The following is an excerpt from Chapter 2 of Enterprise Cloud Computing: A Strategy Guide for Business and Technology Leaders by Andy Mulholland, Jon Pyke and Peter Fingar.
Why is cloud computing so hard to understand? It would be an equally fair question to ask why today’s Information Technology is so hard to understand. The answer would be because it covers the entire range of business requirements, from back-office enterprise systems to various ways such systems can be implemented. Cloud computing covers an equal breadth of both technology and, equally important, business requirements. Therefore, many different definitions are acceptable and fall within the overall topic.
Businesses are becoming more like the [cloud] technology itself: more adaptable, more interwoven and more specialized.
Peter Fingar, Author
But why use the term "cloud computing" at all? It originates from the work to develop easy-to-use consumer IT (Web 2.0) and its differences from existing difficult-to-use enterprise IT systems.
A Web 2.0 site allows its users to interact with other users or to change content, in contrast to non-interactive Web 1.0 sites where users are limited to the passive viewing of information. Although the term Web 2.0 suggests a new version of the World Wide Web, it does not refer to new technology but rather to cumulative changes in the ways software developers and end-users use the Web.
World Wide Web inventor Tim Berners-Lee clarifies, "I think Web 2.0 is, of course, a piece of jargon; nobody even knows what it means. If Web 2.0 for you is blogs and wikis, then that is 'people to people.' But that was what the Web was supposed to be all along. The Web was designed to be a collaborative space where people can interact."
In short, Web 2.0 isn’t new technology; it’s an emerging usage pattern. Ditto for cloud computing; it’s an emerging usage pattern that draws on existing forms of IT resources. Extending Berners-Lee’s definition of Web 2.0, the companion to this book, Dot Cloud: The 21st Century Business Platform, helps clarify that cloud computing isn’t a new technology: “The cloud is the 'real Internet' or what the Internet was really meant to be in the first place, an endless computer made up of networks of networks of computers."
"For geeks," it continues, "cloud computing has been used to mean grid computing, utility computing, Software as a Service, virtualization, Internet-based applications, autonomic computing, peer-to-peer computing and remote processing -- and various combinations of these terms. For non-geeks, cloud computing is simply a platform where individuals and companies use the Internet to access endless hardware software and data resources for most of their computing needs and people-to-people interactions, leaving the mess to third-party suppliers."
Cloud’s birth in the new world
Again, cloud computing isn’t new technology; it’s a newly evolved delivery model. The key point is that cloud computing focuses on the end users and their abilities to do what they want to do, singularly or in communities, without the need for specialized IT support. The technology layer is abstracted, or hidden, and is simply represented by a drawing of a "cloud." This same principle has been used in the past for certain technologies, such as the Internet itself. At the same time, as the Web 2.0 technologists were perfecting their approach to people-centric collaboration, interactions, use of search and so on, traditional IT technologists were working to improve the flexibility and usability of existing IT resources.
This was the path that led to virtualization, the ability to share computational resources and reduce the barriers of costs and overhead of system administration. Flexibility in computational resources was in fact exactly what was needed to support the Web 2.0 environment. Whereas IT was largely based on a known and limited number of users working on a known and limited number of applications, Web 2.0 is based on any number of users deploying any number of services, as and when required in a totally random dynamic demand model.
The trend toward improving the cost and flexibility of current in-house IT capabilities by using virtualization can be said to be a part of cloud computing as much as shifting to Web-based applications supplied as services from a specialist online provider. Thus it is helpful to define cloud computing in terms of usage patterns or "use cases" for internal cost savings or external human collaboration more than defining the technical aspects.
There are differences in regional emphases on what is driving the adoption of cloud computing. The North American market is more heavily focused on a new wave of IT system upgrades; the European market is more focused on the delivery of new marketplaces and services; and the Asian market is more focused on the ability to jump past on-premise IT and go straight to remote service centers.
How the cloud shift affects front-office activities
There is a real shift in business requirements that is driving the "use" as a defining issue. IT has done its work of automating back office business processes and improving enterprise efficiency very well, so well that studies show the percentage of an office worker’s time spent on processes has dropped steadily. Put another way, the routine elements of operations have been identified and optimized. But now it's the front office activities of interacting with customers, suppliers and trading partners that make up the majority of the work.
Traditional IT has done little to address this, as its core technologies and methodologies of tightly-coupled, data-centric applications simply aren’t suitable for the user-driven flexibility that is required in the front office. The needed technology shift can be summarized as one from "supply push" to "demand pull" of data, information and services.
Cloud computing is simply a platform where individuals and companies use the Internet to access endless hardware software and data resources for most of their computing needs.
Business requirements are increasingly being focused on the front office around improving revenues, margins, market share and customer services. To address these requirements, a change in the core technologies is needed in order to deliver diversity around the edge of the business where differentiation and real revenue value are created. Web 2.0 user-centric capabilities are seen as a significant part of the answer.
The technology model of flexible combinations of "services" instead of monolithic applications, combined with user-driven orchestration of those services, supports this shifting front office emphasis on the use of technology in business. It's not even just a technology and requirement match; it’s also a match on the supply side. These new Web 2.0 requirements delivered through the cloud offer fast, even instantaneous, implementations with no capital cost or provisioning time.
This contrasts to the yearly budget and cost recovery models of traditional back office IT. In fact many cloud-based front office services may only have a life of a few weeks or months as business needs continually change to suit the increasingly dynamic nature of global markets. Thus the supply of pay-as-you-go instant provisioning of resources is a core driver in the adoption of cloud computing. This funding model of direct cost attribution to the business user is in stark contrast to the traditional overhead recovery IT model.
While cloud computing can reduce the cost and complexity of provisioning computational capabilities, it also can be used to build new shared service centers operating with greater effectiveness "at the edge" of the business where there’s money to be made. Front office requirements focus on people, expertise and collaboration in any-to-any combinations.
According to Dot Cloud, "There will be many ways in which the cloud will change businesses and the economy, most of them hard to predict, but one theme is already emerging. Businesses are becoming more like the technology itself: more adaptable, more interwoven and more specialized . These developments may not be new, but the advent of cloud computing will speed them up."