Global CIO: Cloud Computing 2.0: Are You Ready?

May 24, 2010 (11:05 AM EDT)

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The tech industry has had a long history of coining terms which needlessly confuse potential customers. But, we've certainly outdone ourselves with today's "cloud computing" jargon. Few ideas have generated as much press and debate as today's cloud computing phenomenon.

Yet, there is no question that the first generation of cloud computing services has delivered tangible business benefits to early adopters. Now, the market must enter a new era to demonstrate to a broader set of IT and business decision-makers that it is okay to put aside their fears and take a serious look at how they can leverage the rapidly evolving cloud capabilities to achieve their corporate objectives.

Part of the confusion associated with cloud computing stems from the mixing together of various elements into a single idea. For instance, it is the success of Software-as-a-Service (SaaS) solutions that has spawned the emergence of Platforms-as-a-Service (PaaS) and inspired the idea of Infrastructure-as-a-Service (IaaS). However, each of these types of cloud services are at varying stages of maturity and have differing risks associated with them.

SaaS has been generally proven to be a viable alternative to traditional on-premise legacy applications in almost every horizontal software category from front office and collaboration to back-office operations and supply chain. Questions about security, reliability and performance have subsided. And, concerns about being forced to accept one-size-fits-all solutions have given way to increasingly flexible and configurable services.

The evolution of SaaS has also led to the emergence of PaaS, which permit users to build their own applications, much like they did in the past using development platforms provided by the previous generations of software leaders. Even here, apprehensions about vendor lock-in are being alleviated by a growing set of industry alliances that promise greater openness across PaaS alternatives, such as's recent partnership with VMware to create VMforce.

\Where much of the controversy and concerns about security, reliability and lock-in still lingers is in the IaaS segment of the market. Here IT and business decision-makers remain apprehensive about moving their data into unproven or uncertain vendor data-center operations.

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Compounding these concerns is the "cloud rush" effect of a proliferation of players jumping into the market to stake a claim for a share of the vast opportunities that this transformation process offers. We are being flooded with self-serving claims from a widening array of vendors that are trying to redefine the meaning of cloud computing to suit their proprietary interests.

But, when you wash away the hyperbole, the key value propositions of cloud computing are still compelling and clearly differentiated from previous business models. For example:

Today's true cloud-computing alternatives offer unprecedented levels of hyper-elasticity coupled with self-provisioning capabilities that drastically reduce the costs and mitigate the risks associated with acquiring computing power, and developing and delivering business applications.

The cost-compression associated with IaaS forms of cloud computing has drawn plenty of attention in the press and praise among early adopters. However, experienced corporate decision-makers are still concerned about another industry shakeout that creates a new set of risks moving to the cloud.

So, where do we truly stand?

The SaaS market has proven itself in horizontal application categories, and is now expanding into specific vertical-market areas to automate a wider assortment of process-management inefficiencies.

The PaaS market has demonstrated that vendor-centric applications can be created on-demand, and is now aiming to prove that a new generation of vendor-independent solutions can also be developed in the cloud.

And, IaaS providers have clearly shown that they can dramatically reduce the cost of computing power in specific situations, and now must convince corporate decision-makers that their services can be safely and cost-effectively utilized to support ongoing production functions.

Most important, each of these cloud segments is proving that it can offer more than just cost-savings. They are also demonstrating that additional business benefits can be derived by changing the way software applications and computing power are designed, developed, delivered and utilized.

In my view, the early excitement of Cloud Computing 1.0 should be put behind us. It is now time to focus on the broader business case and long-term viability of cloud services.

Welcome to the world of Cloud Computing 2.0.

Jeffrey M. Kaplan is managing director of THINKstrategies, an IT strategy consultancy in Wellesley, Mass. He is also the founder of the SaaS Showplace. He can be reached at