Before we can discuss this term, a bit of history and background is needed.
All business activities undergo a lifecycle, they evolve through distinct stages including :-
- the first introduction of a new activity (its innovation)
- the custom built examples replicating this activity (the copying phase)
- the introduction of products which provide that activity ( the product stage, including numerous rounds of feature differentiation which are also unfortunately called product innovation)
- The activity becoming more of a commodity (ubiquitous, well-defined and with no qualitative differentiation). In certain circumstances that commodity can be provided through utility services.
It should be noted that the characteristics of an activity changes as it move through its life-cycle. As a commodity it's of little strategic value (or differentiation) between competitors whereas in its early stages it can often be a source of competitive advantage (a differential).
At any one moment in time, I.T. consists of a mass of different activities at different stages of their life-cycle. Some of those activities are provided through discrete software applications (an example might be ERP), other activities relate to the use of platforms (developing a new system using RoR or provisioning of a large database etc) whilst others relate to the provision of infrastructure (compute resource, storage, networks).
You can categorise these activities into a computing stack of infrastructure, platform and software. Of course you can go higher up the stack to describe the processes themselves and beyond, however for this discussion we will just keep it simple.
What's happening in IT today?
Many activities in I.T. that were once innovations but more recently have been provided as products (with extensive feature differentiation) have now become so ubiquitous and so well defined that they have become little more than a commodity that is suitable for service provision. You can literally consider that chunks of the "computing stack" are moving from an "as a Product" to an "as a Service" world.
This change is the reason why we have the "Infrastructure as a Service" to "Platform as a Service" to whatever else "as a Service" industries. Of course, there are many higher order layers to the stack (e.g processes) but any confusion around the "as a Service" term generally only occurs because we never used to describe these activities with the "as a Product" term.
Had we categorised the previous software industry in terms of "Software as a Product", "Platform as a Product" etc, then the change would have been more obvious.
This change requires more than just activities being suitable for utility service provision. It also requires the concept of service provision, the technology to achieve this and a change in business attitude i.e. a willingness of business to adopt these new models. Whilst the concept is old (more on this later), and the technology has been around for some time (yes, it has matured in the last decade but that's about all), both the suitability and change of business attitude are relatively new.
Thanks to the work of Paul Strassman (in the 90's) and then Nick Carr (in the 00's), many business leaders have recognised that not all I.T. is a source of advantage. Instead much of I.T. is a cost of doing business which is ubiquitous and fairly well defined throughout an industry.
It was quite refreshing to recently hear a large group of CIOs, who all spent vast amounts of money maintaining highly customised CRM systems, comment that actually they were all doing the same thing. These systems provided no strategic value, no differential and in reality what they wanted was standardised, low cost services charged on actual consumption basis for what is essentially a cost of doing business. They also wanted this to be provided through a marketplace of service providers with easy switching between them.
This is quite a sea change from a decade ago.
The change from a "as a Product" to an "as a Service" world is happening today because we have the concept, technology, suitability and most importantly this changing business attitude.
An old Concept
The concept of utility service provision for I.T. is not new but dates back to the 1960's. Douglas Parkhill, in this 1966 book - "The Challenge of the Computer Utility" - described a future where many computing activities would be provided through computer utilities analogous to the electricity industry. These computer utilities would have certain characteristics, they would :-
- provide computing resources remotely and online
- charge for the use of the resources on the basis of consumption i.e. a utility basis
- provide elastic & "infinite" supply of resources
- benefit from economies of scale
- be multi-tenanted
Douglas noted that these computer utilities would take several forms as per the existing consumption of other utilities. These forms included (but are not limited to) public, private & government utilities. He also noted that eventually we would see competitive markets of computer utilities where consumers could switch providers, consume resources across multiple providers (i.e. a federated use) and consume all manner of hybrid forms (e.g. private and public combinations)
One final note is the term utility means a metered service where the charge is based upon consumption. That charge might be financial or it could be in any other currency (e.g. access to your data).
The Cloud Term
Between 1966 -2007, the general school of thought grew to be :-
- I.T. wasn't one thing. Many aspects of I.T. created little or no differential value and were simply a cost of doing business (Strassman, 90s)
- There is a correlation between ubiquity of I.T. and its strategic value (differentiation). The more ubiquitous I.T. was, the less strategic value it created. (Nick Carr, '02)
- I.T. activities could be categorised into rough groupings such as software, platform and infrastructure (the actual terms used have changed over time but this concept is pre-80's)
- Certain I.T. activities would be provided through computer utilities as per other utility industries (Parkhill & McCarthy, 60's)
- There were several forms that these computer utilities could take including public, private, government and all manner of combinations in between. (Douglas Parkhill, 1966)
- We would see the formation of competitive marketplaces with switching and federation of providers.
- These computer utilities had certain common characteristics including utility charging, economies of scale, elastic and "infinite" supply etc.(Douglas Parkhill, 1966)
- Whilst all activities have a lifecycle which they evolve along through the process of commoditisation, the shift from "as a Product" to an "as a Service" world would require several factors (i.e the concept, the technology to achieve this, the suitability of activities for service provision and a change in business attitude.)
Back between '05'-'07, there was a pretty crystal clear idea of what was going to happen:-
A combination of factors (concept, suitability, technology and a change in business attitude) was going to drive those I.T. activities which were common, well defined and a cost of doing business from being provided "as products" to being provided "as services" through large computer utilities. The type of services offered would cover different elements of the computing stack, there would be many different forms of computer utility (public, private & government) and eventually we would see competitive marketplaces with easy switching and consumption across multiple providers.
Unfortunately in late '07 / early '08, the term "Cloud" appeared and the entire industry seemed to go into a tailspin of confusion. During '08, the "Cloud" term became so prevalent that if you mentioned "computer utility" people would tell you that they weren't interested but could you please tell them about "this thing called cloud".
So, what is Cloud?
The best definition for cloud today is NIST's. Using five essential characteristics (include elasticity, measured service etc), four deployment models (private, public, government etc) and three services (application, platform, infrastructure) it nearly packages all the concepts of computer utility, the shift from product to services and the different categories of the computing stack into one overall term - "cloud".
In the process it wipes out all the historical context, trainwrecks the concept of a competitive marketplace with switching and federation, eliminates the principle idea of commoditisation and offers no explanation of why now. It's an awful mechanistic definition which only helps you call something a cloud without any understanding of why.
However, that said, NIST has done a grand job of trying to clean up the mess of 2008.
In that dreadful year, all these well understood concepts of computer utilities, competitive marketplaces, the lifecycle of activities, categorisation of the computing stack and commoditisation were put in a blender, spun at 30,000 rpm and the resultant mishmash was given the name "cloud". It was poured into our collective consciousness along with the endless blatherings of "cloudy" thought leaders over what it meant (I'm as guilty of this as many others)
To be brutal, whilst the fundamentals are sound (commoditisation, computer utilities, the change from products to services etc), the term "Cloud" was nothing more than a Complete Load Of Utter Drivel. It's a sorry tale of confusion and a meaningless, generic term forced upon a real and meaningful change.
My passionate dislike for the term is well known. It irks me that for such an important shift in our industry, I have to use such a term and then spend most of my time explaining the fundamental concepts behind what is going on, why this change is happening and undoing the various "cloud" myths that exist.
Being pragmatic, I'm fully aware that this term has enough momentum that it's going to stay. Shame.