Big Blue Sees Clouds on the Horizon

    IBM’s move into “cloud computing” aka “grid computing” is very smart and coincides well with their core capabilities in computer applications. The cloud computing market is very much in the infancy, there are only a small number of applications which have been adapted to the cloud, and even the most advance “web site hosting” still has much to go before the mass market adopts it.
   As Moore of Crossing the Chasm explains, the need to simply the service offering, being in this case “cloud computing” to fully meet the need of a given market is vital for adoption to occur. IBM is betting on the adoption, which if it occurs and IBM is in a prime location and I gather could significantly boost their sales and revenues!
   IBM’s current ad hock method of creating a custom applications for each cloud computing integration creates much waste, and worst of all does not build a core application which is re-sellable.  Moving from that to a strategy where they are optimizing their services for a few given applications will help give those markets a solid solution needed to help promote adoption of cloud computing.
   Now for a quick overview, cloud computing has several major advantages over the existing in-house or out-of-house servers. But first one must understand the one major trend guiding all IT services, which is the need to minimize IT’s cost while improving its reliability and application flexibility. Large IT departments associated with supporting a mid to large cap business are substantial cost on the company’s income sheets. For example, supermarkets are in the business of selling food, and they ideally would like to concentrate their IT services on optimizing their inventory management, and marketing applications, and avoid managing servers, backups, and IT connections. 
   In theses instances cloud computing shines because the infrastructure need to support this type of IT is virtual, i.e. there is no server configurations to discuss, no backup systems to manage, or connections to monitor. Further more, clouds offer the ability of rapid development and quick rollouts of software updates, not to mention the instance scalability and super reliability.
   One major issue is that cloud computing applications need to be managed on a higher level. Rack Space a premier hosting company had to create a custom application to manage their cloud server. IBM now has a chance now to create a high level architecture (imaging a Cloud OS) that will allow system administrators to manage clouds effectively. Such an architecture would allow for quick porting of applications to a cloud, and management, not of the servers, but of cloud resources (like how much virtual RAM, and processing cycles are being used). Keep in mind, Microsoft made their fortune by creating a OS, and defended it well with the large entry barriers. A similar OS for cloud system could be a big cash cow if done right, and would have similar entry barriers because of the economy of scales, and customer captivity.
    Cloud or Grid computing is clearly a disruptive innovation, but the key is getting it adopted. Imagining how the server market would change if even 30% of the customer shifted to hosting their IT needs over cloud systems.

Dr. Brian Glassman
Ph.D in Innovation Management from Purdue University
Brian.Glassman at Gmail
www.techrd.com