The CLOUD has captured the attention of the IT industry.  The CEOs of Oracle and Salesforce,com are having an all-too-public spat over who is more purely a Cloud Company, and traditional equipment manufacturers are scrambling to replace enduser sales lost to the cloud. Misunderstanding and misconceptions abound…  Business as usual, in other words, for what used to be called the computer industry.  In the good old days, hardware product companies made luxuriuous margins on selling and leasing processors and peripherals to endusers.  The model was that each enduser needed to own the means of production for its data processing requirements.  Large endusers created huge data centers with staffs of programmers and operators.  Product companies were happy to sell them the equipment they needed to do their own data processing.  Very large endusers became very profitable legacy accounts for companies like IBM, DEC.Compaq, H-P, and Dell. The problem with this model for the endusers  was the cost of all that hardware, software, and staff.  Endusers began to realize that doing your own data processing in the basement was not cost-effective, and they started to demand  a more effective model.  The IT industry has never changed on its own—Change has always been driven by customer demand, including especially the Open Systems movement led by Sun in the 80s and 90s. With hardware and software freed from proprietary constraints, customers could now begin receiving “computing on demand,”and IT companies raced to develop the best model to provide computing “by the drink.”  IBM developed “Grid Computing, “and others followed suit.  The breakthrough to “Cloud Computing”  was made possible by the acceptance in all customer segments  of the Internet as a trusted medium.  (Remember–not too long ago  , we were still debating if customers would actually be willing to trust the Internet to do commercial transactions.)


Now, endusers don’t need anything more sophisticated than what Scott McNealy originally called a “network computer, ” a device just to access software that was running somewhere else.  (These used to be called “dumb terminals.”)

In the Cloud, Everything’s A Service
Now, all the processing AND storage can be done by an entity other than the end user.  All the hardware,software, and staff needed to keep it running, can be owned and operated by someone else; and endusers can be free  to use the infrastructructure and/or apllications and platforms they need, when–and only when– they need them. Everything can nowbe consumed by endusers as a service.  We have IaaS, SaaS, and
PaaS in the Cloud(Infrastructure as a service, Software as a Service, and Platform as a Service).

Sophisticated services require SLAs

ServiceLevel Agreements (SLAs)need to be developed to define service delivery from the Cloud,,  If not controlled by SLAs, endusers will have difficulty measuring services provided and establishing accountability. Pricing will be murky.If Cloud services are hard to measure and account for, then endusers may be forced to reverse course and begin to hire talent and buy products again, an outcome that some IT products companies would welcome.

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