Wednesday, November 19, 2008

My views on Cloud Computing - Today, Tomorrow and beyond

Cloud computing refers to the idea of delivering applications via the internet from servers that share resources like storage, processing and bandwidth more efficiently. It is like outsourcing your on-premise datacenter into the ‘cloud’ (a metaphor for the internet). As Customers do not own the infrastructure, they are merely accessing or renting, they can forego capital expenditure and consume resources as a service, paying instead for ‘only’ what they use. Cloud computing can be broken down into three segments: Apps (SaaS or OnDemand), Platforms and Infrastructure.

Quantum improvements in Internet bandwidth, computing power and memory, coupled with enabling technologies like virtualization, parallel processing and multi-core chips, make it feasible to run large computing tasks on a centralized ‘Cloud’ infrastructure. The economics are truly compelling, with cost advantages of 3-5x for business apps, and 5-10x or better for personal productivity apps.

Cloud computing provides several benefits, including: cost savings to Cloud providers and customers, low upfront costs, affordable monthly payments, user-friendly interfaces, and vendor accountability.

Cloud computing has several barriers to overcome, including: reliability concerns, performance issues, security concerns, difficulty customizing, and organizational inertia. Furthermore, some cloud computing technologies still are immature, which may lead to problems in service management and usability. Recent outage on Amazon EC2 and Google apps is a case in point.

In the next 12 months adoption of cloud computing is going to ramp up, not very rapidly though due to the stated reasons. The evolution of cloud computing will likely change how smaller and larger companies will leverage IT infrastructure. The smaller businesses are likely to use the cloud for compute, storage and offering value added services. Larger companies will likely start with building their own internal cloud infrastructure that gives them more control of the overall environment and eventually migrate some of the more robust applications to an external cloud. However, the evolution of cloud computing will not result in an accelerated shift away from proprietary platforms. It is worth noting that the mainframe environment is still around after decades of architectural changes. Broader virtualization trends are likely to follow that will virtualize across platforms in such a way that the most efficient set of resources will be allocated the appropriate workload. Several forms of hybrid architectures will emerge when large customers start integrating existing datacenters with cloud architecture. On-premise software is not going to go away completely. Cloud computing today is in its first phase, and is not yet ready for large enterprise customers. Launching an Internet based business will become easier. Web development is becoming easier and less expensive as the application development environment shifts to the Cloud. There will be a power struggle between the leading companies in this space, followed by consolidation. Standards for cloud computing will emerge and pricing models will further evolve.

Looking beyond 12 months, research paints a rosy picture for cloud computing. Merrill lynch analysts forecast that by 2011 the volume of cloud computing market opportunity would amount to $160bn, including $95bn in business and productivity apps (email, office, CRM, etc.) and $65bn in online advertising. Gartner predicts that by 2012, 80 percent of Fortune 1000 enterprises will be paying for some cloud computing services, and 30 percent will be paying for cloud computing infrastructure services.

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