I’ve had the pleasure of talking with Albert a few times about business and technology. He’s a heck of an entrepreneur so it’s exciting to see him succeed and to be able to be small part of SikFair’s ongoing success.

I’ll start this discourse with a few PC and sincere comments (the two are not mutually exclusive unless one is running for political office).

First, I love Corporate CIOs and IT managers (not in a romantic way, of course, but with great admiration).

Second, they have the most difficult jobs in the corporate universe.  They are the brains and the central nervous systems of large enterprises.  They are also the most taken for granted of all executives.  They represent cost centers who get no credit for their corporations’ profits, while keeping the corporation alive.  If they achieve 99.99% availability of their services, an iota of kudos is given for that 99.99%, but a mountain of wrath is doled out for the other 0.01%.

Finally, I spent 27 of my 37 year career in information technology as an enterprise IT manager and Fortune 500 CIO.  You guys and gals are my comrades.

So, why do I feel the need to put my comrades on a pedestal?  Well, it started with some comments I made at a Wall Street conference and variations of it that I made to members of the technical press and analyst community.  I used the following analogy.

If you woke up in the morning and read in the Wall Street Journal that an eCommerce company like Overstock.com had stopped using the USPS, UPS, FedEx, DHL, etc. to deliver their goods and, instead, leased airport hubs all over the world, bought a fleet of jets and bought thousands of trucks and started delivering the stuff themselves, you’d think they were out of their minds.  So, why is is not equally insane for financial services companies, health care institutions, manufacturing companies, bio-tech companies, pharmaceutical giants, etc. to be spending a billion dollars or much  more each year on information technology infrastructure?

Well, that analogy has prompted several to accuse me of thinking that corporations are insane and corporate IT managers and CIOs are stupid.  I assure you that it not the case.

Then what do I do?  I really put my foot in my mouth.  I title this treatise “Are Enterprises Ready for Cloud Computing?”, as if to arrogantly proclaim that we are ready but enterprises are not.

But there is expiation for that as well (and I am not running for office, so this is a thought embellishment rather than flip flop).

Intellectually, of course you are ready.  Of course you have the experience and skill to adopt Cloud Computing.  And most of you have the resources.  Most significantly, you have always risen to the occasion when disruptive technologies have been thrust upon you.

But, practically speaking, whether you, I or anyone thinks that the future holds a world where all enterprises will get computing on demand and only pay for what they consume, we know that this will not happen over night.  I do see a world, though, in six or seven years, where this will be very much the norm and corporations owning datacenters will be the exception to the rule.

So, here’s where the Darwinian Theory of the Corporate Datacenter comes to play.

I have said many times that Cloud Computing is the most disruptive technology that has come along in a very long time.  Respected technology analysts say it will be bigger than e-Business and it’s potentially a quarter of a trillion dollar market (that’s almost enough to fund a fraction of a war!).  So, people ask me - Do you think Cloud Computing is a revolution or an evolution?

My answer is a resounding “Both”.

I believe that all evolutionary change starts with revolutionary change.  In Darwin’s Origin of the Species evolutionary changes start with a mutation.  Those mutations are the revolutions that result in evolution.  In most cases the mutation comes about as a mechanism to heighten the chance of survival - you know, to make the species more fit.  Subsequent to those revolutions, the evolutionary process gradually occurs as the most fit survive and the mutation becomes the norm - the standard.

Cloud computing is the mutation - the revolution.  Enterprise IT and Corporate CIOs/IT Managers will jump on the opportunity to evolve as they always have when revolutionary technology mutations have occurred.

So, here’s an example of a scenario of how the evolution will happen.

During the next couple of years two things will occur.

First, enterprises know that the hardest things to plan for with regard to capacity, performance, etc., are on line applications offered on the web.  They really have no control over who may log on, how many may log on, when they may log on, what they may do once they log on, etc.  So, the natural evolutionary step to mitigate this is to run those applications on massively scalable infrastructure that scales up and down dynamically as needed, using resources on demand, always there when needed and only paying for what is consumed.  These infrastructures are what we are now calling Clouds.

