Although cloud computing is widely recognized as a technology game changer, its potential for driving business innovation remains virtually untapped. Indeed, cloud has the power to fundamentally shift competitive landscapes by providing a new platform for creating and delivering business value. To take advantage of cloud’s potential to transform internal operations; customer relationships and industry value chains, organizations need to determine how best to employ cloud-enabled business models that promote sustainable competitive advantage. This blog addresses the how to perform business model innovation with cloud computing technology platform and to drive new businesses and transform industries.Although cloud is widely recognized as a technology game changer, its potential for driving business innovation remains virtually untapped. Indeed, cloud has the power to fundamentally shift competitive landscapes by providing a new platform for creating and delivering business value. To take advantage of cloud’s potential to transform internal operations, customer relationships and industry value chains, organizations need to determine how best to employ cloud-enabled business models that promote sustainable competitive advantage.
History of Cloud Computing
Every 10-15 years, the Information and Communication Technology (ICT) industry is transformed by innovations that fundamentally change the way we use computers, how we access information, how businesses derive value from ICT and even how consumers live their daily lives. The main-stream introduction of the Internet via the World Wide Web in 1995 was one such revolutionary change. It enabled ready access to information regardless of where it geographically derived from. It removed barriers to publish information, and to conduct business on-line. The web has indisputably and fundamentally changed entire industries, including publishing, music and telecoms, to name but a few.
In 2000, at the height of the dot-com bubble, Application Service Providers (ASP) entered the market, offering a simple browser interface for interacting with applications. Rather than hosting applications in-house, they could be hosted elsewhere, and were simultaneously offered to multiple clients, accessible via a browser. Salesforce.com, an enterprise software company with a customer relationship management (CRM) product is a successful example of an ASP.
Simultaneously, academic research institutions began to experiment with Grid Computing, so-called because it is analogous to the power grid, in which many power plants supply energy and consumers can draw power at will. Grid computing refers to distributed systems with non-interactive workloads that involve a large number of files, loosely coupled, heterogeneous and geographically dispersed. Around this time a third trend soon came into mainstream, which was Virtualization. Although the technology itself had been around for more than 30 years, Intel began to enable physical processors to host multiple operating systems concurrently. In this way, a physical server that previously may have only been used at 10-15% of its capacity could now be fully utilized. In 2004, Cloud Computing rose to public awareness. Essentially, it is the model used by companies (such as Salesforce.com, Amazon, Google, and Face book) that run their own infrastructures to be always on, with changes and upgrades occurring on the running system and the system scaling in accordance with demand.
Cloud Computing has since become the predominant way of delivering and consuming IT infra-structure (computation and storage), middle-ware and applications. In our opinion, Cloud Computing is one of the fundamental transformations that, as with the advent of the web, will change how we communicate, do business and offer services.
History of Cloud Computing: Timelines
1950: Scientist Herb Grosch (the author of Grosch’s law) postulated that the entire world would operate on dumb terminals powered by about 15 large data centers.
1960: John McCarthy opined that “computation may someday be organised as a public utility”In 1961, Stanford professor John McCarthy was one of the first to suggest a time-share, service bureau computing model.
1966: Douglas Parkhill’s book, “The Challenge of the Computer Utility” explained all the modern-day characteristics of cloud computing
1969: ARPANET developed, UNIX created
1970: ARPANET transformed itself into Internet
J.C.R. Licklider, a key man at ARPANET, predicted an “intergalactic computer network” from which users could access data or programs anytime, anywhere.
1990: Internet age started,
1991: CERN released Internet for general use
1993-94: Browsers such as Mosiac & Netscape launched
1995: The online auction website “eBay” was founded as AuctionWeb in San Jose, California, on September 5, 1995, by French-born Iranian-American computer programmer Pierre Omidyar. Jeff Bezos created Amazon.com, Inc. in 1994, and the site went online in 1995. It is named after the Amazon River, one of the largest rivers in the world, which in turn was named after Amazons, the legendary nation of female warriors in Greek mythology.
In A 1996 paper, The Self-governing Internet: Coordination by Design, MIT researchers used the term “cloud” to describe foundational elements of today’s movement. Advances in hardware, software and networking brought the rise of application service providers in the 1990s.
A 1998 book, The Grid: Blueprint for a New Computing Infrastructure, described “a universal source of pervasive and dependable computing power that supports dramatically new classes of applications.”
1999: Salesforce.com launched in March 1999 by former Oracle executive Marc Benioff, Parker Harris, Dave Moellenhoff, and Frank Dominguez as a company specializing in software as a service (SaaS). Napster was launched in 1999. An 18-year-old college dropout named Shawn Fanning changed the music industry forever with his file-sharing program called Napster. Shawn Fanning, is the co-founder of Napster His idea was simple, a program that allowed computer users to share and swap files, specifically music, through a centralized file server.
