The cloud transforms business.

AuthorGoodburn, Mark A.

The cloud has reached an important inflection point that is impacting corporate strategy and changing business models. Organizations that recognize and are able to effectively manage risks around cloud will create a sustainable competitive advantage.

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Years of technological advances have allowed the Internet to become a viable backbone for "virtualized" technology. The information technology community is well aware of this shift and has largely driven the discussion about cloud and its impact on IT.

Less prevalent has been discussion about the much broader impact cloud is beginning to have on business. Make no mistake about it, with the virtualization of technology comes the virtualization of business applications, processes and services. In effect, it means the virtualization of an organization.

This shift is profound and is poised to have a transformational impact on business models and core drivers of competitive differentiation.

The cloud allows large organizations to move away from managing their own data centers to focusing their attention and their resources--financial and human--on their core competencies. Smaller players see the dynamic implications of a future unrestrained by the need to build extensive IT infrastructure.

Cloud is bringing about transformational change in value chains, enabling companies to respond much more effectively to customer demand. Cloud networks are evolving, linking companies through complex, multiparty processes into single, virtual organizations.

As with any transformational shift, technical and operational hurdles need to be overcome. Data security, privacy and a host of other issues must be fully considered, and the right balance between these risks and performance must be achieved.

Still, at a time of economic recovery, when organizations are seeking new paths to growth, both business and government leaders must seize this ideal moment to think hard about the possibilities a cloud operating environment presents.

What is 'Cloud?'

Cloud is a business imperative. It is more than just virtualized technology. It's an amalgamation of many years of technology innovations and development that has evolved into a model for enabling convenient, on-demand access to a shared pool of virtual computing resources, including networks, servers, storage, applications and services.

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Cloud includes business services (applications) deployed and maintained over the Internet on a pay-as-you-go basis. It provides agility like never before, taking people and latency out of systems, thus allowing companies to adopt new systems in days or weeks, rather than several months or years.

Cloud service providers generally use one of three cloud service models:

Software as a Service (Saas)--business operations over a network;

Platform as a Service (PaaS)--deploy customer-created applications to a cloud; or

Infrastructure as a Service (IaaS)--rent processing, storage, network and other computing resources.

Cloud deployment models for organizations moving to cloud environments include:

Private--a "closed" environment for a single organization hosted by a third party;

Public--a shared environment used by many organizations; or

Community--perhaps the most interesting and potentially transformational of the three, which involves an environment shared by many organizations in particular industries, by geography, along similar supply...

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