[originally published November 2008]

As the dark clouds of recession hover ominously, the world’s biggest vendors are proclaiming another cloud – cloud computing – as the new silver lining for businesses looking to reduce cost and complexity.

In terms of cloud-based applications – a.k.a. software as a service (SaaS) – Google is ahead of the pack, with its online Apps well established among personal users and increasingly sparking business interest. Salesforce.com is also doing well. In terms of cloud-based infrastructure on demand – a.k.a. utility or grid computing – Amazon is steaming forward with its Elastic Compute Cloud (EC2) and other web services, while Sun hopes its Grid Compute Utility will shine through.

But these and smaller pioneers are set to face stiff competition from most of the major industry players. Microsoft will reveal its cloud platform to developers later this month. IBM has just announced its Bluehouse social networking environment for business, which is only the first droplet in its cloud ambitions. SAP is readying its Business by Design cloud-based package for release. Meanwhile HP, Intel and Yahoo announced in July they were jointly funding an open-source cloud computing “test-bed” project.

The world’s most influential analyst, too, has its head in the cloud. In June, Gartner said: “Cloud computing heralds an evolution of business that is no less influential than e-business.”

But as the hype gathers pace and vendors scramble to slap the ‘cloud’ label on anything and everything, confusion reigns. As Oracle’s Larry Ellison told a recent analyst conference: “The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about.”

It’s a point not lost on Gartner, which last month saw fit to acknowledge the confusion and clarify its own definition of cloud computing. According to the analyst, the term refers to services – be these software, applications, storage, computing power, business processes or whatever – delivered via the web, but hosted and run externally. It should not be confused with the infrastructural technologies – such as service-oriented architectures and server virtualisation – required to build internal cloud computing environments or indeed make best use of external cloud services. “Both perspectives (services and technologies) are valuable and should be pursued; however, they are two separate but related initiatives,” the analyst said.

But CIOs should be rightly wary of hype from both vendors and analysts. As the founder of the open source movement Richard Stallman told The Guardian last month: “Somebody is saying this is inevitable – and whenever you hear somebody saying that, it’s very likely to be a set of businesses campaigning to make it true.”

Stallman believes vendors see the cloud as yet another means of extending their proprietary lock-in into the future. “If you use a proprietary program or somebody else’s web server, you’re defenceless. You’re putty in the hands of whoever developed that software,” he said.

Even some suppliers of cloud computing admit there are challenges with the model. At last week’s Future of Web Applications conference in London, Jeff Barr of XCalibre, said that although he was “a massive advocate of cloud computing”, ultimately customers have less control over what they do. “For example, if a traditional software supplier goes bust, at least you’ve still got the product – it doesn’t just disappear of the face of the planet. So you have a massively increased dependency on third parties. And depending on which technologies suppliers use, you can effectively be locked in. Sometimes that’s a necessary evil – for example, it makes sense for users of Saleforce.com to develop apps that run on the Salesforce platform.”

Not surprisingly, Stallman’s answer to businesses’ need to cut costs and increase flexibility is to build their own internal capabilities using open-source technologies. To an extent he’s right: there are many instances where adopting open-source technologies internally makes sound commercial sense – and will increasingly do so as the recession bites. There will, for example, be occasions where organisations need to retain data and services in-house for reasons of security, compliance, resilience or flexibility, and where open source technologies and components may well give them the greatest level of agility at the lowest cost.

But equally, in many cases the security and resilience of cloud services will be perfectly adequate and could also prove considerably advantageous in terms of flexibility and cost efficiency. While Stallman may be correct that vendors simply want to renew or extend their proprietary hold over customers, he fails to acknowledge that those customers are becoming increasingly savvy to the industry’s ploys and in many cases are designing their infrastructure and policies to mitigate such attempts.

For CIOs, the key to achieving the benefits of cloud computing while avoiding the proprietary trap is to ensure you develop a suitably open infrastructure to plug into the cloud, one that gives you the greatest flexibility to source services from whichever providers are offering the best functionality and/or price at any particular time. This plug-and-play flexibility, of course, is the ultimate goal of the service oriented architectures many organisations are putting in place.

Secondly, IT leaders must (as ever) keep a beady eye on suppliers’ terms and conditions to ensure they retain the contractual – as well as the infrastructural – freedom to switch services. And finally, they must insist upon data portability. It’s not enough that vendors deliver their services using open, web technologies. The files and data populating these online applications and services must be easily transferable among – and interoperable with – different providers’ offerings, which means CIOs need to demand cloud vendors support standard, open file formats and protocols.

And if they are to avoid the pitfalls outlined by Stallman and others, IS organisations will need to ensure they have some pretty smart, savvy people designing their systems architecture, drawing up requirements and overseeing third-party suppliers. Because otherwise, cloud computing could become an oppressive force – when it should be helping our businesses soar to new heights.

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