Cloud Computing --- Hype Vs. Reality

According to Wikipedia, Cloud Computing is "Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand, like a public utility."  In other words, instead of housing and maintaining your own computers, your data and programs are stored on other people's computers, leaving you free to focus more energy on your core business and less energy on maintenance. The idea has been around for a long time --- since the 1960's --- but it is now rapidly gaining traction. Salesforce.com gets much of the credit for pushing the model from the lab out to the real world (although Larry Ellison at Oracle claims his firm has been providing cloud computing services for years.)

Cloud computing can take place on a private cloud, a public cloud, or a hybrid of the two. The exact definition of what is private and what is public seems a bit fuzzy to me, but the basic idea is that the private cloud is usually hosted by a private company for its own uses, whereas the public cloud is hosted by one or more other companies who are sharing resources among several or even thousands of clients. Large companies (with billions of dollars in revenue) tend to stick with the private cloud for most situations, whereas smaller companies are embracing public cloud services.

Currently there are three flavors of cloud services: SaaS, PaaS, and IaaS. SaaS, or Software as a Service, is the leader. But IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) are growing rapidly. Rackspace, Google, Amazon, IBM and Oracle are all pushing hard on cloud computing, with offerings in all three flavors. Microsoft seems to be playing catchup, but it is often a mistake to underestimate them.

Cloud computing has a number of strong advantages over traditional computer service delivery. These include:

Reduced Costs --- Instead of buying servers and software licenses, cloud computing clients simply buy what they need, when they need it.

Faster "Time to Value" --- Setup time is minimal. In many cases, cloud computing clients can get their application, platform, or infrastructure set up and working within hours (or even minutes)

Improved Reliability --- As long as the cloud provider is doing their job right, availability is often extremely high, sometimes in the 99.99% range.

Improved Availability --- Maintenance and upgrades are handled according to a tight schedule, so downtimes from software and hardware upgrades are infrequent and during off-hours

But these advantages also come with a price. Security and privacy are the two biggest concerns, but there are other risks. As a cloud computing client, you are almost totally dependent on your cloud computing service provider. If your Internet connection goes down, you lose service. If they go out of business or have a major disaster, you could lose everything.

One way to look at which services should go on the cloud, and which services shouldn't, is to look at "push factors" vs. "barriers", where the push factors are the advantages, and the barriers are the risks or disadvantages. CRM, or Customer Relationship Management, has strong push factors (rapid deployment, lowered costs, high availability, etc.) and low barriers (minimal security concerns, minimal privacy concerns, etc.). Whereas things like disaster recovery and business continuity planning have low push factors (limited costs savings, infrequent need for service, etc.) and high barriers (security and privacy). So things like CRM, email, web hosting, time management, project management, etc. are all moving rapidly toward the cloud, but anything with a high security or privacy component is not.

Right now there seems to be a huge push toward cloud computing. For small businesses ---- the early adopters --- there is very little choice. The minimal initial capital investment hurdle, significant cost savings, high reliability, and quick deployment give small businesses a competitive edge. But it seems very telling that the largest businesses are going slow. I am very concerned that another round of economic calamities or a major Internet shutdown will have a huge impact on cloud computing, and the victims will be small businesses, not the Fortune 500. But the wave of companies embracing cloud computing is growing quickly, and this means there is an opportunity for small companies to create new SaaS, PaaS, or even IaaS offerings with tremendous revenue potential.

If you are thinking of trying a cloud computing service, be sure to review the terms and conditions carefully, as well as the reputation of the company. If you are considering starting a new cloud computing service, do as much market research and analysis as you can. According to IBM, 30% of IT decision makers require a 20%-30% cost reduction before they will consider using a public cloud computing service.

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