It's been likened to the Industrial Revolution in terms of its potential to change lives. But just what is cloud computing and how can companies turn it to their advantage?
It's been likened to the Industrial Revolution in terms of its potential to change lives. But just what is cloud computing and how can companies turn it to their advantage?
Likened by some technophiles to the Industrial Revolution, cloud computing is already transforming the world around us and it promises to shape our future world too. Despite its growing importance, however, many companies are struggling to pin down exactly how this technological miracle can truly benefit their balance sheets.
The practice of cloud computing is something with which consumers all over the world are already relatively familiar, even if the term itself leaves the lay technophobe scratching their head. Sending an email using a third-party Web-based email service provider, such as Google Mail, for example, is a basic form of cloud computing.
In this example, a user accesses a Web-based application maintained by a third-party via his or her Internet connection and browser. The email application itself and all the data it stores exists not on the user's own computer but is delivered as a service via "the cloud" of the Internet.
Christian Klezl, vice president and cloud leader at IBM in Northeast Europe
Christian Klezl, vice president and cloud leader, for International Business Machines Corp. in Northeast Europe says.
"Cloud computing represents a paradigm shift in how IT infrastructure and software are delivered and consumed."
This shift is most pronounced when viewed within the context of corporate IT. Companies have traditionally purchased or developed software application products and maintained that software themselves. Most large companies, for example, operate and maintain their own corporate email systems.
The cloud-computing model represents the "natural evolution" from this proprietary approach to software provision, says Mr. Klezl, by enabling IT products to be consumed as services. These services are provided by a third party over the Internet and can be consumed on-demand and on a pay-as-you-go basis.
Klezl says.
"Cloud computing is built on the concept that you have a distributed spectrum of users who can source data or services from a centralized pool of resources, at any time in any place, when they need it."
Power provision is a commonly used analogy. Most homes and companies do not build and run their own onsite power generation but instead source electricity from the grid when they need it. This model allows consumers and companies with varying power requirements to scale their power consumption up and down at their convenience, and to pay only for what they use.
Simon Wardley, a researcher at CSC's Leading Edge Forum, a global research and advisory program for CIOs
Cloud-computing advocates envisage the IT phenomenon in the same terms. Simon Wardley, a researcher at CSC's Leading Edge Forum, a global research and advisory program for chief information officers says.
"With cloud computing we're seeing a shift from an IT product-led world into an IT service or utility world."
The building blocks of cloud computing have existed for nearly a decade, but the IT model has only gained major traction in recent years as its enabling technologies, such as broadband, have developed, and as business processes and attitudes have matured.
Together, these developments have conspired to promote cloud computing as a major force in the global IT market, from NATO to manufacturing giants such as Siemens AG. By 2015 some 50% of Global 1000 enterprises are expected to use cloud computing for their top 10 revenue-generating processes, according to Gartner Inc.
For such institutions, cloud services offer many benefits, not the least of which is cheaper IT. Mr. Wardley says.
"Cloud gives you economies of scale and allows companies to establish a closer link between what they use and what they pay."
By allowing companies to mobilize IT resources quickly, cloud computing also improves business agility. Alan Goldstein, chief information officer for BNY Mellon Asset Management says.
"From an institutional standpoint, the benefits of cloud computing are concrete. You're able to more rapidly deploy infrastructure and applications and to scale-up horizontally. That ability to be able to rapidly provision is really meaningful in terms of expediting speed to market."
Because cloud-computing is a Web-enabled phenomenon, the model also allows companies to access their IT services and the data stored in it from anywhere in the world. Dominic Shine, chief information officer for Reed Exhibitions, a conference company that uses around 10 different types of cloud-based services says.
"The key for us is to be able to run our business and access our business data anywhere in the world."
But while improved cost-efficiency and greater business agility are attractive, what really excites cloud enthusiasts are the macro-economic possibilities.
Many cloud evangelists believe that the phenomenon enables companies to boost overall productivity by allowing them to satisfy what Mr. Wardley describes as the "long tail" of unmet demand for IT resources found within most firms. This has led some experts to liken cloud computing to the Industrial Revolution.
Far-fetched though this may sound, research published by the London-based Centre for Economics and Business Research in December seems partly to reinforce this view. It predicts that the increased productivity, job creation, business development and competitive advantage brought about by cloud computing will generate an additional €763 billion ($1.04 trillion) in economic value and will create some 2.4 million jobs in Europe during the next five years.
But not everyone will benefit equally. Cloud-computing—like the Internet it is enabled by—is a disruptive technology. By making IT cheap and accessible, cloud services threaten to lower the barriers to entry in a number of industries and in some instances may undermine the prevailing operating model.
George Hu, executive vice president for platform and marketing at Salesforce.com
George Hu, executive vice president for platform and marketing at Salesforce.com, the 10-year old enterprise cloud-computing company that is widely regarded as a poster-child of the phenomenon says.
"One of the unique things about cloud computing is that it's a very democratic technology. It's the first technology that can service companies of all sizes."
Reed Exhibitions' Mr. Shine agrees:
"Years ago, if you were a small company, you had access to a small number of vendors because that's all you could afford. But today, small companies can access the powerful IT of their larger rivals. If I were setting up a start-up, I would run the whole thing from the cloud."
Barriers are also set to be pulled down in the consumer world where cloud computing promises to make software increasingly accessible and easy to use. Take Google Inc., another icon of the cloud-computing age. In December, the IT services giant launched a prototype laptop (The Chromebook) that requires no software to be installed whatsoever: All applications and data are stored and delivered by Google via the Internet.
