Look to the clouds for a silver lining

Chances are you have heard friends or business colleagues talking about “cloud computing”. You may even have been on the receiving end of a call attempting to sell it. Butwhat exactly is it? It appears that even those who might be expected to know all about it are a little confused.

According to research from the electronic document management software company VersionOne published in late June, 41 per cent of senior IT professionals admitted they didn’t know; of the remainder, 17 per cent thought it was internet-based computing, 11 per cent considered it a mix of internet-based computing, software as a service, software on demand or an outsourced or managed service. The rest thought it was a mix of all of those things.

Like many developments in technology, it is partly a new phenomenon and partly a dressing up of some reasonably wellestablished concepts that, in short, enable users to obtain the benefits of the latest computing breakthroughs without having to install costly new systems. Essentially, cloud computing enables you to use your computer screen and keyboard as a means of gaining access to a computer managed for you elsewhere.

So, for example, if you use Hotmail or Gmail you’re using cloud computing because your mail is listed on the internet rather than on your computer. The technology research company Gartner describes cloud computing as a service on towhich companies will log, but stresses the “service” rather than the “log-on” element. The analyst Rene Millman feels it is particularly well suited to the start-up organisation. “Cloud computing is succeeding where on-demand computing services are needed and cannot be served by traditional computing methods,” he says. “This is particularly true for new startups looking to provide ‘web 2.0’- type services. Many may not have the resources to tool-up or build a data centre.”

Accordingly, Rococo Chocolates is using a cloud computing platform provided by NetSuite, aUS-based provider of business management software, to develop its retail business, while the online work tools supplier Justoffbase is using NetSuite to obtain streamlined business processes over the internet to enable its small staff to manage a rapidly growing turnover. “This also works for larger enterprises looking for extra computing services to be run as an operational, instead of capital, expense. This greatly decreases the time from the inception of a particular project to full-scale running without having to pay for a large upfront cost,” adds Millman.

Among the larger companies adopting cloud computing are the computer games company Nintendo, which runs its security on a cloud system hosted by the internet security specialist Astaro, and Wolsey Securities, which uses a web-based system to provide finance for housebuilders across the UK. Interactive Data Corporation, a leading researcher in the technology sector, says in the enterprise resource planning (ERP) software field cloud computing will grow 40 per cent this year, while traditional installed-onthe- premises ERP will shrink by 1 per cent.

Gartner says the market will reach a value of $150bn (£104.8bn) by 2013. Current worldwide cloud services revenues are on track to pass $56.3bn this year, compared with 2008 revenues of $46.4bn. The sellers of the technology are excited at the possibilities. Martin Schneider is director of product marketing at Sugar- CRM, a customer relationship management company operating under the slogan “The cloud is open”. He says: “The cloud is many things – but we are seeing it as analogous to open source at its roots. Those leveraging cloud components are not locked in; rather, they can move their cloud deployments from private to public clouds [managed by online retailer Amazon or webhosting company Rackspace, for example].

Cloud-based application systems should also be written on more open, standards-based languages and components to foster interoperability and common development communities.” This month, the International Telecommunication Union is holding a meeting designed to prevent any confusion in standards. Art Levin, head of the standardisation policy division at the ITU’s telecommunication standardisation bureau, says the organisation’s chief concern is that cloud technology has to be interoperable. He says: “There has to be plurality. People should be able to move from one provider to another.” It sounds so simple, and as a principle it is. Technology has rarely been so accommodating, though. Betamax customers couldn’t use their tapes in VHS machines, HD DVD customers cannot put their obsolete discs into Blu-ray machines, and now the ITUwants to make sure at the small end a Google Apps customer can move to Microsoft Live Workspaces painlessly, and at the upper end a Rackspace customer has no problem making a similar move.

The business case also has to prove itself. Kerrie Lee, sales and support director of Apple Macintosh tech support operation AA Mac, is not totally convinced. “For our typical clients – small to medium-sized creative businesses – applications like CRM and database content can be just as effectively housed on an intranet or not put online at all. Cloud computing isn’t necessary for most of them. This is particularly true because most creative businesses are producingwork that will ultimately be in the public domain but is highly confidential while on the drawing board.” However, experiences like that of Asuitthatfits.com suggest much is to be gained from the cloud.

But there are hurdles to overcome and the IT industry is taking these seriously. What is for sure, though, is any business setting up now or seeking a cost-effective means of upgrading its technology should be looking to the clouds. There could be a silver lining.