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Starting with the basics: What is ‘cloud computing’? ........................................................ 2

Knitting fog: Defining cloud computing ......................................................................... 2
Cloud service models .......................................................................................................... 4
In conclusion........................................................................................................................ 6

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In Focus: Cloud Computing


That is a good question and not a simple one to answer, as we’ll see. The term ‘cloud
computing’ has been known by many other names, including on-demand computing,
elastic computing, utility computing, grid computing, and everything-as-a-service.
While each term captures facets of the idea, they fall short of providing a complete
Whenever cloud computing arises in conversation, the contributors tend to express
their opinions and divide into one of two camps:

Cloud computing changes Cloud computing changes

everything! nothing!
• Your business model is old and • This is only outsourcing rebranded
outdated! with some new buzz-words.

• Are your competitors in the cloud? • We’ve been here before – this is
Then your business is doomed if you nothing new
don’t follow suit!

The ‘cloud changes everything’ camp is generally populated by evangelists with

varying motivations – some of them commercial.
In the ‘cloud changes nothing’ camp we generally have the sceptics and agnostics
comfortable with their corporate IT empires, perhaps protective of them, and those
people who have perhaps misinterpreted some of the information attempting to
define what cloud computing is. An infamous example arose in the early days of
cloud computing development in July 2008; Larry Ellison, founder and CEO of
Oracle, was quoted in the Wall Street Journal:
“The interesting thing about cloud computing is that we’ve redefined
cloud computing to include everything that we already do... What is
it? It’s complete gibberish. It’s insane. When is this idiocy going to
So which is right? Is it either of these ideas or something different? I would like to
show you that both concepts play their part in helping to understand what cloud
computing is and how it can be used effectively; they are not mutually exclusive.
We’ll look at this in more detail in ‘What is driving the development of the cloud?’
and ‘What does the evolving cloud change?’

Knitting fog: Defining cloud computing

In the US, the National Institute of Standards and Technology (NIST) have made
bold attempts to get a grip on a definition of cloud computing. At the time of writing
the latest definitive document – version 15 dated October 2009 1 – goes into

On 1st February 2011 NIST announced that a revised draft definition was available for comment.

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In Focus: Cloud Computing

moderate detail over two pages. Inevitably, there are supporters and detractors of
this definition.
The most useful and enduring information from the NIST definition is captured in
the very first paragraph:
‘Cloud computing is still an evolving paradigm. Its definitions, use
cases, underlying technologies, issues, risks, and benefits will be
refined in a spirited debate by the public and private sectors. These
definitions, attributes, and characteristics will evolve and change over
There’s the nugget: ‘Cloud computing is still an evolving paradigm.’ So to get a
handle on what this looks like today, let’s fast forward to 2011 and reverse-engineer a
definition based upon what we see vendors offering and the underpinning technology
that they are using.
At the most generic level, ‘Cloud computing’ is information processing undertaken
using cloud services accessed via the Internet. What do we mean by ‘cloud services’?
There are different models, as we’ll see below, however they have some common

• Cloud services are not dependent upon the computing device used by the
customer or where that device is located.
• Cloud services are ‘multi-tenanted’, serving a number of users simultaneously
from shared resources.
• Cloud services are highly scalable to meet the peaks and troughs of processing
• Cloud services support rapid self-service provisioning and configuration (i.e.
buying additional services) and usage monitoring.
• Most cloud services charge the customer based upon a resource utilisation
model (though a minority offer a subscription model).
This utility business model for cloud services is covered in more detail in ‘What is
driving the development of the cloud?’
Although the term ‘cloud computing’ is quite recent, elements of the concept have
been around for a number of years: Timesharing and virtual machines have
identifiable origins in the mainframe era in the 1960s. The concept of ‘the network is
the computer’ was first coined by Sun Microsystems in 1982. Grid computing, in use
by the scientific community since the early 1990s, has been widely deployed in
financial services, particularly in securities and trading operations. Even the on-
demand business model dates back to the late 1990s, when it was delivered by
organisations known as application service providers, or ASPs. All of this adds to the
conviction of the ‘cloud changes nothing’ camp.
However, it is the innovative configuration and application of techniques and
technologies that have evolved from these earlier systems that make up the current
cloud service ecosystem. In the next section we will compare the traditional
enterprise solutions with the cloud service models offered today and offer some
examples that you may be familiar with.

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In Focus: Cloud Computing

Cloud service models

The traditional enterprise IT stack model is a useful reference. The different types of
cloud services that have evolved to date generally map as equivalents on this model.
These services range from ‘bare metal’ infrastructure provision through to
comprehensive services supporting specific business processes.