The Google prototype provides a glimpse of a future in which users are not required to pay up-front for software, or negotiate painful software installations, upgrades and anti-virus programs. Instead, all applications and data will be stored in the cloud, which consumers will be able to access from any location.
Mobile technologies are rapidly making this a reality. The emergence of the super-functional smartphone and tablets, such as the iPhone and iPad, are bringing cloud-based applications, such as the hyper-successful social networking application Facebook and the micro-blogging application Twitter, onto mobile devices—along with a wide range of other applications. By moving onto mobile devices, applications guarantee their own ubiquity and relevance.
In time, more and more cloud-led IT services will follow suit, including business applications, says Mr. Hu.
"The Facebook model is now the new model for the future: Why can't business applications be like Facebook? That is, inherently social, in the cloud, and accessed more and more through mobile devices."
Cloud computing is still an evolving IT model, however, and some IT chiefs believe it will take time for all companies, particularly highly regulated industries such as financial services, to embrace it.
Michael Fahy, global head of IT infrastructure at investment bank Nomura says.
"The cloud will be important in people's IT strategy: The prize is pretty considerable, but the commercial model is not yet sufficiently developed to operate on the scale we want to operate on, and there are still questions around data security."
The European Union shares these concerns; last year it recommended the creation of standards and a regulatory framework for cloud computing. But this is unlikely to impede the technology's advance, believes Mr. Wardley:
"Do you have a choice when it comes to the advance of cloud computing? Not really."
COMMENTARY: Just how big is cloud computing, you ask? Check out this interesting infographic from Wikibon:
[Click Image To Enlarge]
Cloud computing is a very broad-based industry space, but the creative people Lustratus REPAMA have broken down the market into five main segments
- Infrastructure Services.
- Platform Services.
- Software Services.
- Cloud Software.
- Professional Services.
Lustratus REPAMA also prepared this very interesting SlideShare presentation describing the cloud computing market segments:
A Market Landscape/Taxonomy/Segmentation Model for Cloud Computing Rev 1 (0.92)
According to IT solutions provider F5, there two types of cloud computing types: Opaque and Transparent. Each model is explained below
Opaque Cloud Computing Model
In an opaque cloud computing model all details are hidden from the organization. The hardware and software infrastructure details are not necessarily known or controlled by the organization but are completely managed by the cloud computing provider. This allows for a completely on-demand environment in which all resources necessary to deliver applications according to service level agreements are automatically provisioned, de-provisioned, and managed by the cloud computing provider.
The organization need only develop and deploy the application to the cloud, the rest of the details are opaque and handled for the organization by the cloud computing provider. Most opaque cloud computing providers currently allow the organization to determine how many "instances" of their application is running at any given time, with the details of provisioning the appropriate resources to support those instances hidden from the customer view.
In many ways, SaaS (Software as a Service) providers such as Salesforce.com have been using an opaque cloud computing model for many years, as the implementation details in terms of hardware and software infrastructure are completely hidden from and unavailable to the customer (the organization). The difference between a SaaS offering and an opaque cloud computing model is in the application development and deployment processes. A SaaS offering such as Salesforce.com orGoogle Apps requires development of applications on a specific platform, almost always proprietary to the SaaS provider and non-negotiable.
An opaque cloud computing provider allows the organization to determine the platform upon which applications will be deployed, more akin to some of Amazon's cloud offerings, such as EC2, though the underlying operating system and hardware may not be known due to the extensive use of operating system virtualization by the cloud computing provider. This is why virtualization is inexorably tied to cloud computing - it is the most efficient way to deploy an application to a remote, virtual data center without the overhead of configuration and management of the incredibly high number of combinations possible for application platforms. Opaque cloud computing providers like Joyent have an infrastructure already constructed to scale. Customers may be aware of what that infrastructure comprises, but cannot necessarily specify the choice of switches, routers, or application delivery infrastructure.
Transparent Cloud Computing Model
In a transparent cloud computing model the organization is left with determining its specific needs. The organization decides how much computing power it requires, what hardware and software solutions it will require, and it manages its provisioned resources in the cloud.
The transparent cloud computing model is more akin to an outsourced data-center, a virtual data center if you will, than it is to an on-demand opaque cloud computing model. The acquisition and provisioning of resources becomes much difficult in a transparent cloud computing model.
The prospect of automated on-demand computing in a transparent cloud computing model is good and in some cases already available for some functions. The same mechanisms used to manage the opaque cloud computing environment could become customer-facing ones. Some management and configuration of cloud computing resources are currently being offered to customers by providers like RightScale, though what infrastructure functions can be delegated to the organization vary greatly from provider to provider.
Rackspace is a good example of a transparent cloud computing model, as are many of the traditional hosting providers. The transparent cloud computing environment is still evolving, currently comprising several different models for architecting your infrastructure. Some, like Areti, offer flexibility in infrastructure choices by taking advantage of virtual appliances. This allows the customer to choose from a number of application and network infrastructure solutions while keeping the cost of acquisition and management down for both the provider and the customer. Other providers continue to focus on physical infrastructure deployment in a fully or collaboratively managed environment, understanding that some organizations will require dedicated, proven solutions if they move into the cloud.
Courtesy of an article dated February 15, 2011 appearing in The Wall Street Journal's Technology
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