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Cloud Computing - Jam Today, Not Tomorrow

Smart data centers are a smart investment

For business people, especially investors, the one core sentiment about Cloud computing I would stress right now, in October 2010, is this one.

The last time I experienced it was during preliminary phases of the dot com boom, and well, we all know what followed.

Cloud Computing simply represents a re-surfacing of this same underlying trend, because what goes down must come up, and independent of human fears about the stock market there is a relentless evolution of Internet-centric computing that will continue to gain adoption on an enormous scale. Not only will software available from the Internet become more pervasive, it will also become dramatically cheaper (open source SaaS) and it will get smarter too.

Cloud Outsourcing
The key role for Cloud providers to position themselves around is "burst capacity" for this automation platform.

This video from the CTO of RSA is a great explanation of how enterprises will 'extend their security perimeters' such that their virtualized data-center can reach out securely into Cloud services, with the business benefit of course being utility pricing of IaaS.

For large organizations this will help them automate much of their mundane IT work so that they can work more creatively to use the technologically to achieve their business goals, breaking up the "innovation gridlock".

So as well as looking at SaaS type business models the real key area for investors to consider are solutions to address the 'Private Cloud' market, ie., the internal data-centre for the large corporation, as well as what they host in an external data-centre. Software that helps make this environment "smarter" in various ways are likely to be big winners over the next few years, so that specialism within the Cloud space is key. A great headline example is Joyent.

Jam Today
To illustrate all of these points check out this white paper I wrote in 2002, "XML Web services - Jam today, not tomorrow". Almost ten years ago the same underlying principles offered business benefits under the umbrella of 'Utility Computing' that are the same for today. Fundamentally this technology offers virtualization and workflow automation for IT infrastructure, so that the repeated "manual labour" can be systemized to reduce HR cost and downtime through eliminating operator error.

Swap the concept of an XML "services grid" for Cloud Computing and you'll see this paper describes elements of Private Cloud, with this automation of IT labour the same principle business benefit. For VCs this is hopefully quite helpful, because the start-ups I profiled in it were all acquired in the following couple of years.

It highlights the type of deal opportunities this market will present. The vendors who were profiled in this article were essentially the Cloud software providers of the time, and all were quickly acquired by the big players moving into the market, such as Sun and Terraspring, Veritas buying Jareva and also Ejasent, as well as IBM grabbing ThinkDynamics. Sun touted their N1 vision as the equivalent to Cloud at the time, as did HP with their Utility Data-Centre vision, ultimately killed in 2004 but as described in this white paper it offered a solution for automating data-centre operations.

A couple of clicks on the same news web site and you can learn that the news today is that HP is getting back into the same game, and with the recent CA acquisition of 3Tera we are likely to see a similar same pattern of events, only on a muuuch larger scale.

As Giga says, it's only just getting started.

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The Cloud Best Practices Network is an expert community of leading Cloud pioneers. Follow our best practice blogs at http://CloudBestPractices.net

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