In the beginning, the cloud was long and white

Saturday 25 October 2008 - Filed under Tech Notes

It’s reassuring to know that I wasn’t the only one talking clouds. Yesterday, The Economist published a special report on cloud computing. Also yesterday, Xero, the accounting business I cited as one of the prominent examples of cloud computing, received much media attention to become even more prominent.

As an overview, here are the titles and tag lines of the Economist report, which is a must-read in-depth series of insight for people interested in the upcoming changes in corporate IT and the economy at large:

1. Let it rise – Information technology is turning into a global “cloud” accessible from anywhere. What does that mean for the way people conduct business?
2. Where the cloud meets the ground – Data centres are quickly evolving into service factories
3. Creating the cumulus – Software will be transformed into a combination of services
4. On the periphery – The cloud’s communications with its clients will become ever more intelligent and interactive
5. Highs and lows – As IT gets cloudier, the economics of the business will change
6. The long nimbus – The cloud will make businesses more adaptable, interconnected and specialised—and often smaller
7. Computers without borders – The cloud may be the ultimate form of globalisation

Over the past twelve months (a timeframe observed by The Economist), cloud computing has risen from a mere IT buzzword to a branch of economics that ties in with just about every single emerging trend in business and technology, such as globalisation, green energy, virtualisation, big brother, and the gloomy picture for the global economy. Somebody ought to write a thesis on this. But The Economist has already summed it up elegantly in the first three sentences of their special report:

IN THE beginning computers were human. Then they took the shape of metal boxes, filling entire rooms before becoming ever smaller and more widespread. Now they are evaporating altogether and becoming accessible from anywhere.

I am particularly intrigued by the fact that cloud computing and virtualisation are fuelled by each other. As I witness in the workplace daily, virtualisation right now is THE hottest potato in the world of IT. If I had money and access to the U.S. stock market, I would invest in the leading vendors of virtualisation products and technologies such as VMware. All the cost savings, benefits, and promises of virtualisation, however, are not necessarily as good news to the working families as they are to the shareholders:

Hewlett-Packard (HP) used to have 85 data centres with 19,000 IT workers worldwide, but expects to cut this down to six facilities in America with just 8,000 employees by the end of this year, reducing its IT budget from 4% to 2% of revenue.

Other large organisations are following suit. Using VMware’s software, BT, a telecoms firm, has cut the number of servers in its 57 data centres across the world from 16,000 to 10,000 yet increased their workload. The US Marine Corps is reducing the number of its IT sites from 175 to about 100.

We’ve all heard of mobile workers, virtual teams, and telecommuting. But thanks to cloud computing and virtualisation, entire data centres each comprising thousands and tens of thousands of “servers”, too, will go mobile in the future, in the form of trucks and ships that move around the globe as they please – often driven by factors like energy costs (and perhaps legal jurisdictions):

Google, for its part, seems to be thinking of moving offshore. In August it applied for a patent for water-based data centres. “Computing centres are located on a ship or ships, anchored in a water body from which energy from natural motion of the water may be captured, and turned into electricity and/or pumping power for cooling pumps to carry heat away,” says the patent application.

Thankfully, service providers have been thinking about the perils of cloud computing, namely, privacy and ownership concerns:

Stefan van Overtveldt, the man in charge of transforming BT’s IT infrastructure, thinks that to attract more customers, service providers will have to offer “virtual private clouds”, fenced off within a public cloud. BT plans to offer these as a service for firms that quickly need extra capacity.

..But it is not only personal information that could get out into the open. Privacy is a worry for companies too — and not just because criminals or spies might intercept their data. Once they are in the cloud, governments can also get their hands on them more easily. SWIFT, the organisation that manages international bank transfers, is planning to build a data centre in neutral Switzerland. That will allow it to keep data about European transfers on the old continent, where it cannot be subpoenaed by the American government. Web-based e-mail is not safe either. Thanks to the Stored Communications Act, American law enforcers can read people’s messages — and do not even have to tell the recipient.

At least on the surface, cloud computing means productivity that comes with affordability plus freedom and without administrative burden. Global cloud service providers like Google and Amazon have begun renting out portions of their cloud to businesses that need instant, cheap computing power. More importantly, skyward-looking vendors and service providers are not fearing the global economic slowdown because the proliferation of cloud computing can only be accelerated by it.

2008-10-25  »  JK