At the infrastructure level, many organisations have already started to source raw
computing resources (processing capability, network bandwidth and storage) from
external providers on an on-demand basis. In many cases, these resources are
currently used to augment rather than replace existing in-house infrastructure.
Unlike traditional hosting services which provide dedicated hardware to each
customer, infrastructure cloud service providers implement capacity monitoring and
virtualisation technology to dynamically expand or contract the allocation of
resources from a vast shared pool to accommodate fluctuating demand from
different user organisations. Amazon’s Elastic Compute Cloud and VMware’s vCloud
are prime examples.

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In Focus: Cloud Computing

At the platform level, cloud-based environments provide application developers

similar functionalities to those used in traditional desktop settings. Specifically,
these include tools and other support for development, testing, deployment, runtime
libraries and hosting. The emergence of such platforms allows independent software
vendors and IT staff to develop and deploy online applications quickly using the
third-party infrastructure.
For example, in the case of developers can take advantage of the existing
data and customer base from the core Salesforce customer relationship management
application. Google App Engine is another example. And Microsoft is promoting its
Windows Azure service platform, which extends its desktop capabilities (such as
.NET) into the cloud.

At the software application level, the initial wave of cloud-based services fell broadly
into the areas of customer relationship management, human resource, and financial
management. Later service developments have introduced desktop productivity
tools including word processing, spreadsheets, e-mail and Web conferencing.
Application clouds currently span all major enterprise solution areas, from
procurement to enterprise resource planning and content management.
These applications run on the third-party infrastructure. User organisations
subscribe to these services based on the number of users or seats. Since these
services are available via standard browsers, they support device-independence and

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In Focus: Cloud Computing

anywhere-access. Principle vendors include Salesforce, NetSuite and Google (Google

Apps). Traditional enterprise software providers such as Oracle, SAP and Microsoft
have also begun to offer their own hosted applications.

At the business process level the cloud based solutions are also known as business
process utilities or platform-based business process outsourcing (BPO).
Occasionally, they are referred to as ‘Process-as-a-Service (PraaS). They offer an
Internet-enabled, externally provisioned service for managing an entire business
process such as claims processing, expense management or procurement.
Unlike traditional BPO, which requires the service provider to take over an existing
software installation, the process cloud uses a common, one-to-many platform to
automate highly standardised processes. It differs from application clouds in that it
provides end-to-end process support; this covers not just software but also processes
supported by people, such as contact centres. These processes are typically priced on
a per-transaction rather than per-seat basis. Examples include PayPal (consumer
micro payments), the ebay sales process environment, ADP Employease payroll
service, and Amex-Concur business expense management.

In conclusion
Cloud computing is a very flexible concept for delivering computational power.
Potential organisational application and benefits are wide-ranging. For example:

• It enables a new start-up company to rapidly set up knowing that initial

resources will be inexpensive but a sudden increase in demand from users
won’t make the company a victim of its own success (as has happened in some
cases in the past).
• It can mean easier IT administration, with issues such as licensing, backup
and server environment security being taken care of elsewhere.
• It can provide a powerful computational environment available anywhere that
the user can access a the Internet through a web browser.
But what about the end-user experience? That can’t be equivalent to that with
traditional architecture, can it?

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In Focus: Cloud Computing

Web services are being widely adopted, allowing easy publishing, access and
integration of application functionalities and infrastructure capabilities from
different organisations. For instance, the entire Amazon cloud is accessible through
Web services.
Rich Internet Applications (RIAs) – for example, AJAX, Flash/Flex, OpenLaszlo –
support desktop-like client-side functionality within a browser including:

• local persistence for offline use,

• enriched graphics processing,
• integration with local devices.
Without RIAs, application clouds such as and Google Apps would not
have been possible. In addition, other advances in hardware virtualization, multi-
tenant architecture, parallelization engines (for example, MapReduce, Hadoop), and
grid architecture have been fundamental, underpinning the elasticity and scalability
of the cloud.
So what’s the catch? Aren’t there drawbacks? Of course there are. But that doesn’t
invalidate the potential benefits and value of cloud computing; being aware of
constraints and risks is the first step in making an informed decision about cloud
services and provides controls to an organisational strategy for cloud adoption.
We’ll look at these concerns in more detail in ‘What does the evolving cloud change?’
and ‘Caveats and controls to be aware of’.

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In focus: What is ‘cloud computing’? v1.0 18th March 2011

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