2000: Dot com bubble bursts: After the dot-com bubble, Amazon played a key role in the development of cloud computing by modernizing their data centers. Having found that the new cloud architecture resulted in significant internal efficiency improvements whereby small, fast-moving “two-pizza teams” could add new features faster and more easily, Amazon initiated a new product development effort to provide cloud computing to external customers.
2006: Amazon launched Amazon Web Service (AWS) on a utility computing basis although the initial released dated back to July 2002. Amazon Web Services (AWS) is a collection of remote computing services (also called web services) that together make up a cloud computing platform, offered over the Internet by Amazon.com. The most central and well-known of these services are Amazon EC2 and Amazon S3.
2008: Eucalyptus became the first open-source, AWS API-compatible platform for deploying private clouds. Eucalyptus is a software platform for the implementation of private cloud computing on computer clusters. OpenNebula became the first open-source software for deploying private and hybrid clouds. OpenNebula is an open-source cloud computing toolkit for managing heterogeneous distributed data center infrastructures. OpenNebula is sponsored by C12G. C12G Labs is an enterprise software company which provides OpenNebula-based software and services. C12G (numeronym for Cloud Computing) was founded in April 2010.
2007: Salesforce launches Force.com, a web productivity tool. Force.com is a cloud computing platform as a service system from Salesforce.com.
2007-2010. With launch of iPhone, HTC’s first Android phone, Android-Apps, Samsung’s smartphone and a whooping sale of 1 million iPad in the first month of it’s launch, the enterprise market saw huge transformation that scripted a completely different IT market story driven totally by consumers. Cloud services got much needed boost with the launch of i-services for iPhone and iPad costumers. Cloud applications hosted on far away Data Centers became a rage which ultimately launched the golden era of cloud computing and services based upon “as a service” delivery-model.
2011: The year that truly made a mark for Cloud Computing. Several start-ups were founded that leveraged the cloud services.
According to the National Institute of Standards and Technology, the definition of cloud computing is “a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”
Translated, this means that rather than maintaining your own expensive computer hardware, you can take advantage of a “host” computer over an Internet connection to access applications, content, and data that exists “in the cloud.” It functions much like the electric utility that powers your home.
Cloud Computing Origins
The idea of cloud computing dates back to the 1960s: That’s when the American computer scientist who coined the term “artificial intelligence,” John McCarthy (who died in October 2011), advocated that the use of that era’s huge computers could be offered much like a “public utility.” Much discussion followed, including the 1966 book The Challenge of the Computer Utility from Douglas Parkhill, but the idea died out until the early 2000s.
Amazon became a key cloud computing player in 2006 when it launched their Amazon Web Service for “utility computing.” IBM and Google entered the field a year later followed by Eucalyptus in 2008. Then in April 2009, the National Science Foundation (NSF) awarded $5 million in grants to 14 universities to participate in the “IBM/Google Cloud Computing University Initiative” to provide the computing infrastructure “to explore innovative research ideas in data-intensive computing.” Since then, the impact of cloud computing has prompted corporations and the U.S. federal government to use the Cloud to reorganize their huge computer infrastructures and decrease their spending budgets.
The concept was born in the 1960s from the ideas of pioneers like J.C.R. Licklider (instrumental in the development of ARPANET) envisioning computation in the form of a global network and John McCarthy (who coined the term “artificial intelligence”) framing computation as a public utility. Some of the first uses included the processing of financial transactions and census data.
Flash forward to 1997, when the term “cloud computing” was first used by information systems professor Ramnath Chellappa.
Within just a few years, companies began switching from hardware to cloud services because they were attracted to benefits like a reduction in capital costs as well as an easing in IT staffing issues. But the No. 1 benefit companies cite is efficiency. One of the first milestones for cloud computing was the arrival of Salesforce.com in 1999, which pioneered the concept of delivering enterprise applications via a simple website. The services firm paved the way for both specialist and mainstream software firms to deliver applications over the internet. The next development was Amazon Web Services in 2002, which provided a suite of cloud-based services including storage, computation and even human intelligence through the Amazon Mechanical Turk. Another big milestone came in 2009, as Web 2.0 hit its stride, and Google and others started to offer browser-based enterprise applications, though services such as Google Apps.
The most important contribution to cloud computing has been the emergence of “killer apps” from leading technology giants such as Microsoft and Google. When these companies deliver services in a way that is reliable and easy to consume, the knock-on effect to the industry as a whole is a wider general acceptance of online services.
