Cloud Computing is a revolution that will define IT in the second decade of the 21st Century. This new form of computing is perfectly poised to provide solutions to a host of business problems within organizations large and small. Cloud Computing will be the catalyst for the long predicted notion of “ubiquitous computing”, enabling this revolution through a number of means:
2010 marked the escalation of the war of words between the respective CEOs of Oracle and Salesforce.com, Larry Ellison and Marc Benioff. In the words of these larger than life figures, we can actually see an outline of many of the themes that will be explored in the following pages. Is Cloud Computing fundamentally different from what came before? What does it mean for an organization to “do” Cloud Computing? These are the questions that one must ask to answer the question “Is Cloud Computing a Revolution” or simply version 2.0 of a continuous series of innovations.
For his part, Oracle’s Ellison has a history of discounting Cloud Computing as no more than a new name for what has gone before. In a 2009 interview  that has become somewhat of a web cult classic, he said:
“All the Cloud is, is computers in a network....Our industry is so bizarre. I mean, they just change a term and they think they’ve invented technology.”
In some ways, Ellison is correct. Many of Cloud Computing’s most common features-virtualization, pay-as-you-go, reduced cost and moving IT responsibility to third parties - have been around much longer than “the cloud”. Yet there are those who argue that despite the similarities to what has come before, the cloud is fundamentally different.
In this camp, the most vocal foil to Ellison is Salesforce.com’s Marc Benioff, himself a former Oracle executive and protégé of Ellison. In what was a drama filled keynote speech at the Oracle OpenWorld 2010 conference, Benioff outlined his own definition of Cloud Computing: 
“Our definition of Cloud Computing is multi-tenant, it’s faster, half the cost, pay as you go, it grows as you grow or shrinks as you shrink. It is extremely efficient. We’re not going to show you computers taller than you. We’re not going to show you a cloud in a box because clouds don’t come in a box. They never have. That’s the whole idea.”
The “computers taller than you” refers to Oracle’s Exalogic Elastic Cloud, an impressive mix of hardware and software designed to power web-scale enterprise applications. The point that Benioff makes with his characteristic color is that Cloud Computing is not about individual business buying bigger and better hardware, what Oracle calls a “cloud in a box.” The cloud is about businesses giving up the cost and burden of managing and maintaining hardware all together. This author agrees with Benioff. Traditional hardware and software vendors, like Oracle, have a vested interest in arguing that Cloud Computing is best implemented by doing more of what companies have traditionally done to gain efficacies. Buy more hardware and software. Buy better hardware and software. In support of Benioff’s position, another well-known IT executive, Werner Vogels of Amazon Web Services, commented that that “if you have buy more hardware just to get started it is not a cloud...”.
So just what “is” Cloud Computing, and why it is so different from what has come before? The following pages will detail 4 main areas in which Cloud Computing allows businesses to break from the past:
Each of these areas does not itself create a computing revolution, virtualization as Ellison would point out, has been around for some time, but together, they are changing computing forever. Let’s see how.
Technology has a way of grinding on, despite of vested interests of vendors and industries built upon a particular way of doing things. To understand the revolutionary qualities of Cloud Computing, it is appropriate to utilize a well-worn, but accurate analogy that compares Cloud Computing to a traditional utility service like water or electricity. Nicholas Carr’s book The Big Switch  is an excellent introductory read to this subject. In a previous article appearing in the Spring 2005 issue of the MIT Sloan Management Review, Carr wrote that;
“...As a business resource, information technology today looks a lot like electric power did at the start of the last century [when it was routinely produced by individual businesses rather than utility providers]... executives are routinely sidetracked from their real business... by the need to keep their company’s private IT infrastructure running smoothly.”
Noting the similarities between computing and a technology that most would agree is best handled by specialists rather than individual firms, Carr then moves onto a discussion about the consequences of self provisioning infrastructure and the resulting overcapacity that often accompanies it:
“When overcapacity is combined with redundant functionality, the conditions are ripe for a shift to centralized supply. Yet companies continue to invest large sums in maintaining and even expanding their private, subscale data centers. Why? For the same reason that manufacturers continued to install private electric generators during the early decades of the 20th century: because of the lack of a viable, large-scale utility model. But such a model is now emerging...”
The model that Carr says in emerging is Cloud Computing. Cloud Computing provides specific economics that are beneficial under many situations – especially anytime demand is erratic, the organization is in a state of change or when pressure comes to bear to move from CapEx to OpEx. While the metaphor comparing Cloud Computing to utility power helps explain the nearly inexorable forces compelling business to adopt this new model, it doesn’t position this latest technology in the more recent context of massive technological shifts. For that, we can look at the shift that saw mainframes transformed into clouds over the course of only a few decades.
