Can You Bet on the Cloud?

There's no question that the cloud model is gaining steam, but large enterprises may not be ready to roll the dice. Big players such as IBM, and Google are offering services, startups are making use of cloud computing services to save money, and larger organizations such as the Department of Defense and Major League Baseball are drawn to the flexibility of scalable services.

The future of computing may be a lot harder to predict than the weather. So, can you bet your company on the cloud?

This question is pressing on enterprise IT executives who are trying to weigh the allure of low-cost, flexible computing in the cloud against the risks inherent in the platform. The fear of outages is perhaps one of the biggest obstacles to the adoption of cloud computing, but IT and business managers also worry-rightly-about data security, regulatory concerns and vendor viability, among other things.

Interest in the sometimes nebulous concept is rising faster than moist air in a thunderhead. Venture capital companies are showering investment dollars on a crop of tiny, oddly named startups. Established vendors are scrambling to reposition their offerings as "cloud this" and "cloud that." Dell has even sought-unsuccessfully so far-to trademark the expression "cloud computing."

Definitions vary, but a few generally agreed-upon characteristics of cloud computing are emerging: It is not a product but a service; it is available via the Web with little or no human assistance; it is more or less instantly and infinitely scalable to accommodate sudden bursts and drop-offs in demand; and customers pay according to usage with little long-term commitment.

Amazon Web Services, or AWS, are generally agreed to be quintessential cloud services.'s EC2 (Elastic Compute Cloud) for application development and its S3 (Simple Storage Service) both serve up a Web interface, inviting the customer to pay for what's used via credit card. has augmented those services with SimpleDB, Simple Queue Service, Flexible Payments Service and Mechanical Turk, a service, now in beta, that provides an on-demand work force.

In August 2008, enhanced EC2 with EBS (Elastic Block Storage), which enables storage to persist after an EC2 instance is terminated. is far from alone. Search engine giant Google offers Google App Engine, a cloud-based platform for application development. In the United Kingdom, hosting provider XCalibre Communications is serving up FlexiScale, which offers users a self-service virtual dedicated server on the Web.

"You go online and sign up," said Philipp Huber, chief operating officer of XCalibre. "Once you have an account, you can set up a machine in a minute or two."

Most observers agree there are several basic types of cloud. Forrester Research has segmented the cloud market into five categories: Web-based services and SAAS (software as a service); developer application services; middleware infrastructure as a service; virtual IT infrastructure as a service; and physical infrastructure as a service.

But not all clouds are created by commercial cloud computing service providers. Most significantly for corporate IT professionals, corporate clouds-call them "intraclouds"-have emerged, in which companies with significant IT resources make them available in cloud form to their own employees.

And in what may be a sign of the staying power of compute clouds, a cloud ecosystem is developing in which utility vendors are creating tools for monitoring cloud performance, and cloud aggregators are putting together packages of different cloud services.