Cloud Computing Will Be as Influential as E-business

Cloud computing heralds an evolution of business that is no less influential than e-business, according to Gartner Inc., maintaining that the very confusion and contradiction that surrounds the term ‘cloud computing’ signifies its potential to change the status quo in the IT market.

Gartner defines cloud computing as a style of computing where massively scalable IT-related capabilities are provided ‘as a service’ using Internet technologies to multiple external customers.

“During the past 15 years, a continuing trend toward IT industrialization has grown in popularity as IT services delivered via hardware, software and people are becoming repeatable and usable by a wide range of customers and service providers,” said Daryl Plummer, managing vice president and Gartner Fellow. “This is due, in part to the commoditization and standardization of technologies, in part to virtualization and the rise of service-oriented software architectures, and most importantly, to the dramatic growth in popularity of the Internet.”

Mr. Plummer said that taken together, these three major trends constitute the basis of a discontinuity that will create a new opportunity to shape the relationship between those who use IT services and those who sell them. Essentially it will mean that users of IT-related services will be able to focus on what the service provides them rather than how the services are implemented or hosted. Gartner maintains that although names for this type of operation have come into vogue at different times — utility computing, software as a service (SaaS) and application service providers — none has garnered widespread acceptance as the central theme for how IT-related services can be delivered globally.

The types of IT services that can be provided through a cloud are wide-reaching. Compute facilities provide computational services so that users can use central processing unit (CPU) cycles without buying computers. Storage services provide a way to store data and documents without having to continually grow farms of storage networks and servers. SaaS companies offer CRM services through their multitenant shared facilities so clients can manage their customers without buying software. These represent only the beginning of options for delivering all kinds of complex capabilities to both businesses and individuals.

“The focus has moved up from the infrastructure implementations and onto the services that allow for access to the capabilities provided,” said David Mitchell Smith, vice president and Gartner Fellow. “Although many companies will argue how the cloud services are implemented, the ultimate measure of success will be how the services are consumed and whether that leads to new business opportunities.”

Gartner predicts that the impact of cloud computing on IT vendors will be huge. Established vendors have a great presence in traditional software markets, and as new Web 2.0 and cloud business models evolve and expand outside of consumer markets, a great deal could change. “The vendors are at very different levels of maturity,” said David Cearley, vice president and Gartner Fellow. “The consumer-focused vendors are the most mature in delivering what Gartner calls a ‘cloud/Web platform’ from technology and community perspectives, but the business-focused vendors have rich business services and, at times, are very adept at selling business services.”

Branding is a powerful and revenue-generating asset for potential vendors. Gartner analysts cited Wal-Mart as an example of a company that has two brands — one with consumers for its low prices and one in the business world for its supply chain expertise, its core competency, which it capitalizes on to support its consumer-facing brand.

“Companies invest billions of dollars in building up their core competencies, much of which goes into IT,” Mr. Smith said. “If companies could lease their core competencies to other companies then they would capitalize on both brands, driving revenue both in the consumer-facing market and the business service market in the way that Amazon has done with technology.”

Gartner maintains that cloud computing is very much an evolving concept that will take many years to fully mature. It also underlined the fact that the cloud-computing model is not simply the next generation of the Internet.

“When organizations cross the threshold between the Internet as a communications channel and the deliberate delivery of service over the Internet, then we truly start to head for an economy based on consumption of everything from storage to computation to video to finance deduction management,” said Mr. Plummer.

Additional information on the Gartner report
Cloud Computing Confusion Leads to Opportunity