Cloud Computing Brought Down to Earth

By Kenneth Neil Cukier

Introductory Remarks for Digital Transformations Panel

World Economic Forum - Dalian, China; September 12, 2009

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What is cloud computing? So much attention is given to it these days that there is a sense that it must be something very new. But when you think about it, it is actually very old -- at least ten years old, and arguably traces its roots to the very start of the Internet.

Consider the three elements that today typifies cloud computing.

First, applications. Hosted applications and software as a service seems new. But when you type a search query into Google and get a result back, that is remote computing.

Second, content. Peer-to-peer file-sharing, where people can access digital content that is distributed across the network, has existed for a decade when it comes to music, and far longer for text files.

Third, processing power. Things like SETI@home, where computer geeks use spare computer cycles to search for extra-terrestrial life, is distributed processing power.

So why should we be so excited about cloud computing today? There are a couple of things that make it new.

In the past, its three pillars -- applications, content and processing -- were treated separately, and on their own were not enough to create a robust market. Today they are joined together.

Also, the technology is ready. We have the bandwidth with broadband at home, the processing power with inexpensive, standardized server technology, and the memory with low-cost storage.

Finally, we have a great “brand.” The term “cloud computing” helps humanize the technology with an intuitive name.

The transition is massive. The shift from desktop PCs to cloud computing will be as fundamental and wide-reaching a transformation as the change from mainframes to personal computers a quarter-century ago. Users will buy data services as they do water or electricity -- as a utility.

And it is an important economic shift in the structure of IT: cloud computing is about leveraging the large sunk cost of infrastructure by distributing it across many customers.

The advantages are myriad. It leads to lower costs and easier administration. But this is just the first step in.

More importantly, it will boost innovation, since application developers can deploy their technologies faster, and compete better. Development cycle times and upgrades can happen more quickly and smoothly. Customers can experiment with new services, and new revenue models can be devised.

Even more striking still, cloud computing will lead to new forms of integration and interaction among data, applications and business process. It will unleash new services, and probably new corporate forms.

All this sounds like heavenly -- as if we can relax, drifting on cloud nine. However, there are storm clouds on the horizon: big challenges that need to be overcome to get from here to there.

Privacy, security and intellectual property are a constant worry. Reliability and performance needs to be assured. People need confidence in the infrastructure if they will migrate their operations and data into the ether.

Rules will be needed, whether industry standards to ensure interoperability or government regulations that can be flexible yet meaningful -- and enforced. And all this must happen across jurisdiction, since the cloud inherently crisscrosses borders.

It raises the issue of “information governance” -- which will probably be the defining issue of our industry moving forward.

Luckily, our panel today is particularly well placed to discuss these questions -- and hopefully, offer some answers. Let me introduce them now…

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