Peter's Technology Trumpet

Cloud computing. Marketing pixie dust or IT Industry paradigm shift?

The topic even had the Economist gushing about cloud computing's impact on business in their regular technology supplement in October. Analysts have wholeheartedly jumped on the bandwagon with Gartner spreading cloud computing all over its Top 10 strategic technologies list for the coming year, and Yankee group predicting a $20B marketplace for software as a service by 2011.

Meanwhile marketeers keen to capitalise on all the attention are sticking a "Cloud Computing" banner over last months "Green Computing" badge in a desperate attempt to sell the same old junk to win a share of an increasingly fickle audiences shrinking IT budget.

Despite the confusion caused by cloud marketing spin, at a Software + Services Roundtable I attended today with a collection of Scottish IT Services and Software Development companies, Edinburgh and Scotland seem well-placed to benefit from these industry developments.

CLOUD CAMPAIGN:

The Cloud concept is providing great headline fodder for bloggers and journalists, with "Ahead in the Clouds" from the Times, "Thinking Out Cloud" from high rated cloud blogger Geva Perry and  "Get onto my Cloud" from Yours Truly.

But there is little evidence that the activity on the newswires has influenced buyers of IT services - many customers I meet nonplussed by the promise of cloud computing's promise of a new way forward, and see it as just a recycling of last years concepts - Software as a Service, Grid, Utility Computing and the like. Others, like Larry Ellison,  are bamboozled by the buzzwords. Larry with some justification condemned the IT industry fickle fascination with fashions such as cloud and confessed "Maybe I’m an idiot, but I have no idea what anyone is talking about".

So what is behind the hype? Cloud is nothing more than shared IT services:  delivered at large or massive scale, made made available to multiple customers,  generally on a subscription basis over t'Internet.

What marks a real shift in the industry is the explosion in diversity of these internet services, the stong investment in software development and cloud infrastructure by key industry players like Microsoft, IBM, Amazon, etc, the creativity of cloud startups, and the willingness of more customers to consider the model for their own applications.

Cloud embraces familiar computing models such as co-location (where multiple customers dedicated equipment is placed together and some or all of its operations outsourced) and Software as a Service (where many customers instance of an application are run centrally far more efficiently and at lower cost than any one customer could achieve). The recent activity and attention has arisen from the variety of applications, services and business processes which are starting to be made available in this manner.

So where will clouds growing share of the software marketplace predicted by Gartner, Yankee et al come from?

Firstly from Software delivered as a "finished service" such as Salesforce, and Microsoft Exchange Online. Till now, most would prefer to trust important business information to their own tin in their own server room. But if a service is available as hosted or on-premise and both can be shown to meet all of a customer's requirements, the hosted option is likely to be cheaper overall through its inherent economies of scale.

Given the pay as you go model, it's likely that cloud adoption will accelerate in the current global recession. Customers will find it more difficult to find capital for the upfront investment in equipment and systems integration which an on-premise solution requires. Likewise, as more companies tighten their belts and try to reduce costs, subscription software may be an increasingly attractive option allowing them to scale up quickly and provision new services, users and infrastructure based on demand. Likewise if the back office staff have to be let go, or the Christmas rush doesn't happen, capacity and costs can be quickly reduced.

Another important cloud play is around the virtual datacenter - this model is really co-location on steroids, where rather than racking up servers, storage and networking in their own server room, an enterprise can readily provision such services in the datacenter of a cloud provider with usage-based chargeback. Customers can provision servers with their specific preconfigured application images as and when peak demands dictate. Server virtualisation and associated technologies are an enabler here, but key to the viability of such services is automated provisioning of IT infrastructure and the abstraction of this physical hardware and setup from the customer - companies such as QLayer and Scotland's Enigmatec are innovating to fill this gap.

But where the cloud has generated most hyperbole and discussion of "platform shift" is where the cloud can offer all the services required for applications as a complete "Cloud OS" . Examples include Amazon's Web Services and Microsoft's Azure. These aim to provide all the services which application developers require to build applications and services in the cloud, incorporating existing applications and devices, and providing tools which allows companies and developers to leverage their existing skills and investments.

SCOTLAND'S CLOUD CAPITAL:

Scotland is seeing its fair share of innovation in the cloud space.  Scottish hosting company XCalibre have established their Flexiscale low-cost on demand computing service, and Enigmatec founder Duncan Johnson-Watt is currently in stealth mode setting up Cloudsoft.  Several more Cloud Computing startups are at the funding stage, and we can expect to hear more in the New Year.

Likewise Scotlands play for the nascent market for the engine rooms of Cloud Computing is gathering pace with support building for 3 ambitious mega-datacenter projects in the 100MW range - Cable & Wireless/Thus and Internet Villages International in the South West, Alchemy Computing in the NorthEast, and from Morgan Stanley near the Pentland Firth.

CLOUD CONCLUSIONS

The Cloud currently gathering on the horizon will drive an evolution of the IT industry rather than the revolution the hype has suggested. But in the words of David Chappell, the Armani-wearing long served Microsoft pundit...

...whether you work for an ISV or an enterprise, some cloud platform services are likely to be useful for applications your organization creates. A new world is unfolding; prepare to be part of it.