The concept of the technological “cloud,” a term that is at once confusing and ubiquitous, has been around for years, but industry experts say the extent of its reach has only just begun to be tapped. What used to be done with software and the nearly extinct floppy disk now happens in a virtual space from the consumer’s perspective, and a changing one from the business side.
With 38 of the 40 largest companies in the world already using application cloud services, and every business application that went public since 1999 delivering in the cloud model, there’s no denying this tool is the way forward.
Timothy Chou, professor at Stanford University and on the board of directors at Blackbaud (Nasdaq: BLKB), said this is just the beginning of the cloud’s next cycle.
“For those of you who were around the last time around that we made a big shift, it was called 'client server computing,' and I believe we’re in the same shift right now,” Chou said at a CommNexus program at American Internet Services on Thursday. “I think we’re in year two or year three of a 20-year cycle. You’re at the beginning of that wave, and the very same economics that drove what happened last time around is driving what is happening here.”
Chou said he thinks the industry is headed to “a growing list of specialized compute and storage cloud services,” which will be customized according to security, performance, business model and location, with the buyer deciding the specifications of each category. This will make cloud services even more competitive and universal.
“My personal belief right now is that in less than 10 years all compute and storage, and network, all will be delivered as cloud services,” Chou said. “It just doesn’t make sense to do it any other way.”
The reason it doesn’t make sense any other way is based on economics. The cloud and the new business models it facilitated create the ability to purchase and pay only for the time and storage you need, instead of paying for a system to handle your heaviest trafficked days year round. As Chou put it, $3,000 can buy one computer for three and a half years, or 10,000 computers for 30 minutes, a concept that has yet to be fully realized.
Chou highlighted three distinct types of cloud use based on the services offered by a company’s application. Applications with the aperiodic bursting model experience high use at certain expected times of the year like Valentine’s Day, tax day or the Super Bowl. Businesses aware that their online services will be in high demand at these times can purchase extra cloud support on these days or simply pay for what they use, instead of having to support a system with the capability to handle these highest flow days every day of the year.
On-off applications, which use high volumes of compute and storage for a few weeks out of the year, are the second framework, and periodic bursting, where companies collect data during the day and ramp up their machines at night to run algorithms on the data, is the third model.
“Technologically this was always possible, economically never possible until the advent of new computer storage cloud services,” Chou said.
The challenge many companies are now facing is how to transfer existing applications to the cloud. Chou laid out seven ways to make this switch, including moving to a new network cloud provider, moving to a new data center cloud service provider, switching to a new compute and storage cloud service, or rebuilding an app with a software development cloud service.
Additionally, executives could decide to manage the application in their own data center, allow the software vendor to manage the software they sold, or lastly move to a new piece of software entirely.
While the economic advantages of cloud computing and storage are strong, security concerns are still a deterrent for some companies wanting to make the change. Peter Bybee, president and CEO of Security On-Demand, said these fears are largely unfounded, as cloud security is no worse than the computer security of the past.
“I also don’t want you to think the cloud necessarily means the security will be worse,” Bybee said. “It’s just going to be different. Yes you have a few new problems you didn’t have before, but you know what, some of your old problems went away as well.”
This is because security is quickly evolving, from what Bybee calls “security 1.0,” or security as an internal skill set, to “security 2.0,” which has a more permeable boundary than just inside and outside the firewall, to the cloud era of “security 3.0” that we’re entering now.
“Now we have this combination, it’s a hybrid environment; we have on premises, we have cloud based, and we also have service-provider based,” Bybee said. “And it could even go from there.”
If Bybee and Chou are correct, the one place the cloud is definitely going is up in market share, as new uses and applications of the technology spring to life.
“In the end of the day, when I say we’re in year two of a 20-year cycle, it’s because we have yet to see what this is going to bring,” Chou said. “And the kids are going to figure this out. It’s going to be stuff you’ve never seen before, taking advantage of an economic model that’s never been used before.”