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Cloud Computing and the Promise of On-Demand Business Innovation

The wow isn't just about technology; it's about process flexibility and reuse that will enable enterprises to quickly serve new customers and launch new lines of business.

Peter Fingar
Peter Fingar
We are witnessing a seismic shift in information technology, the kind that comes around every decade or so, and it will have a huge impact on business -- especially in today's economy.

First things first: What the hell is Cloud Computing? Definitions and opinions of cloud computing abound. At one point Larry Ellison, CEO of Oracle, declared it to be "complete gibberish" and "insane."

Reasons the enterprise shouldn't adopt cloud computing abound: security, privacy, lack of cost savings, data governance, migration issues, and legal and regulatory issues. Pick your favorite.

Sure, consumer-level cloud computing is cool, but why should the enterprise be interested in this "insane" stuff, as Ellison called it? Whatever the definition or concern, cloud computing, still in its infancy, is game changing. Remember how the retail book industry was slow to grasp the "non-secure, unreliable, poorly-governed" Internet? Then along came Amazon. Expect the same phenomenon with cloud computing.

This article, which is adapted from the new book Dot Cloud: The 21st Century Business Platform, (Meghan-Kiffer Press , 2009), explains that the story of cloud computing isn't about technology; it's about enabling businesses to do things never before practical that will drive the enterprise to embrace cloud computing. The current economic crisis will accelerate the adoption as companies cope with unexpected change, do more with less and adapt their business models to the current realities. Supply-side opportunities for cost savings made possible by cloud computing receive the majority of attention and focus. One reason for the cost focus is that expensive company data centers are often idle more than 90 percent of the time due to over provisioning to handle peaks. Private clouds can change all that, enabling companies to gain economies of scale while consolidating their data centers through virtualization.

But the implications of cloud computing go far, far beyond cost savings. As we will explore, business architecture is the central issue of enterprise cloud computing. No, there won't be a "big switch" where companies dump their data centers on a given Friday and move to data-center boarding houses (public clouds) in the sky the following Monday. The PC didn't eliminate the mainframe; the Internet didn't eliminate the PC. In fact, most large companies still maintain their back-office systems of record on mainframe computers behind the firewall; always have and probably always will. But it's those outward-facing front-office business activities that live on the Internet that must be woven into an overall business architecture. In short, Enterprise IT must extend out to Consumer IT, otherwise those companies simply won't be able to compete. As we'll explore, Web 2.0 has changed the landscape with social networks, and companies can ill afford to ignore the shift.

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