Enterprises migrate or deploy their software-based applications to the cloud both to deliver new service and value faster to drive their top line, and to improve operational efficiency to boost their bottom line. This paper defines operational efficiency for business-to-consumer and other applications operating on public, private or hybrid cloud platforms. A cost model of application service production is proposed with six efficiency improvement levers: automation; scalable capacity; advanced self-service; agile service creation; application execution efficiency; and efficiency analytics. Three key indicators are also proposed to help drive continuous efficiency improvement by the enterprise: the unit cost of service production; the cost of capacity waste; and the cost of creating functionality.
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