Cloud // Software as a Service
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10/30/2008
06:15 PM
Rob Preston
Rob Preston
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Down To Business: Microsoft, Industry Still Hang In The Cloud Ether

Many customers still don't understand what "the cloud" is. Vendors don't help when they use the term to describe just about any product--or planned product--delivered from or touching a data center.

Now that microsoft has roughed out plans for a range of cloud-based services (see story, "Microsoft Stakes Its Place In The Cloud"), cloud computing has officially arrived ... well, at least as a mainstream concept. If cloud computing is to continue moving beyond the cumulo-nebulous phase, the leading IT vendors must start delivering on their promises, which have been lofty even by tech industry standards. Microsoft, for one, isn't even committing to a timetable for the cloud-based developer, operating system, and application services it started talking about last week, once again putting the market on hold while it catches up.

In fairness to Microsoft, other big enterprise IT vendors are still aspiring to the cloud but producing little of substance. IBM, for example, announced last November its plans for Blue Cloud, "a series of cloud computing offerings that will allow corporate data centers to operate more like the Internet by enabling computing across a distributed, globally accessible fabric of resources." The first Blue Cloud offerings were due in the spring, but we haven't heard much out of IBM, mostly just talk about aligning with Google in some way. SAP has made noises about offering its ERP software over the Internet as a subscription service, but it's still loath to put its conventional license business at risk, especially as it feels the effects of an economic slowdown (see story, "SAP Americas CEO Cites Steep Drop In Customer Buying"). Similarly, Oracle worries that SaaS will undercut not only its shrink-wrapped application business, but also its relational database, which underpins most conventional apps. Amazon Web Services and Google offer cloud-based computing, storage, and software services today, but enterprise customers remain few and far between.

Salesforce.com, which put software as a service on the map with its CRM offerings, will use its Dreamforce conference in San Francisco this week to advance its latest cloud initiative: "platform as a service," by way of its Force.com business application development environment. Salesforce touts cloud computing as the biggest enterprise IT shift since mainframe to client-server, but even Salesforce acknowledges that shift won't happen overnight, as customers are wary of security, standards, latency, and other issues. (Meantime, how many mainframes still underpin banking, insurance, university, and other big institutions? IBM reported in its most recent quarter that revenue from its System z mainframe products rose 25% year over year, so even the demise of this first-generation tech platform has been greatly exaggerated. But I digress ...)

The cloud evangelists are touting their service and platform approaches as ideal for increasingly cost-conscious IT organizations: Their offerings aren't capital-intensive and let customers pay for only what they use. Researcher IDC is on board with this logic. Having recently surveyed 244 executives about what it calls "IT cloud services," IDC predicts the market will almost triple, to $42 billion, by 2012. Citing cost and service-delivery advantages for customers, IDC says cloud computing will account for 25% of IT spending growth in 2012 and nearly a third of growth in 2013.

The problem comes when customers still don't understand what "the cloud" is. Vendors don't help when they use the term to describe just about any product--or planned product--delivered from or touching a data center. "Cloud" clutters the vendor lexicon much as "compliance" and "e-commerce" did in another day. You know a market's immature when the industry can't agree on a definition.

So here goes, compliments of my colleague John Foley, editor of InformationWeek's PlugIntoTheCloud.com. Cloud computing refers to highly scalable IT resources--software, CPUs, storage capacity--that are housed outside of company data centers, available on demand over the Internet, and whose usage is measured and billed incrementally. Private clouds mimic those characteristics inside the company firewall but lack the economies of scale of public clouds.

Now that we have a workable definition, bring on the products--preferably ones we can evaluate and buy rather than just dream about.

Rob Preston,
VP and Editor in Chief
rpreston@techweb.com

To find out more about Rob Preston, please visit his page.

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