According to a recent Carbon Disclosure Project report, companies that streamline operations to improve IT performance will not only reduce capital expenditures but they’ll shrink energy consumption and carbon emissions. The group estimated that, by 2020, U.S. organizations that move to the cloud could save $12.3 billion in energy costs and the equivalent of 200 million barrels of oil.
In 2009, revenue for cloud services was just over $58.6 billion. In 2011, IT spending is expected to top $2.6 trillion. And with cloud computing accounting for just 2.3 percent of that global market, there’s plenty of room for growth. The research firm Gartner projects that revenue for cloud services will approach $152.1 billion in 2014.
One factor that’s driving demand for cloud computing is the explosive growth of data. According to projections by Century Link, by 2015, the world will see a four-fold increase in the amount of data being created and replicated. And once all of that data comes into being, you need a way to store it all securely and allow end-users to access it efficiently.
Cloud computing has evolved through a number of phases which include grid and utility computing, application service provision (ASP), and Software as a Service (SaaS).
But the overarching concept of delivering computing resources through a global network is rooted in the sixties.
The idea of an “intergalactic computer network” was introduced in thesixties by J.C.R. Licklider, who was responsible for enabling the development of ARPANET (Advanced Research Projects Agency Network) in 1969.
His vision was for everyone on the globe to be interconnected and accessing programs and data at any site, from anywhere, explained Margaret Lewis, product marketing director at AMD. “It is a vision that sounds a lot like what we are calling cloud computing.”
Other experts attribute the cloud concept to computer scientist John McCarthy who proposed the idea of computation being delivered as a public utility, similar to the service bureaus which date back to the sixties.
Since the sixties, cloud computing has developed along a number of lines, with Web 2.0 being the most recent evolution. However, since the internet only started to offer significant bandwidth in the nineties, cloud computing for the masses has been something of a late developer.
One of the first milestones for cloud computing was the arrival of Salesforce.com in 1999, which pioneered the concept of delivering enterprise applications via a simple website. The services firm paved the way for both specialist and mainstream software firms to deliver applications over the internet.
The next development was Amazon Web Services in 2002, which provided a suite of cloud-based services including storage, computation and even human intelligence through the Amazon Mechanical Turk.
Then in 2006, Amazon launched its Elastic Compute cloud (EC2) as a commercial web service that allows small companies and individuals to rent computers on which to run their own computer applications.
“Amazon EC2/S3 was the first widely accessible cloud computing infrastructure service,” said Jeremy Allaire, CEO of Brightcove, which provides its SaaS online video platform to UK TV stations and newspapers.
Another big milestone came in 2009, as Web 2.0 hit its stride, and Google and others started to offer browser-based enterprise applications, though services such as Google Apps.
“The most important contribution to cloud computing has been the emergence of “killer apps” from leading technology giants such as Microsoft and Google. When these companies deliver services in a way that is reliable and easy to consume, the knock-on effect to the industry as a whole is a wider general acceptance of online services,” said Dan Germain, chief technology officer at IT service provider Cobweb Solutions.
Other key factors that have enabled cloud computing to evolve include the maturing of virtualisation technology, the development of universal high-speed bandwidth, and universal software interoperability standards, said UK cloud computing pioneer Jamie Turner.
Turner added, “As cloud computing extends its reach beyond a handful of early-adopter Google Docs users, we can only begin to imagine its scope and reach. Pretty much anything can be delivered from the cloud.”
Following the cloud
“Many IT professionals recognise the benefits cloud computing offers in terms of increased storage, flexibility and cost reduction,” said Songnian Zhou, chief executive officer of Platform Computing.
But he added that IT directors still have concerns about the security of their corporate data in the cloud. This means that it will be 2010 at the earliest before cloud adoption sees increased growth.
Julian Friedman, a specialist in emerging technologies, said that security and other concerns will soon be resolved.
“Considerations such as security, data privacy, network performance and economics are likely to lead to a mix of cloud computing centres both within the company firewall and outside of it.”
He added that today’s applications will naturally move towards a cloud model as they become more pervasively available through the web, require more data processing, and span the boundaries of multiple devices.
Experts seem to agree that cloud computing will ultimately transform today’s computing landscape.
Andreas Asander, vice-principal of product management at virtualisation security specialist Clavister, said that once the security issues are resolved, cloud computing services “can enable an enterprise to expand its infrastructure, add capacity on demand, or outsource the whole infrastructure, resulting in greater flexibility, a wider choice of computing resources and significant cost savings.”
It is clear that cloud computing can bring enormous benefits for IT users.
However, the bottom line for IT directors is that they will need to continue to manage their internal computing environments, whilst learning how to secure, manage and monitor the growing range of external resources residing in the cloud