Everybody Loves a Cloud


Is cloud computing just the latest fad?

The IT industry loves a new buzzword, even if it’s just a new word and not a new concept. Cloud computing is the buzzword du jour and software vendors small and large want everyone to enjoy life in the cloud.

But is cloud computing really that new? Or is it a move back to centralized systems, reminiscent of the days when the mainframe was king with a dash of Software-as-a-Service added?

Some cloud resources are available as a utility (metered service, conceptually similar to a public utility such as the electric company) or as a service (billed monthly or annually regardless of usage). The concept of utility computing dates back to the 1960s and was in use in the 1990s for asynchronous transfer mode (ATM) networks. As for the cloud itself, as Amy Wohl recently reminded me, a quick look at network slides from the 1980s show clouds sitting above every network. I recall the term “telecom cloud” being used to describe VPN networks deployed by telephone companies because the routing for data traffic was, for all intents and purposes, somewhat cloudy.  And Larry Ellison of Oracle asked,  at a recent Churchill Club presentation, if it were true that companies such as Google were based on “water vapor.”

Needless to say, there are some clear and unequivocal advantages to cloud computing. A company can deploy IT resources on demand with little or no up-front cost. Therein lies the rub. While the barrier to entry (for end-users) is minimal, the usage or monthly fees continue ad infinitum, unlike licensed software for which there is only a one-time cost. Granted, larger organizations pay maintenance and support charges for their enterprise software, so this may be a greater expense to smaller organizations that have not paid such fees in the past. Companies that migrate a good part of their IT infrastructure to the cloud can eliminate significant costs for hardware and upkeep, not to mention IT personnel.

Cloud computing has also enabled new business models. Indeed, the rise of mobile computing and smaller smart devices (such as netbooks and smartphones) – devices with little storage and relatively few installed applications – may serve to drive the next generation of cloud computing applications. Cloud computing has also allowed software companies to develop applications tailored to individual consumers (as opposed to large companies) and this is yet another area where we are just scratching the surface in terms of innovation. It’s important to keep in mind that some knowledge workers within larger organizations may use applications from the cloud intended more for consumers and may ask for enterprise services from the cloud based on their experiences; others may sneak in applications (under the radar of their IT departments) that they need to do their work, making the distinction between enterprise and consumer cloud apps a bit blurry.)

Despite the hype, cloud computing comes with some baggage. There is no agreement on standards or one single architecture. In fact the one thing for which there is consensus is that there is no true consensus as to what cloud computing really is.

This doesn’t mean that managers shouldn’t investigate whether cloud computing might work for their organizations. But before they do, there are three factors to consider.

First and foremost is vendor lock-in, a concept familiar to many enterprise software buyers. Competing cloud providers have their own standards and formats, many of which are incompatible with one another. Indeed, even the simple (in concept) task of moving data from one cloud to another is fraught with peril.

Second is storage. While large vendors such as Salesforce.com have built up considerable trust with the user community, there are new entrants to the cloud arena every day that haven’t earned their stripes. Is your organization’s data secure? Are proper security precautions in place, both in terms of on line access as well as physical egress? For free services, what do the vendor’s terms of service allow it to do with personal data?

Last, and possibly most important, is the data stored in the cloud safe from loss? While cloud providers have gone down from time to time (Google’s Gmail service has had seven outages so far this year), the point of safety was driven home quite strongly last week by the T-Mobile Sidekick debacle, in which tens of thousands of users lost myriad personal data (including address books and photo albums, among other assets), while said data was entrusted to the aptly-named Danger subsidiary of Microsoft.

Jonathan B. Spira is CEO and Chief Analyst at Basex.

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