It is worth briefly reviewing where Cloud Computing sits in the continuum of computing innovations, each of which were seen as revolutionary in their time. Initial widespread corporate computing occurred within a shared resources model where massive mainframe computers took up acres of space within dingy basements and users would book time for both the machines themselves and the skilled technicians who knew how to operate them. Their use case was generally narrow business analysis and hence computing had a very narrow sphere of influence.
With the advent of mini computers and later the personal computer in the 1970’s, we saw the ability to utilize the benefits of technology rolled out to a much broader audience. While still relatively expensive and functionally basic machines – the personal computer put computing onto (almost) any desktop in a reasonably well resourced organization.
The advent of the Internet however changed things forever, both from the perspective of the network and the perspective of individual computers. The increased reliability and reduced cost of the internet (in comparison to proprietary networks) along with the decreasing cost of computers, led to increased use of web based applications. This along with the demand for application access via multiple devices using multiple form factors led to a rapid growth in Cloud Computing – at an infrastructure, a platform and an application level.
It is worth drawing parallels between the resistance to adoption of Cloud Computing, and that of adoption of the Internet generally. In his book Management Strategies for the Cloud Revolution: How Cloud Computing Is Transforming Business and Why You Can’t Afford to Be Left Behind, Charles Babcock discusses the competitive pressures that gradually lead to adoption of the Internet. As he points out:
“At one time corporations built out high-performance proprietary networks to link... different locations... As the Internet became the default connection between universities, government agencies and some companies, the cost of not having an [Internet protocol] network internally went up and up.”
So too will the economics of Cloud Computing render previous approaches as increasingly cost prohibitive. This step change in the approach to technology will be caused by four major shifts, the first of which is virtualization.
Picture if you will a traditional server. Housed in a noisy cabinet somewhere, a server is a computer that can generally do one thing at a time. It may fill the role of email server, database server or web server but running multiple processes concurrently risks reliability and efficiency so typically severs are operated as single use machines. While this may be a robust way of providing a service, it is inefficient since many times servers have excess processing capacity above what is used by a single application. Virtualization was developed to overcome this limitation of physical hardware as it enables multiple pseudo-servers to be run on one physical device. This division of a single physical server into multiple “virtual” servers containing multiple sets of segregated data is the backbone of Cloud Computing as it allows for far greater flexibility and resource utilization.
Virtualization not only brings efficiency gains in terms of processing power but also saves electric power, space and cooling since the number of physical machines running is greatly reduced. To illustrate this point, studies  have found that Cloud applications consume 90% less energy than on-premise ones.
While virtualization is an enabler for Cloud Computing, Cloud Computing itself enables some major shifts within organizations. The first of these is the tendency for Cloud Computing to democratize technology in a way not seen previously.
Cloud Computing is facilitating a seismic shift in terms of business development. Formerly entrepreneurs who wished to start a business had to invest significant capital into hardware and software licenses. Even the simplest of businesses required expensive software licenses, a server or two and the associated administration cost of keeping it all running.
The availability of Cloud Computing solutions has led to a massive shift in the availability of computing power. It is now almost effortless for an entrepreneur to set themselves up with some infrastructure and applications upon which to run their business. With many Cloud Computing provides, a server capable of running many of the most common web or business applications can be rented for around $11/month. A recent study by Github  indicates that less than 25% of Y Combinator start-ups are self hosting their web infrastructure. No longer is enterprise scale infrastructure the exclusive domain of enterprises.
This democratization is analogous to the widespread availability of the word processor. Formerly the creation of documents was the sole preserve of the typing pool, an overworked shared resource which, like the mainframe, needed to be scheduled or booked in advance and needed a skilled operator to make it work.
Office productivity applications enabled even the least dextrous of executives to create professional reports and letters, all from the comfort of their own PC. This move, while arguably detrimental to those who made their living working in a typing pool, greatly increased the efficiencies and timeliness of document creation.
The ease, economics and speed of provisioning Cloud Computing resources is enabling an entire generation of businesses to be founded – one needs only look at the meteoric growth of question and answer site Quora.com which in December 2009 begun to experience usage spikes of 5 – 10 times its normal load. By utilizing Cloud Computing for their infrastructure needs, Quora was able handle the load with relatively few issues.  In the same way that most people would consider it bizarre to have to send work away to have a document created (and to have to wait days for the work to be done), so too will we regard computing. It is our contention that in a few years time, the need to wait for the provisioning of infrastructure, the need for skilled engineers to perform the tasks and the need for administrative staff to “keep the lights on” will be but a distant memory.
This democratization of computing is paralleled by an ability to rapidly scale infrastructure to levels previously unobtainable by all but the largest organizations.
