In a previous article, I had written about Cloud Computing and its relationship to SaaS (News - Alert). It looks like the matter has reached Main Street. The Wall Street Journal had a front page article on the 26th of March chastising Tech Industry executives for creating yet another term, “Cloud Computing,” with all the ambiguity surrounding it. The article went on to mention that “Cloud” was old jargon and was a metaphor for all things related to the Internet, in the late 90s. Finally it alluded to the fact that companies like Oracle (News - Alert) had diluted its meaning by relating all existing products to cloud computing.

 

I had the opportunity to visit a local university and talk about cloud computing and its implications last week. The topic was Efficient Monetization of Cloud Computing Services. One lady in the audience commented before I began, that the title was intimidating. I had to assure her she was not alone and told her about the article in The Wall Street Journal.

 

To add to the confusion, management consulting company McKinsey generated a recent report on Cloud Computing. The report said that there were 22 different definitions for Cloud Computing floating around, and went on to define it again. So what are mere mortals to do? The key is to identify Cloud Computing Services, and not get bogged down by the definition and jargon. Is this really a new paradigm in computing? Are these new technologies? There is definitely a change in the business model of selling computing resources. However, the underlying technology has only evolved over time. The reliability of IP networks and the improvement in virtualization technology has enabled delivery of business services over the Internet. In the simplest sense, any business services delivered online, that one can buy on a pay as you go basis can be classified as cloud computing services.

 

In my previous article, I had written about a classification of Cloud Computing into SaaS (Software as a Service), PaaS (Platform as a Service) and IaaS (Infrastructure as a Service). However the adoption of Cloud computing seems to be progressing in multiple ways. Application services are clearly seen as a big plus, and buyers seem to like the notion of a compute service and a storage service in the cloud. I am confused by the fact that buyers have no fears storing data in the cloud, but allowing cloud applications to work with the data is a whole different story.

 

Take a quick look at strategies for small businesses to cut prices in this economy, and it is apparent why the Cloud Computing model is relevant. The first suggestion is to use performance based pricing, which is a defining principle of a pay as you go cloud service. Offering less expensive services and slimmed down versions are other ways. Now how is this similar to Cloud Computing? For one, the notion of bundled services with different prices is core to the Cloud delivery model. Cloud service providers can use less expensive hardware and lower service level agreements for base plans and give higher qualities of service for more expensive service plans. And finally, adding new services to attract and retain profitable customers is a way to get through this global economic downturn for small business. Again, this is akin to the Cloud service model.