Organizations that pervasively use information technology as a strategic weapon for growth and profitability have capitalized on a seismic shift in business that has occurred over the last twenty years. Information and data management are now at the core of our ability to compete and prosper. What we primarily do as an organization is now second to our ability to operate at an intensely competitive level. Let's face it, most of us do something that someone else does. If they can do it better, cheaper, faster, they win. Cloud computing will, as information technology originally did, and then the Internet did again, forever disrupt the balance of power in business.
Let me make the case.
The basic idea of cloud computing is nothing new. Architecturally it is the same type of distributed computing that took root in the 60s with the mainframe computer. But distributed computing over the Internet achieves unprecedented scale, going beyond any one organization. Computing power and capability can now be built on a shared-cost basis over thousands of companies for a single application. When you share the cost of a server to do your accounting with 200,000 other companies, you can bet your cost benefit ratio goes up. Way up.
What helps big companies get bigger is the exploitation of economies of scale. As the ability to more effectively gather, process, disseminate and manage information became a competitive advantage, big companies that could afford big computing capabilities used information technology to increase their lead. Information technology and data management became, in many cases, their top competitive enabler, distancing them from their lesser-heeled technologically under-invested smaller competitors.
Big Power for the Rest of Us
Not anymore. Now, the power of sophisticated, robust, scalable computing, formerly the reserve of only those who could afford it, is becoming available to companies of any and every size. No server, network, or software licenses to manage (mostly true), reduced capital costs, and improved system uptime. If you don't like the product, no agonizing over the investment already made. The cost of switching services, which admittedly may not be insignificant, is still a fraction of server deployment costs today.
For example, when you sign up for SalesForce.com, you have exactly the same CRM capability that many of the largest companies in the world use, at roughly the same cost. When this becomes true for all your information systems, accounting, HR, project management, etc., information technology as a competitive edge will no longer be the domain of only those who can afford it.
Security concerns are still keeping many companies, especially smaller ones, out of the cloud. Ironically, properly implemented secure cloud sites are more secure than anything most in-house teams could do. But the certainty of security in the cloud, as certain as security can ever be, is a solvable problem that will improve over time. Google just announced server-side encryption for its cloud customers. Brilliant young start-ups like Vancouver's Dark Matter Labs are working hard at giving you the power of the cloud with none of the intrusion risk, authorized or not, by letting you and only you manage your encryption certificates.
Of course, there will also be situations where the cloud will not be as economical or practical as an in-house team and bank of servers. Technology companies and very big organizations that run sophisticated internal servers or private clouds may wait for some time for public cloud computing to catch up with their particular computing economics and capability. Hybrid clouds that distribute workloads provide redundancy and burst load capacity between in-house, private, and public servers are their current trend.
No Local Applications? Not so fast...
Contrary to general thinking, cloud computing will not make locally owned and managed applications obsolete. In fact, for the next decade, the more a business moves its core computing functions into the cloud, and for the first time operates without their own local server, the less "dumb" they will want their endpoint devices to be. If you have been around a while, consider how we moved from dumb terminals in the mini and mainframe age to powerful desktop PCs, in spite of the fact that the LAN servers are right down the hall on a superfast wire. We've gotten used to a lot of local application power and information at our fingertips, and until we get ubiquitous big bandwidth in every imaginable place on the planet, this will be slow to change. To maximize efficiency for out of contact and high performance work, we will be storing a robust amount of replicated data that we need in a variety of endpoint devices.
The economics of cloud computing will beneficially affect most companies in just the next few years. It will neutralize some of the advantage that the behemoths that run advanced IT strategies enjoy. So now, that specialized bank you want to deal with of 150 staff will be able to compete with the array of services, reliably and securely, that the giant bank of yesterday offers. In the fully democratized economic computing model of public cloud computing, the tables will turn and the efficiency advantage will go to... well, let see how it goes.