At the same time, the mission critical data and systems of records that are the enterprise life blood residing in their datacenters need to be isolated from these on line applicatons exposed to every internet user.  This will be accomplished through the use of secure virtual gateways in the Cloud, connecting, in a loosely coupled manner, rather than a fully integrated manner, to the enterprise datacenters, their databases and systems of record.

These gateways will take many forms.  They may be SOA gateways using XML and virtual XML firewalls, virtual messaging systems such as MQ, virtual EAI appliances or customized appliances encapsulating organizations’ proprietary techniques for reliably and securely communicating among systems (and anything new that comes along to supplement or replace these things).

Second, infrastructure/architecture agnostic Cloud platforms (what we at 3tera call Cloud Computing Without Compromise) will be installed in enterprise datacenters.  There will be two factors that will drive this.

(1) As more and more apps are offered on line, those same apps will often be used internally by the enterprise employees.  Why incur the cost of having separate experiences for employees and customers who are accessing the same information and functionality.  Also, when connecting the on line apps in the Cloud to the datacenter and SORs, having them on similar platforms will make it seamless and efficient.  ‘

(2) A Cloud infrastructure done right, behind the corporate firewall, enables the enterprise to run their datacenters as metered utilities.  It enables them to more efficiently use their hardware resources by provisioning what is needed for each application on demand and releasing those resources when no longer needed for other applications to use.  It enables them to more efficiently use intellectual capital by shifting IT administrators from managing machines to managing applications.  And, most importantly, it greatly decreases time to market because the lengthy provisioning, configuring, etc., of hardware and infrastructure resources is, pardon the pun, virtually eliminated.  So albeit humongously significant, forget all the talk about cost reduction and avoidance.  Cloud Computing in the enterprise has the potential to greatly increase revenue and beat the heck out of competitors implementing like products using traditional datacenter deployment methods.

OK - so what’s the next step in the evolution?

At the same time that enterprises are growing comfy with apps in Clouds and realizing the upside of dynamic provisioning and scaling, they will be developing new applications and replacing/changing existing ones.  They will start building the new apps in Clouds and as they change existing apps, will consider migrating them to the Cloud in the process.  This will afford them the advantages of much faster times to market, the ability to run applications on demand in multiple datacenters (globally if appropriate) creating their first truly complete disaster recovery abilities and concentrate on their core businesses which may be financial services, health care, manufacturing, etc., but certainly is not datacenter operations (they will leave that to the companies whose core business IS datacenter operations).

Now the final step (well, as my limited vision can see it - of course there will be much more beyond this):

Enterprises will find themselves with datacenters that only contain data.  Finally, a datacenter will be what its name implies.  All of their functionality - all the non-data tiers of their services, will be in Clouds connected to the datacenters’ data.  At that point, evolution will have to start behaving like the datacenter is an appendage.  Over time, the corporate data will move to the Cloud just as many smaller businesses without datacenters are using storage services in Clouds today.  The corporate datacenter will be a vestige, and eventually evolution will cause it to disappear.

Discussion of this step always raises questions of privacy and security.  I maintain that when corporate data is in the Cloud it will actually be more protected than it is in the enterprise datacenter.  But I’ll save that for a separate, devoted future posting.

In short, the corporate datacenter is not a stupid useless entity.  There have been no alternatives.  My hat is off to the brave men and women who devote their careers to thanklessly operating them.  They are profound necessities.  But neccesity truly is the mother of invention, and the corporate datacenter, with all of its overhead, has bred Cloud Computing.

So, as I started this with a PC comment, I feel like ending it with one.  As I composed this, I did realize that there are many people out there that discount Darwinian evolution in favor of Creationism.  I assure you that I have the utmost respect for all beliefs, no matter how different from my own.  And my references to evolution here, obviously have to do with the evolution of technology, not of the human race.  Furthermore, I am very happy to depict the corporate datacenter as the eventual dinosaur with a saddle on it’s back being ridden by a member of the Cloud Computing species.

I would add one more question to Frank’s list, though. Potential users should also ensure that service is available in multiple data centers and preferably from multiple providers as well. This makes it easier to build for business continuity and to provide a responsive rich user interface to wide spread audiences.

