TechnologyAccountant.com

First time I encountered the term “cloud” as it relates to the Internet was in 2001. ‘Cloud computing’ only emerges as popular in the past 2 years. It’s vague and

Internet as the Cloud

misunderstood, but simple: users subscribe to on-demand “in-the-cloud” computing services similar to subscribing utility; pay for usage instead of owing the infrastructure. Out of curiosity I have done some research to see if cloud computing is here to stay – or it is really a fad?

The concept is not new. Unix operating system was largely widespread by the 80′s, and it allows many users logging in from remote locations. Early electronic bulletin boards (BBS) built by university students use Unix to share news and discussions, many of which are still in operation today (such as PTT in Taiwan). These systems pioneered the ways of cloud computing by offering users on-demand services that exists on the Internet.

So what’s new with today’s cloud computing? Not much. The only truly new element is virtualization. Until approximately 5 years ago, online service must live off physical server at fixed location. You can determine the location of a server and attack it – online or offline – to shut it down. Also server utilization is not efficient. Sometimes the usage is low (such as at night) but servers are kept on 24/7 resulting in wasted energy. Then it came the technology that virtualize server which detaches the operation system from the physical hardware so the entire software can be moved around easily. This gave a whole new meaning to computing because it means that the software does not need to run from any fixed location, and servers can be easily scale up or down according to usage.

Amazon launched AWS (Amazon Web Services) in 2006 offering server rental by the hours. This essentially removed the barrier for tech start-ups to buy expensive servers upfront.  Now there is a low-cost test lab for incubating projects. In the same year, Google started offering Google Apps: a hosted email and office suite for organization and businesses. Add that to Salesforce, a company selling online based CRM software since 1999, then you have an era of cloud based software.

The most recent news has to be in March 2010 when Microsoft CEO Steve Ballmer announced that the company is “All in” the cloud. An industry heavyweight, slow to react but nonetheless influential, Microsoft’s determination marks the end to any doubt that cloud computing is a fad. By of end of 2011, you can get Microsoft Office entirely online along with email, IM and spam protection for less than $25 per month.

One of my business contact puts it this way: “If on-premise infrastructure is like owing your own house, than managed services is like condo apartments, and cloud would be hotels”. Nicely put. Think about what happens when going to hotels each day cost lower than owing your house?

The bottomline? Cloud computing is not for everyone, yet for many small to medium size businesses it means accessibility to technology on-par with the Fortune 500 and gaining the edge. It’s here to stay, and your strategy better include some consideration of cloud computing.

P.s. – this is the beginning of a series that discuss cloud computing. Please come back to read more about these topics:

• Cloud computing: the good, the bad, the ugly.
• Free cloud computing resources for small businesses
• Email in the cloud – why, how, and how much (hint: free included!)
• Office in the cloud – comparing Google App and Microsoft Office 365
• Accounting in the cloud – is it for my business?
• Disaster plan – do you have offsite backups? How to automate it.