TECHnalysis Research Blog

August 16, 2016
The Utility of Cloud Computing

By Bob O'Donnell

From a technology perspective, the idea of delivering computing services from the cloud has gone mainstream. Every day, it seems, we end up hearing about or interacting with a new service or app that gets its capabilities from the ephemeral and, frankly, sometimes baffling idea of computers in the sky.

Well, OK, not exactly—advanced computing topics aren’t always known for their precision of language and clarity of meaning—but we all do use lots of online resources that are powered by servers and other computing devices that we can’t see or touch.

For consumers, these types of cloud computing-driven interactions are becoming regular and commonplace. Looking for transportation? Hail a ride from Uber or Lyft. Settle a debate? Ask your question of Siri, Cortana, Google Now or other personal assistants. Listen to your favorite tunes? Fire up Spotify, Pandora, Tidal or a host of other choices.

Businesses can also leverage cloud computing based services from the likes of Salesforce, DropBox, and hundreds of other companies. There’s also a rapidly growing business in offering cloud computing itself as a service from companies like Amazon, Microsoft, and Google.

In all cases, the idea is to leverage a seemingly inexhaustible supply of computing power, storage space, and fast network connection pipes to deliver computing as a utility, much like power companies deliver electricity to all our homes and businesses.

Web-based companies, like the ones mentioned above, are writing software to take advantage of this new utility in a way that allows them to run services on top of this infrastructure and build a business model around them.

Traditional businesses, however, have been much slower to move to this new flexible, but often technically challenging, type of computing. Oh sure, there’s been a lot of talk about creating “private clouds” (companies build their own web-like computing infrastructure, leveraging the same kinds of tools and methods used for the public internet but keeping everything inside their own walls), or “hybrid clouds”, which mix some elements of “private clouds” with “public clouds” hosted out on the Internet. In reality, however, adoption of these new concepts has moved slower than many initially expected.

The reasons for these delays are many. First, there is the basic question of trust. Many companies have been very leery of letting their digital crown jewels outside the walls of their organization. Not as widely discussed, but equally problematic, is the issue of job security. If projects that IT used to manage are being handled by outside cloud companies, won’t that reduce the need for some IT jobs?

Another big issue is technical complexity and limited skill sets. Many cloud computing concepts, tools, structures and methodologies can be very challenging, and traditional business IT departments simply don’t generally have enough people with the capabilities to do the work. (Of course, this relates back to job security as well.)

As time has passed, however, many businesses are starting to recognize that their fears were either unfounded or not as troublesome as they first thought. In the case of trust and security, for example, it’s becoming increasingly clear that companies who specialize in cloud computing are so highly focused on security, that they’re probably going to have a safer environment than a company’s own network.

We’ve also seen the rise of companies like Rackspace and other managed service providers that can help companies who don’t necessarily have the in-house expertise to make the transition to cloud-based computing services.

The net result is that we’re turning the corner on cloud computing models becoming mainstream options in traditional businesses as well. This represents a significant sea change that’s likely to have important repercussions within the overall business computing environment for many years to come.

On one hand, the improved flexibility that the dynamic, quickly evolving cloud computing methods can bring to businesses should help them in a number of areas, from delivering mobile versions of custom business applications more rapidly, to integrating with partners and other web services more easily.

But the move also implies that many businesses will start to slowly get out of the business of hosting their own data centers, preferring to have that computing “utility” hosted by an outside party, such as an Amazon, Microsoft or Google. For companies like HP Enterprise, Dell, Cisco and others that generate significant revenue from selling enterprise hardware to companies who have been running their own data centers, the changes could be particularly profound.

Of course, not all companies will completely move away from running their own data centers, nor will the ones who start to do so make those changes overnight. But just as few companies today think of running their own power grid, there may come a day when companies will look to a highly consolidated group of compute utility companies to deliver some of the services they now provide.

Adjusting to the potential of that new reality will keep the enterprise computing market interesting to observe for several years to come.

Here's a link to the column: https://techpinions.com/the-utility-of-cloud-computing/46842

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.