Why the cloud is more than just hot air

5 Oct 2010

Cloud computing is being hailed as one of the most significant developments in IT since the birth of the industry.

There’s been a lot of talk about cloud computing; maybe too much talk. Why all the hype? It is one of the biggest developments in IT since the industry began, and its supporters claim it could radically transform how businesses operate. A report by the World Economic Forum earlier this year said it has the potential to allow “new levels of productivity and innovation” in organisations. Industry analyst firm Gartner estimates that spending on the technology will reach US$112bn cumulatively over the next five years.

There are almost as many definitions of the cloud as there are people to give them. Simply put, it is technology delivered as a service on demand over the internet. The processing power and storage takes place remotely in data centres where systems are shared between multiple customers, so that more computing power is at the disposal of any business that needs it.

Economies of scale mean that delivering IT this way allows cloud providers to offer services at much lower cost than individual companies could afford to do by themselves.

You pay for IT like electricity

The technology industry has never been one to leave low-hanging fruit unpicked, so the cloud’s cost saving potential has been the primary reason seized on by vendors trying to convince buyers of its benefits. With this model you only buy what you need, and when you need more you buy more. Utility computing may be a less marketing-friendly term but it arguably describes the concept better: you pay for IT like electricity or water and you use it the same way – just turn it on and consume according to your requirements.

Amazon.com is one of the leading providers in the cloud sector, having originally taken the decision 10 years ago to use the excess computing capacity on its servers and rent it out to business customers. At the Cloud Summit in Croke Park last month the company’s chief technology officer Dr Werner Vogels outlined some of the key benefits of cloud computing. “It lowers cost: you have not only capital cost reduction, but operational cost reduction,” he said.

Emphasising the flexibility it gives business, he added that the cloud lets businesses scale up their IT quickly. “Most important is that you scale around business dimensions and that means you have to be able to scale down when you no longer need the resources. Most enterprises rate increasing agility as way more important than driving cost down.”

The cloud also removes the ‘heavy lifting’ involved with IT. Businesses don’t have to worry about running their own data centres or complex networks – in the cloud, service providers take care of those hassles.

Following a well-worn path

Sean Baker, IT industry veteran and chairman of the Irish Software Association pointed out that the cloud is following a well-worn path.

“As any new technologies come out, they go through many cycles. The first is scepticism – ‘that’ll never work’. The second and most dangerous stage is hype. With this you get the belief that you can turn off all your machines, get rid of your storage systems and move to the cloud. The third phase is in understanding where it should and should not be used – that’s where you get the power of something.”

On the ground in Ireland signs are positive. Readydynamics.com carried out surveys for the Irish Internet Association (IIA) in 2009 and 2010, and comparing the two shows that understanding of cloud computing has improved by 19pc. Last year 54pc of senior business people didn’t understand the term; in 12 months that figure has fallen to 35pc.

Of those businesses that did use some form of cloud computing, the response has been overwhelmingly positive: 94pc said it was successful and 97pc would it use again. Both findings are an improvement on last year’s figures. The surveys also show strong intentions by firms to deploy cloud technology in the short term, with 71pc planning to do so this year and a further 19pc aiming for next year.

Gerry Power, general manager of Readydynamics.com, said the statistics also show medium and large enterprises are now even more enthusiastic about using the cloud in their business. Over the next four years, these companies will increase use of cloud technology by 30pc.

As a useful reality check, the IIA survey tells us cloud adoption is still low but more firms of all sizes consider it a viable option. “At the end of the day it’s not going to replace everything. It’s good for some things and not for others. It’s still very early days for this and it will still take five to 10 years to go where people think it’s going to go,” said Power.

“There still are security issues, storage location issues, and broadband issues so it’s not without hitches,” he continued. “Sometimes the experience isn’t as good as systems that are on premise and some companies have gone back.”

This acceptance that cloud can’t – or shouldn’t – replace every aspect of a company’s IT is possibly the best antidote to the fog of hype that surrounds the cloud. After all, if every single technology revolution completely overthrew what came before it, there would be no mainframes running any more. Now that business owners can see the issues more clearly, they can take more informed decisions about what parts of their IT to move, and when.

Silicon Republic has embarked on its Cloud Centre campaign to better inform businesses about opportunities in cloud computing. To visit our Cloud Centre, click here

Gordon Smith was a contributor to Silicon Republic