Jim Champy, chairman of consulting at Perot Systems, looks at the brave new world of cloud computing. Photograph by Asia Kepka

Advice on the brave new world of cloud computing

The idea of a large-scale compute utility has been around for a long while. In 1963, as a young instructor and research assistant at MIT, I used one of the first versions of such a utility through DARPA's Project MAC (Multiple Access Computer). At the time, the defense agency was supporting early work in artificial intelligence. A single large processor was available to multiple researchers through hard-wired, remote terminals. The terminals were actually teletype machines, the same devices that Western Union used to send telegrams. The setup was primitive, but it worked.

For the last 46 years, the information technology industry has been trying to update the MAC model and create a viable commercial compute utility. That utility has finally arrived in the form of the "public cloud"a seemingly endless array of networked servers providing on-demand computing to multiple customers. What makes the cloud viable today is the low cost of compute power, the ubiquitous network provided by the Internet, the abundance of bandwidth, and recently developed sophisticated means for managing data. The technology world has been waiting nearly half a century for the convergence of these capabilities.

Some cloud service providers will simply offer this compute power as a raw, low-cost service, with unlimited scalability. Other providers will use the cloud as a platform to offer applications on a "software-as-a-service" basis.

Over time, public clouds will dramatically alter the information technology service business. For cloud customers, the benefits are significant: faster implementation of systems and processes at dramatically lower costs. By some estimates, the cost of cloud computing will be one-tenth that of traditional computing. And for customers, the capital costs of compute power will be converted to a variable expense. But the Nirvana that technologists see in the cloud masks the challenges it presents to customers who must change how they think and act toward computing. Here's some advice for those eager to enter this brave new world.

Don't be afraid to enter the cloud.

Customers may be initially concerned about the security and reliability of public clouds. The term "cloud"which refers to how the Internet is graphically portrayeddoesn't help. No company wants to think of its valuable information evaporating into the mist. I would have preferred to use the term IBM coined to describe its last vision of a compute utility, "on-demand computing."

But test the cloud initially with noncritical operations. Several large universities, for example, have already standardized on Gmail, which effectively runs on Google's cloud. Some companies will want to test critical applications on private cloudsclouds that they manage and control directly. Healthcare providers are doing just that: adopting cloud architecture to address the challenge of providing secure access to health records by multiple clinicians.

Be prepared to adopt standardized processes.

Standard business processes will be embedded in cloud software services. But to use these capabilities, companies will have to overcome their inclination to think of their processes as unique. The truth is that most business processes from company to company are the same, or could be made to be the same without any competitive loss. The good news is that in many applications areaslike finance, supply chain management, and even customer relations managementcompanies are increasingly prepared to accept standard processes from service providers. Public clouds will take this development one step further and offer the opportunity to buy these processes based on usage. Over time, this will dramatically change the business model for applications services.

Establish a strong governance process.

Public clouds raise the risk of anarchy, a condition that arose in many companies when decentralized computing was first introduced 30 years ago. At that time, every department and function started to buy its own processor and applications software. Noncommunicating systems proliferated within companies. The central IT function lost control, and costs escalated. Public clouds will make it even easier for anyone inside a company to buy not only compute power, but applications. All kinds of compute services will proliferate from which to pick and choose.

Companies must adopt a governance model to manage the capabilities of public clouds and ensure the interoperability of cloud-based processes and systems. Standardization of processes inside a company has become increasingly important as companies work to become more operationally integrated and efficientso this is not a time to risk anarchy.

Act like a systems integrator.

IT functions should now begin to operate more like a systems integrator than a factory. IT must take the cloud's compute power, applications, and processes and put these together to work intelligently for the company. Cloud computing is, in fact, a "disruptive technology." The challenge for companies is to make that disruption pay.