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Cloud Computing

Thu, 11th December, 2008 - Posted by Administration

ONCE A TECHNOLOGY that was adopted only by large enterprises and cutting-edge startups, cloud computing, in which hardware and software are outsourced to Internet service providers, is coming of age as a potential strategy for mainstream companies of every size. So where does cloud computing stand now in the small to midsized enterprise market?

The Cloud Is Rolling In

Major cloud computing announcements seem to be coming out almost weekly from both major vendors and smaller developers. For example, IBM recently unveiled consulting and implementation services for cloud computing, and Cisco’s CTO Padmasree Warrior recently noted at the Web 2.0 Summit that the company sees the cloud as the next evolution in computing. There’s also more traction for hosting providers that have launched within the last few years, such as Amazon Web Services, one of the first efforts to bring utility computing to a wider customer base.

Companies can expect that innovation pace and interest to continue, which will lead to greater use within data centers. In fact, research firm Gartner has named cloud computing among technologies that are poised to reach broad enterprise adoption in the next two to five years.

Many analysts note that cloud computing isn’t ready for the masses quite yet, so enterprises that haven’t explored the strategy and technologies already aren’t likely to make the move within the next year. But even for those companies, cloud computing will probably become a much more active discussion, and implementation could come within a few years after that.

“There’s definitely a transition occurring,” says Bert Armijo, senior vice president of sales, marketing, and product management at 3tera (, maker of a grid operating system that enables utility computing for the deployment and scaling of online applications. “We’ve been in the market for [more than] two years, and what we’ve seen over the last year is a change in the type of companies interested in cloud computing. It used to be just Web 2.0 enterprises, but now it’s companies of every kind.”

Biggest Draws

Like many of the largest data center shifts—virtualization, blade servers, and SaaS, for example—cloud computing is being touted for its potential to deliver big benefits without significantly increasing enterprise costs.

In a recent customer newsletter, Citrix Systems ( noted that cloud computing delivers “IT infrastructure as simply as water from the tap or electricity from the socket.” Cloud computing makes every element of IT infrastructure available as an on-demand service, the company claims, including operating systems, applications, storage, servers, appliances, and workflow management.

The major benefit with that kind of breadth is that it turns computing into a kind of industrialized model, with large service providers offering their services in high volume at low cost so that smaller companies can achieve the same cost benefits that larger companies have always seen.

Forrester analyst Ted Schadler notes that there are three key advantages, particularly for messaging and collaboration. The first is speed, as the technology allows companies to launch strategies such as employee portals much faster than traditional in-house efforts.

Secondly, Schadler adds, companies can depend on cloud computing firms to do IT tasks such as network support and monitoring, leaving IT and data center managers to focus instead on high-level strategy and planning rather than mundane firefighting.

And, finally, there’s the payment plan structure of cloud computing, which usually allows companies to pay according to the number of users every month. For companies that have large numbers of seasonal workers, this can be a boon, and it’s also advantageous because companies can cancel a contract without much notice, Schadler states.

In his recent report, Schadler writes: “[I]n capital-constrained times, the upfront cash outlay and financial risk of on-premise solutions can prevent many projects from being funded. Fortunately, cloud-based collaboration service providers offer a cash-flow-friendly alternative to on-premise installation for projects including email overhauls, wiki workspaces, and Web conferencing.”


Although analysts and vendors are eager to articulate the benefits of cloud computing, and predictions of wide adoption are being advanced, it’s likely that right now, most companies will not be diving into the cloud computing arena quite yet.

“Despite all the talk, cloud computing is still in its infancy,” says Armijo. “There are really just a handful of providers, and the majority of them are still small. So far, we’re just finding out what the technology is capable of.”

During the next year, Armijo anticipates that there will be more exploration by customers and vendors into what types of service cloud computing can really provide and how payment structures can be tweaked to be even more beneficial.

“For cloud computing to be successful, for it to be ubiquitous, we need to work on how clouds extend into corporate data centers,” he says. “We need to focus on how they can be used [in] a way to strategically move resources back and forth on demand.”

In the meantime, SMEs should keep up on the latest developments and look closely at the cloud when the time comes to build a new data center, believes Jian Zhen, senior director of product management at LogLogic (, a log management firm.

“Small companies will focus on building their business, and SMEs often don’t have the resources to build new data centers,” he says. “Because of that, we think that within the next three years, there will be more public clouds and more SMEs willing to use them.”

by Elizabeth Millard

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