An exaggeration? Of course. But there's a kernel of truth beneath the hyperbole. Cloud computing, once a concept as murky as its name suggests, is becoming a legitimate emerging technology and piquing the interest of forward-looking CIOs. Out-of-control costs for power, personnel and hardware, limited space in data centers, and above all, a desire to simplify, have encouraged significant numbers of startups—and a still small number of enterprises—to move more infrastructure into a third-party provided cloud.

"The concept of cloud computing makes enormous sense, says André Mendes, the CIO of Special Olympics. "It helps the CIO abstract another layer of complexity from the organization and concentrate on providing the higher levels of value." Mendes, who's now moving much of his data center outside his enterprise via conventional hosting services, says he expects to move toward the cloud in the next few years.

Why now? Enabling technologies, including nearly ubiquitous bandwidth and widespread server virtualization, plus the lessons learned from the rapid ascent of software as a service (SaaS), are encouraging CIOs to think further outside of the data center.

To be sure, it's still the early days of cloud computing. Concerns around security and application latency, to name two of the issues most commonly raised by the IT community, are real. Also, providers have not fully formulated their business and pricing models, which is one reason that some CIOs who did not reap the desired ROI from SaaS now look at cloud computing skeptically. Yet another issue: transparency. Entrusting mission critical applications and data to a third party means the customer has to know exactly how cloud providers handle key security and architectural issues. How transparent providers will be about those details remains an open question.

A New Level of Scalability

Unlike many "next big things" cloud computing didn't just spring fully-formed from the brain of a Silicon Valley whiz kid. "It's the logical corollary of what happened in computing over the last 30 years. In a sense, it's a return to the past; time-sharing on steroids," says Mendes.