The diagram below  indicates the traditional “boom and bust” of infrastructure provisioning. For any organization where workload is erratic, there will always be one of two situations:
Neither of these two situations are desirable as both result in direct economic impacts; either through higher costs or through decreased outputs caused by service degradation. As we have noted before, the businesses of today are seeing far higher levels of volatility in their computing needs – one only need look at the infographic below detailing the relative growth of both Twitter and Facebook to see that a traditional approach towards physical hardware cannot hope to keep up with scaling demand. While most companies will not see the amazing growth that Twitter and Facebook have experienced, the speed at which information travels around the web has created “viral” phenomena where company websites can experience huge traffic spikes after being profiled on a television show like Oprah or evening the local evening news. Cloud Computing enables organizations to maintain infrastructure at required levels at all times, as such it enables cost savings to be gained by virtue of the fact that, despite the per unit price from a utility service provider potentially being higher than an owned resource, aggregate cost can be reduced by paying only for what is required when it is required. Having the ability to scale is beneficial, but not when it comes at the cost of significant administration and management. Luckily Cloud Computing also commoditizes infrastructure which frees up IT departments to focus on their key strategic objectives.
It’s hard to overstate just how much the IT role is changing in the face of Cloud Computing. Cloud Computing vendors are often quick to use cost reduction as their main selling point for the cloud, but it would appear that users are more thoughtful than this and perceive the business agility gains to be the number one benefit of a move to the cloud. A recent SandHill report  found that around 50% of respondents consider agility as their primary reason for adopting the cloud. A similar result came from Information Week which found that over 65% of respondents cited agility to business needs as a driver for Cloud Computing.
It’s not hard to believe these statistics when one remembers the estimates that put IT maintenance at around 80% of total IT expenditure. When one considers that Cloud infrastructure is still nascent and the vast majority of servers are still managed in-house, this presents a significant opportunity and a significant change agent for traditional IT.
The underlying trend here is pressure upon IT departments to produce greater outputs, with less resourcing – Cloud Computing offers the ability for IT departments to apply resource as, and where, they are needed.
Clearly the savings to be gained from a move to the Cloud free up IT resources for adding business value rather than simply maintaining the status quo – this change however will require IT personnel to embrace the new world order and learn a new set of skills that the organization will require. IT departments, and individual IT personnel, will need to move from being primarily technologists with a modicum of business knowledge, to being truly balanced professionals who can equally mix technical ability with an understanding of the business drivers.
It’s hard to not resort to hyperbole when discussing just how much Cloud Computing allows organizations to focus on their core business. The very fact that they are able to abstract responsibility for what are essentially commodity services to a third party drives significantly more value to the organization than any mere financial benefit through cost reductions that Cloud Computing can bring. Few people would argue that IT departments should be focusing on high-level strategic work. We contend that Cloud Computing enables this to occur more readily than ever before.
2011, and the decade after it, will go down in history as the era of the cloud in the same way that the 60’s was the era of the mainframe. Cloud Computing offers a massive benefit to organizations and it is our contention that any organization or individual who routinely interacts with technology solutions will have to learn how to work with the cloud.
While some practitioners may feel threatened by this changing paradigm, we believe the opportunities are ripe for the creation of a new breed of IT worker – one who is in equal parts a technician and a business person, someone who is of true strategic value to the organization and someone who is much more than a simple maintainer of technology assets.
Ben is the founder and managing director of Diversity Limited, a consultancy specializing in Cloud Computing/SaaS, Collaboration, Business strategy and user-centric design. More information on Ben and Diversity Limited can be found at http://diversity.net.nz.
Resources:  http://www.youtube.com/watch?v=KmXJSeMaoTY  http://www.cbronline.com/blogs/cbr-rolling-blog/salesforcecom-fires-back-at-oracles-ellison-benioff-oracle- openworld-220910  http://twitter.com/Werner/status/25005220624  http://www.economist.com/node/17797794 http://www.jackofallclouds.com/2010/08/state-of-the-cloud-august-2010/  http://www.amazon.com/Big-Switch-Rewiring-Edison-Google/dp/0393062287  http://www.nicholasgcarr.com/articlesmt/archives/endofcorporatecomputing.shtml  http://www.amazon.com/Management-Strategies-Cloud-Revolution-Transforming/dp/0071740759  Cloud Computing Emissions Comparison, Nucleus Research, 2010  http://jpf.github.com/domain-profiler/ycombinator.html?2010  http://techcrunch.com/2011/01/05/quora-surge/  http://www.encoding.com/  see video http://www.youtube.com/watch?v=n6l0kMLYP6c&feature=player_embedded  http://www.chades.net/  http://www.penn-olson.com/2010/02/10/infographic-facebooks-amazing-growth/, http://blog.facebook.com/ blog.php?post=409753352130, http://socialmediatoday.com/dirktherabbit/162555/twitter%E2%80%99s-growth- doubles-becomes-more-international  http://www.reuters.com/article/idUS144602338520100818  http://www.informationweek.com/news/software/showArticle.jhtml?articleID=211300562  http://www.gartner.com/it/page.jsp?id=497088
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