Now, on to get the next two nines.

During the chat, something very important dawned on me. This space is getting noisier and noisier – rightfully so – Cloud Computing is hotter than Hades and better than sliced bread! And we are making it even noisier with our semantics.

People do not define terms in this space consistently. I think it’s ironic that the semantics of Cloud Computing are, er, uh …, well, cloudy.

I’ll paraphrase:

IW – You talk about internal Clouds behind firewalls. How can a Cloud be private and internal?

3tera – We think of Cloud Computing in terms of how, not where?

IW – I disagree. Cloud Computing is running on IT infrastructure that you don’t own – someone else is the datacenter operator.

3tera – Maybe this is just semantics. We could call private Clouds “internal utilities” instead of private “Clouds”. If an enterprise were to run an app in an external Cloud and wants to connect that to their systems of record in their own datacenters, they might want to consider the same platform in their data centers.”

…. and so on.

After wrangling about that for several minutes, the subject changed. All we accomplished though was an addition to the confusion.

The epiphany for me during that conversation is that whatever I call Cloud Computing and whatever someone else calls Cloud Computing is kind of irrelevant. A couple of years from now, someone will obsolete the term Cloud Computing with something more trendy and we’ll debate what THAT is.

For me, the future holds computing services on demand – Information Technology as a Service – MASSIVELY scalable IT as a Service. ITaaS – the sound of that tickles my funny bone. ITaaS will use the Internet and, I think, intranets as well. End users will need no regard for the underlying technologies that support their services. They will only need to know that the services are available and perform at any scale on demand.

If someone installs a generator in their home instead of using the power utility, they get electricity on demand, the same as if they plug into a public utility.

I concede though, at face value, the economics of Cloud Computing seem to favor Clouds as external entities. After all, the hallmark of anything on demand is that you only pay for what you consume. External Clouds can accomplish this by making the same hardware available, at different times, to different users, thus, eliminating idle time and getting the most bang for the buck. But looking deeper, the economics favor internal, private Clouds as well. If a data center manager wants to be provisioned only for average usage rather than peak usage, he/she can do that if he/she is on a Cloud infrastructure that can grab resources from external Clouds only occasionally, when needed. If you add to that, with a Cloud done right, the data center manager manages applications rather than servers, decreasing administration costs; and, time to market is greatly reduced due to the lack of need for tedious provisioning, configuring, etc., the economics of the private Cloud become quite compelling.

To me, the bottom line is this. This is the 21^st century. It has been almost forty years since a man walked on the moon. For most of those forty years, almost all businesses have relied to some degree on Information Technology. It’s about time that IT is available on demand – really on demand – and everyone can have access to world class technology, only paying for what they consume.

So, call it Cloud, call it Utility, call it Platform as a Service, call it ITaas, call it whatever you want to call it. But please, don’t call me late to dinner … and, pretty please, don’t call me late to the on demand computing revolution!

Virtual Appliances - Intelligent networking functions like firewalls, load balancers, traffic shapers, caches and intrusion detection won’t be purchased as physical devices by cloud computing users. Instead, they’ll adopt this functionality as virtual appliances and pay by the hour. Thus vendors can participate in the growth of cloud computing by repackaging their products and adjusting their pricing model.

Selling to Cloud Operators - IMHO, this shift will actually be harder for many vendors. Alistair identified a couple of issues, including commoditization caused by the purchasing power of large data center operators. However, there’s a more fundamental issue - cloud computing has very different networking requirements than traditional data centers. Traditional data centers have purpose built deployments for specific applications. You can literally walk through the data center, point at racks, and identify the application. Many of these applications have local networks within the rack and uplink into the data center backbone. In contrast, cloud data centers are built for scale from homogeneous resources. Rack after rack of servers. Any application has to be able to run anywhere. Thus, while traditional data center purchasing decisions have been based primarily on features,  cloud computing favors large, high performance, switches with relatively few features.

The shift won’t happen overnight, of course, but vendors that recognize the trend early will have the opportunity to build market share.

Xseed’s recent announcement offering AppLogic in Japan means cloud computing is now truly global.