by Scott Stewart

The cloud that surrounds the cloud

May 26, 2010
Cloud ComputingIT Management

Many new technologies have emerged in the world of IT but none is more confused and misunderstood than cloud computing. Here is another new technology paradigm that is crying out for a set of common standard definitions and a global consensus of understanding.

Cloud computing represents perhaps the greatest fundamental shift in how we consume IT that you may see in your career and if you are a CIO who wants to survive, you need to be on the right side of the “I get it” ledger.

I was discussing cloud computing at a recent function with a valued customer of the firm who also happens to be a venture capitalist investing in IT companies developing software-as-a-service (SaaS) offerings. I commented that the firm wasw “going to the cloud”.

Without hesitation the client responded that if his own investment bank “went to the cloud” he would close his accounts and move his money and his information elsewhere!

Of course I immediately realised my gaffe — that we were, in fact, talking about different ‘clouds’. I quickly explained I was referring to a secure and private cloud service, which he was quite relieved to hear.

But his initial response to my somewhat ambiguous statement provides some interesting insights; firstly, that consumers are just as sensitive about the security of their information as they are about the security of their money. Secondly, any discussion on cloud computing invariably touches people’s fundamental concerns about security and privacy. And finally, there is much confusion and misunderstanding around what it means when someone uses the term “going to the cloud”.

The regulators of the banks were so concerned with the security and privacy issues of cloud computing that they moved to restrict banks from sending customer data off-shore. This will influence the way that the banks play out their cloud strategies but it will certainly not stop them from adopting a cloud strategy — and quite aggressively, it would seem.

Last month, we heard the group executive of enterprise services and CIO of the CBA Bank, Michael Harte, speak about the bank’s push to cloud computing and how it will help the bank reduce much of the 50-80 per cent of its in-house infrastructure spend. He is also reported as saying that the security and privacy concerns are “actually the most easily fixed”. The most telling insights about his resolve to push the bank into a cloud strategy came with these comments: “We’re saying that we will never buy another data centre. We will never buy another rack or server or storage device or network device again” and also: “I will never implement an internal solution for a common problem that I could procure on subscription across the Web.”

With this speech Harte confirmed that cloud computing is well and truly here to stay and, once the reports start circulating of organisations realising significant savings, cloud computing will become well and truly entrenched as a common model.

It is difficult to imagine that once organisations unravel and deconstruct all their in-house infrastructure in the hunt for cost reductions that there will be any company which will ever want to own a server, rack or data centre, nor want to employ the infrastructure technicians required to keep the lights on.

Harte also deals a fatal blow to those tired and worn excuses of “security and privacy” that technologists regularly pull out and dust off to throw a stick in the spokes of any new initiative that they don’t like or see as threatening to their position.

Before a CIO jumps on the cloud bandwagon, however, they must first understand just what cloud computing really is and how it could be applied in their organisation to provide real business value. The lack of definitions makes this difficult.

Fortunately, there has been an effort to develop a standard definition for cloud by the National Institute of Standards and Technology, an agency of the US Department of Commerce.

You can see their definitions here.

The development of these definitions is an excellent step in the right direction for the industry, but I still found it was a challenge for the business to understand the concept of cloud computing and it can be deployed. The next challenge for smart CIOs is how to bring clarity to the business on the whole nebulous concept of cloud computing.

Scott Stewart is CIO of Wilson HTM Investment Group and member of the CIO Executive Council.