Cloud Computing: The Ultimate Recession Technology

The recession is hurting <EM>everyone</EM> ... or is it? This could be the break out year for cloud computing vendors who are ready and waiting for a flood of businesses to embrace low cost, no investment, no management computing in the cloud.

Benjamin Tomkins, Contributor

January 28, 2009

4 Min Read

The recession is hurting everyone ... or is it? This could be the break out year for cloud computing vendors who are ready and waiting for a flood of businesses to embrace low cost, no investment, no management computing in the cloud.Faced with stagnant revenue and tight credit business owners are leaping at every opportunity to slash costs. The trick, of course, is not cutting so deeply that the business is crippled. And that's where the appeal of cloud computing become undeniable. You could argue that the down economy is a boon to cloud computing -- case in point, here's 7 Reasons Cloud Computing Is Fed By The Bad Economy.

The recession may be just the tipping point that cloud computing needed to reach critical mass. A report from BroadGroup, a British consulting firm, cites an investment bank estimate that pegs the market for cloud computing at $100 billion. Not exactly TARP bailout numbers, but still quite a few zeros.

The low cost and simplicity of cloud are the drivers for adoption and more and more businesses are recognizing the opportunity, taking cues from adoption in the consumer ranks (an instance of consumer technology leading IT). As the BroadGroup report says:

"The cost arguments for moving to the Cloud are becoming more measurable and concrete; big-iron providers of IT products and services are beginning to identify Cloud as a priority and the surge in consumer adoption of Cloud Computing through the use of Yahoo! Mail, Flickr, or Google Docs, even though they may not be aware they are doing so, collectively demonstrate new data points and the progress of Cloud so far."

And then the kicker: "For companies that are considering deploying enterprise software, it [cloud computing] can offer potential savings of up to 25% of the total cost."

And the roster of vendors placing big bets on the clouds is growing fast. This week alone, Cisco announced a cloud server, a fresh round of rumors about Google Gdrive, and Symantec rolled out a Web 2.0/Cloud Webtop.

More vendor offerings will drive wider acceptance, but some small and midsize businesses remain hesitant about moving to the cloud according to a survey from Rackspace (PDF) focused on cloud hosting. Less than a third some small businesses are considering cloud hosting, yet more than half of midsize businesses do plan to use cloud hosting.

There's some irony in those findings, as smaller companies that can least afford in-house IT resources stand to gain more, proportionally, from the cloud. The dominant reason small businesses gave for not considering the cloud was "no need for it." That may be true, but it also underscores that there's more work to be done on the acceptance front. For midsize businesses, the leading impediment is concern about security and compliance, the issue that's likely to bedevil cloud computing as obdurate users refuse to embrace computing they can't see and touch.

Cloud vendors could do with some evangelizing and the key issues aren't a mystery. Recently, bMighty associate editor Jennifer Moline, speaking about SaaS, pointed to some key steps and evolutions that will lodge cloud computing firmly in the mainstream.

So that's what needs to happen, but back to what's expected to happen. Predicting that 2009 is the year of cloud computing isn't granular enough. Fortunately, there are ample predictions that venture into the tall grass for a closer look.

InformationWeek's John Foley presented 10 predictions for the cloud in 2009 (click through for the details of each):

  • The Cloud Market Will Grow Steadily

  • Google Will Remain A Niche Player

  • Service Outages Will Be More Frequent, But Less Disruptive

  • Big Companies Will Embrace The Cloud

  • Microsoft Will Keep Customers On Hold

  • Enterprise-Class Management Tools Will Emerge

  • Cloud Startups Will Thrive

  • We'll See Public-Private Clouds.

  • Data Security Will Reemerge As A Major Issue

  • Oracle Will Become A Cloud Vendor

And for a a strident take on what will happen in 2009 for cloud computing, let's turn to Narinder Singh, co-founder of SaaS-provider Appiro, who says, "This year cloud computing made the leap from an interesting proposition to a viable option for even the largest of enterprises. In 2009 it becomes mandatory."

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