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Cloud Summit: SAP Sees Bright Future In Cloud Computing

Cloud computing is coming more quickly to smaller organizations, largely because it is financially compelling, a panel of industry CTOs and insiders agreed.

Thomas Claburn

October 15, 2008

4 Min Read

The IT forecast calls for widely scattered clouds, in the sense that cloud computing looms on the horizon.

That was the consensus among the panelists at Tuesday's Cloud Summit Executive conference at the Computer History Museum in Mountain View, Calif.

Cloud computing is coming, everyone seemed to agree, slowly to large organizations, more quickly to smaller ones, largely because it is financially compelling.

MR Rangaswami, co-founder of Sand Hill Group, presided over the event with the aim of reaching some consensus about the definition of cloud computing, providing some insight into where the clouds will be forming, and examining where new opportunities might shine.

The definition remained elusive. Cynics might prefer Oracle CEO Larry Ellison's insistence that cloud computing is marketing gibberish or free software guru Richard Stallman's assertion that cloud computing is a trap.

While any cloud computing offerings should be evaluated for gibberish and lock-in risk, such definitions are too broad to be meaningful. Every business has different needs and not every cloud computing service can meet those needs.

Columbia law student and tech blogger Luis Villa, in a recent blog post, observed that there are really four kinds of clouds: traditional applications, hosted elsewhere (Salesforce.com); services involving data that can't (yet) be managed locally (Google Maps); services that make creation of new data technically or economically feasible (Wikipedia); and services offering computing and storage, rather than data (Amazon Web Services, or AWS).

Vishal Sikka, CTO of SAP, at the conference, described for three kinds of clouds: Google App Engine and AWS-style platforms; outsourced clouds run by the likes of HP and IBM; and the clouds companies run themselves. He was there to argue that large enterprise software makers like SAP and Oracle still have a place where clouds gather and to pitch his company's vision of the SAP business suite as a single application that will eventually be able to serve any business need.

Among the descriptions of cloud computing heard at the conference, Amazon Web Services came up the most frequently. It offers the most clearly defined cloud play: a no-frills, pay-as-you-go computing infrastructure platform.

Cloud computing was described as having the following core characteristics: transparent scalability, usage-based billing, and off-premises operation.

More broadly, cloud computing can be thought of as the urge to stop worrying about how the bits flow in an organization, in order to focus on how the flow of bits can create business value.

And under that definition, Amazon Web Services falls short. As Navin Chaddha, managing director of the Mayfield Fund pointed out in a panel discussion, AWS is still hard.

In that difficulty, Chaddha sees the opportunity for new companies to help manage the cloud, to make IT disappear. If the cloud is indeed computing as a utility, as some definitions suggest, the complexities of coding and networking should be invisible to cloud customers, just as the delivery of electric power happens out of sight and out of mind of utility customers.

Many of the start-ups that will enable that transparency have yet to be started, but Chaddha and others at the conference expect to see them soon. That's where the opportunity lies, he suggested. Some of these cloud-enablement start-ups, like Zuora, a subscription billing and recurring payments service for online businesses, are already here.

Cloud computing works best for start-ups at the moment. Large organizations still aren't comfortable with the concept.

Putting your information in the cloud "feels like free fall," said Carolyn Lawson, CIO of California's Public Utilities Commission. "There's nothing that I can really grab on and touch."

As the CIO of a government entity, Lawson has to worry about regulations that don't apply to most start-ups. "I am personally accountable for what happens to the data in my charge," she explained.

That's not to say she can't or won't do things in the cloud, but she stressed that she has to be reassured to a far greater level that cloud services are reliable and secure. That means airtight service level agreements, security certifications, and guaranteed data portability.

Other organizations see things differently. "I'm more comfortable with my data in Oracles' data center than in my 40 person IT shop," said Anthony Hill, CIO of Golden Gate University, an organization that has embraced the cloud model.

By the time the conference concluded, it was still not entirely clear where clouds will be forming or what shape they will take. But for companies that want to build IT infrastructure without major capital expenditure, the future of cloud computing looks bright.

To further understand how companies large and small are approaching cloud computing, InformationWeek has published an independent report on the subject. Download the report here (registration required).

About the Author(s)

Thomas Claburn

Editor at Large, Enterprise Mobility

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful master's degree in film production. He wrote the original treatment for 3DO's Killing Time, a short story that appeared in On Spec, and the screenplay for an independent film called The Hanged Man, which he would later direct. He's the author of a science fiction novel, Reflecting Fires, and a sadly neglected blog, Lot 49. His iPhone game, Blocfall, is available through the iTunes App Store. His wife is a talented jazz singer; he does not sing, which is for the best.

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