Cloud Computing: To Be Or Not To Be?

Cloud computing has become the industry’s biggest buzzword. It is a term used to describe systems that allow consumers, developers and businesses to use the Internet to access programs and data at remote computer centres. The cloud is emerging as a fiercely competitive market. Every day we are hearing a new announcement of some cloud offering by a megavendor.

Is cloud emerging as a critical challenge for traditional vendors?

According to Yefim Natis, VP and distinguished analyst, Gartner, the business model for application providers is rapidly changing and it’s a big challenge for established application vendors such as SAP and Oracle and other players too. Sharad Sharma, former CEO of Yahoo R&D points out that the shift to cloud is as big as that from mainframes to a client/server model. It is therefore a threat as well as an opportunity for traditional vendors. “Just as some mainframe application companies did not succeed in the client/server world, it is quite possible that some traditional application vendors may not be successful in the cloud world,” he says.

Although cloud computing technology is yet in a nascent stage, there are a number of vendors waiting to ‘cash in’ on this buzzword. “It is interesting that in the last few years, companies which were dismissing the idea of the services model, are now eagerly wrapping themselves in the same flag by saying we are going to be cloud computing providers too,” says Peter Coffee, director, Platform Research, Salesforce.com.

The competitive landscape of cloud computing

The capability to get services delivered over the network and to convert CAPEX into OPEX is an attractive proposition for end users. Especially in the current economic scenario, this value proposition allows companies to construct new systems without capital investments in new IT infrastructure and further to grow the new systems to meet ever-changing business requirements at a rapid pace.

Cloud computing also gives an opportunity to vendors to tap the widespread SMB segment, which has been long waiting for such a computing model. All these and many other reasons have made the ‘cloud’ an extremely attractive market for vendors and hence, we are seeing a lot of activity in this space with the release of cloud computing platforms like Azure from Microsoft, EC2 from Amazon and Service Cloud from Salesforce.com in addition to the recent entry of Sun Microsystems in this space.

All these vendors are primarily offering cloud services in three different forms, which comprise infrastructure-as-a-service (EC2 by Amazon), application platform-as-a-service (Force.com) and software-as-a-service (Salesforce.com and Microsoft Dynamics). Thus, cloud is already a multi-vendor environment. According to Natis, Microsoft and other major software vendors are all building up for the cloud, but at different paces and all of them have a different vision for the cloud. Microsoft made an announcement at the end of 2007 related to the building of four new data centres specifically dedicated to cloud computing, wherein each data centre would cost $500 million.

“With Microsoft making that investment and Google and Amazon, which are relatively new in the software business, already having deep investments in cloud computing, the others are also under pressure to take position on that,” says Natis. He further informs that IBM has already started moving in this direction with blue cloud and blue house. However, Oracle and SAP, the two biggest enterprise application providers, have not yet moved strategically in this direction. Gartner expects that in 2009 at least one of them is going to come out with a full-fledged roadmap of their adoption of cloud computing. It is expected that in the next two years all substantial software vendors will get strategically involved in cloud computing.

It should, however, be interesting to see how Indian IT vendors pounce on this new market. According to Sharma, it is really a huge opportunity for Indian companies and they have already started making their mark in this space. A good example of this is Zoho. “I think Indian companies have the potential to do exceedingly well in this space,” he says.

Major Apprehensions

While major vendors are preparing to battle it out in the cloud market, experts say the market is definitely going to take five years to mature. There are some serious issues, which if not addressed effectively, could hamper the adoption of the model. Sharma informs that traditional apprehensions related to the adoption of cloud computing revolve around availability and security. For example, if networks or servers are down, it could put the enterprise in jeopardy.

A lot of people in mainstream enterprises are very cautious about moving apps or data to the cloud as they would like to retain sensitive data within the boundaries of the enterprise. “However, we believe these objections are temporary. They are comparable to objections, which people had against credit cards for buying things on the Internet, which have now dissolved,” says Natis. He feels that security concerns cannot stop progress and there is always a solution that is found and deployed.

Need to be pragmatic

Although there are obvious benefits of moving to the cloud environment, enterprises need not get carried away with this buzzword and rush to adopt this model unless and until the business requirement has been clearly defined. According to Professor S Sadagopan, founder and director, IIIT Bangalore, the recent incident of ‘Gmail’ being down for four hours was a clarion call to take a fresh look at cloud computing. “We may probably not be able to shift certain mission-critical enterprise applications to the cloud yet, but hopefully things will soon change,” he says.

What kind of applications can be moved to the cloud? What sense does the cloud make for large enterprises? Will all applications move to the cloud ultimately? These questions are on the mind of many CIOs today. Natis feels that all applications moving to the cloud does not seem to be a likely phenomenon in the near future. However, e-commerce and global kind of applications, which have an unpredictable up and down in the usage pattern, will be the first ones to move to the cloud due to its flexibility. On the other hand, traditional, batch style and predictable applications will probably be among the last ones to move to the cloud, feels Natis.

The talks in the industry clearly reflect that SMEs will lead the adoption of cloud technology through SaaS kind of models while large companies will be slow in the adoption of such models due to their existing heavy investments in IT.

However, Coffee holds a completely opposite view and believes that the cloud model is not confined to SMBs. Today, even the largest companies are realising that better allocation of scarce capital, rapid time-to-value, and faster development and deployment of applications, are strategic benefits of cloud computing. Giving an example of Salesforce.com customers, he says, “We offer a standard application development platform to Dell Computers, which has tens of thousands of users on our platform. Our largest individual customer is Japan Post with 65,000 subscribers.”

Thus, experts and gurus clearly indicate that enterprises need not rush to the cloud, but they must start understanding the nuances of this new technology model.

Thus, the cloud computing market is in a period of excitement, growth and high potential, but will still require several years and many changes in the market before it becomes a mainstream IT effort.