We have lots of clouds, but what has that to do with computing?

The IT jargon of today seems to be “Cloud Computing” but what are techies talking about and how does it affect the average user? Within this article I will demystify one of the most critical trends in enterprise IT today.

As a metaphor for the Internet, “the cloud” is a familiar cliché, but when combined with “computing,” the meaning has tended to get even more confusing. Ultimately, we’re just talking about Internet based computing. With the convergence of broadband, virtualization and utility computing we have seen a transition to remotely accessing applications and data “online” via the “cloud” rather than directly from the desktop.

Though it has been a recent phenomenon, cloud computing has actually been possible since the development of the first networked computer systems.  Users provided with a simple “dumb terminal” used keyboard to input and call data and applications that were stored and run centrally,  on room-filling mainframe computers. Over time these terminals evolved into fully functional PCs capable of running their own programs, storing data and in time replacing their huge mainframe predecessors.

As the internet has become ubiquitous, affordable storage has become available via very high speed net connections making the offsite centralized approach to “Cloud Computing” more practical.  In the modern home the cloud has, for some time, enabled the delivery of computing services such as web based email or document editors in real-time from any device with internet access, on a rented, ad supported or “freemium”  business approach.

Examples of personal cloud applications include:

A host of other online software services can be found at Alternative.to

The primary benefit of cloud computing is reduced cost for everyone involved. Specialized software vendors maintain a single central version of the product online rather than spending thousands of hours supporting users in maintaining their own local installations. Instead, the provider manages and maintains the entire infrastructure in a secure environment and users interact with resources via the Internet. Conversely, users also save on the significant up-front costs of fully purchasing, installing and supporting the static end product. The effectiveness of the ‘public’ cloud has encouraged the belief that corporate IT would be revolutionised in the same way.

Accelerated by the economic downturn, organizations are under pressure to ‘do more with less’ in terms of IT. Where organizations traditionally bought, owned, and maintained data centers to support database, messaging infrastructure and content distribution services, the corporate cloud has increasingly led business purchase IT services on an as-needed basis. Capacity can then grow or shrink instantly. Organizations are also benefitting from clearer and improved Return on Investment (ROI) calculations.

The move toward the cloud has also had a distinct impact on the supplier landscape. In the changing IT market, previously dominant companies have often found their strategic advantage whittled away. Microsoft for instance, has been forced to defend their market share by moving core desktop tools like their Office suite online.

At the furthest extreme, “the private cloud” refers to a situation where large organizations deploy cloud services to in-house infrastructure.  In these situations, businesses still own data center space and servers. Capacity is limited by the amount allocated by the owned infrastructure, so it is not truly elastic. With significant fixed, up-front investment having already taken place the private model may have benefits but it has not truly taken off yet across the board. Services are also not pay-as-you-go because you have already consumed large up-front costs for the hardware. Where services are pay-as-you-go they provide a flexible pricing model. Capacity is truly elastic, so organisations can scale up or down any time and they never sit on or pay for unneeded excess capacity.

The Cloud is not all silver linings

Where a system exists on your network, you can maintain, repair and secure it. With cloud providing services, users place a high level of trust in the quality and maintenance of those services. When introducing the web, privacy and security also become more vital considerations.

Several classes of applications, including web and application hosting, collaborative tools, online marketing campaigns and data analysis are obvious candidates for ‘cloud-ification’.  Migration of others require far greater consideration and planning – particularly where they have dependencies on other internal software or data sources. Most companies have applications that were not written in a way that can easily take advantage of the cloud and its elasticity.

VW has been a prolific user of cloud computing, however, according to the VW CIO, Nick Gaines, they tend to go for the hosted approach in areas where there is a low business risk. “Cloud is everywhere and we wish we could use more of it, but the dilemma is around the quality of integration and security. For us, it is very difficult to put the detailed data about our products and customers on the cloud,” he said.

Rather than just a phase to be waited out, Cloud computing is a truly structural shift much like the advent of the mainframe, PC or client/server. The cloud is not simply a way of saving money. It gives businesses opportunities to be more productive, agile and responsive than is possible with physical hardware in a company datacenter. Within ten years, software as a service will be the dominant delivery mode for software. Indeed, an IDC report predicted that 76 percent of businesses would use SaaS in 2009, and that SaaS spending would grow more than 40 percent[1]. In a shorter time, more people will access the Internet over mobile platforms than over laptops and desktop PCs.


[1] Economic Crisis Response: Worldwide Software as a Service Forecast Update, 11/2008

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