Late last year, Larry Ellison of Oracle remarked that “We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud computing other than change the wording of some of our ads. That’s my view.”
There is truth in what he said. We all use Hotmail, Yahoo and Gmail for email. We’re mostly all used to working in a cloud. So what exactly is new with cloud computing?
The idea of leasing processing and storage space online with a company such as Amazon (Amazon’s Elastic Computer Cloud) looks like the leased main-frame concept of the 80’s. Except now, the services are internet based and we have a diverse collection of applications and operating systems. Add virtualization to the mix and essentially cloud computing is a new term for an improved version of a concept that’s been around for a long time – commoditizing computing resources.
Oracle customers for example, especially smaller ones, could benefit substantially from the cloud computing concept where they can be freed from the intricacies of maintaining both software and hardware. But then, as a customer you lose control. If Oracle makes all their applications software available online using a SaaS model, it could very well attract new customers who are willing to sacrifice control for convenience.
Instances where one is not likely to buy into cloud computing:
Location of Critical Applications
Larger customers may not buy into the concept. Think about this, how much are you willing to trust an outside company to manage your critical applications? Say like AIG or Lehman Brothers a cloud computing
service provider goes belly up rather fast for whatever reason? What exactly are you going to do?
How Many Platforms?
What happens if your company used multiple application platforms and one cloud computing service provider cannot support all platforms? Are you going to use multiple clouds?
VMware has a solution for this and their virtualization technology may very well make then an acquisition candidate (Without virtualization cloud computing is really not possible).
Cost vs. Convenience
Your applications still sit on a server somewhere. If at some point your application usage requirements are such that you really need dedicated ownership of a server’s resources, would you really save money utilizing a cloud computing environment? Would not using a managed server be a better option?
The Internet is not 100% Reliable
How many companies are going to feel comfortable about depending upon their ISP to reach their critical applications/data?
Privact and Legal Requirements
I would assume that most cloud computing data centers are based in the USA. Just yesterday, there was news of UBS handing over confidential tax records to the US tax authorities (not a bad thing in my opinion).
How data contained within cloud computing data centers are governed and made available to government authorities will be of considerable concern to companies that are not American. This is still a legal gray area.
Liability
Does anyone read the fine print about liability? Zoho, GoogleDocs do not guarantee that your data is 100% safe. They are certainly reliable but that’s not the same as a 100% data security guarantee. What happens if a company loses their sales leads to a competitor who hacked into one of their sales accounts available online?
Instances where one is likely to buy into cloud computing:
Small Companies and Start-ups on a Budget
Smaller companies who wish to provide a world class experience to their application users but with a limited budget, would find cloud computing to be a welcome alternative to huge upfront costs. The idea here would be to start making money first before investing into dedicated hardware and infrastructure.
Scalability
Say you a have a new online service that may become the next big thing overnight. A cloud computing environment can give you the additional computing power seamlessly if you have a surge of new users/customers.
Mobile Applications
If your workforce is geographically dispersed, chances are that your workers are accessing reporting, applications remotely. In such scenarios it may make more sense from an availability point of view to use a cloud computing environment to serve applications.
Lower Cost Hardware
Your workers will have the added advantage of using the new range of sub $300 Netbooks from Acer/Asus/Dell since they will not need substantial localized computing power.
Online office suites like Zoho and GoogleDocs are good examples of online applications that are widely used.
Unlimited Storage Capacity
This is one of those features that can be called a plus but really is not, since most computers today come with atleast a 150GB hard drive. So unless you’re collecting movies or something of that nature, this is not really a huge plus for end-users. From an enterprise point of view, storage only gets cheaper with time.
Native Group Collaboration
If 10 people need to look and comment on a document, it becomes easy to do so with a cloud based application.
In conclusion, I think cloud computing will become an accepted means of delivering software as a service (SaaS). Cloud computing will initially be adopted more by those companies that are starting up and who are keen on saving on tech infrastructure costs and by smaller companies who cannot afford to maintain a dedicated infrastructure to deliver online services. But it will take a certain amount of time for the model to mature to a point where security, reliability and legal issues have been worked out for large corporations to become comfortable.
VMware Cloud Demo Video here (really good intro)
http://download3.vmware.com/vcloud/demos/cloud_demov2.html
Some references:
UBS to ID clients accused of tax evasion
http://money.cnn.com/2009/02/18/news/companies/UBS.reut/index.htm
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