economy forward and create good-paying jobs.”

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Please leave comments below or contact Mr. Dodd directly at earl.dodd@rmscinc.org