Let me start off by laying out what I believe are the three tiers of cloud computing. I believe that cloud computing consists of hosted services (IBM), hosted applications (VMWare, Citrix), and hosted storage/data. This contrasts with internal services (SharePoint, Exchange), internal applications (MS Office, Adobe Acrobat), and internal data (File server). The internal computing may be run on virtualized servers, or on their dedicated boxes. In my opinion, businesses are concerned firstly with security regarding hosted documents/storage layer, secondly web services, and thirdly, most open to hosted web applications.

We are seeing a shift away from applications run on local machines to run on a server and/or virtualized (Citrix, VMWare). These applications tie into the internal services and storage. We are also seeing a shift away from local and/or virtualized applications to web applications. While not all applications can be run as hosted applications (Multimedia applications, lab machines, etc), most of the basic productivity apps are able to be run online or on a VPN server. Web applications (whether hosted or run internally) tie into the company’s services. These services in turn create mountains of data to be stored. Where does the data get stored? Should companies use hosted storage or should they use internal storage? If they want internal storage, they are going to have to create a framework infrastructure to dump this data internally, whether it be from web services or from hosted/web applications. There is no competing with the onslaught of hosted applications. Some are transitioning to web applications, but most (if not all) will be transitioning from local to being hosted.

Here’s a brief synopsis of what companies are offering what (in my model of a three tier system):

• Vmware vCloud – virtualized hosted apps, tie into internal infrastructure, thinapps
• Microsoft Azure- hosted services, storage, web applications
• Cisco VN- virtualized apps, network
• Citrix – hosted apps
• IBM – hosted services

Let’s move to the next tier, the web services layer. This layer provides services such as email or forums (Microsoft Exchange Online, Drupal, Joomla, IBM services). I would argue that it also includes web serving services as well. The problem with this layer is that this is where more and more malicious apps are being targeted. Microsoft recently did a study that showed that malicious apps are targeted more and more at the browser or specific apps. They target the authentication component of the web services. If compromised, an attacker can use the information gathered to gain access to the data contained (emails, documents in the document management system). However, with enough security measures, this risk can be mitigated for the most part. 

The other negative to having hosted web services is that your emails and forums are being hosted on someone else’s server. How much this affects your organization is something you have to decide. 

The benefit of hosted services is that the cost to run them is miniscule. Organizations no longer need to employ internal staff to maintain these, and pay a lot less on implementation costs. It also provides arguably better failover services. The benefits are very attractive for organizations. I would argue that competing with hosted web services is a waste of time for the most part.

The third layer is the data storage layer. This is where all your documents are stored. This would include Microsoft SharePoint Online, Live Mesh, or other web storge services. This is critical. Are you willing to have your documents hosted elsewhere? Do you have thousands of employee SSN’s or financial data stored? This is a weighty matter to consider. What about if somehow an employee at the company hosting your data manages to break in. How big is this risk? Are you willing to take it? 

Here is where I see things going:
Government & Financial institutions will likely graduate to hosted applications or web apps, while moving to virtualized services and internal data. VMWare/Cisco will be the big players. Security is paramount, so services will all be virtualized internally.

Medium to Large organizations will move to hosted services, hosted AND virtualized applications, while maintaining data internally. Big players include Microsoft (Azure) and VMWare. Cisco will also play a fairly large role. The employees will be working from home/remotely more frequently, as well as have intermittent (flights, dialup, etc) internet outages, so offline virtualization is more important.

Small to Medium organizations will graduate to hosted or virtualized applications, hosted services, and hosted data. Big player: Microsoft. The cost outweighs the benefit, so being heavily internet based will be more attractive than maintaining ability to work offline.