Vantive Media
Cloud Computing Blog Post

 Cloud Computing

Cloud Computing Market Confusion

Cloud computing has become one of the most frequently cited and infrequently understood new technology terms pitched to IT buyers, analysts, media, industry observers and the public at large. Despite the term’s pervasiveness in trade magazines, event key notes, marketing collaterals and vendor web sites, cloud computing lacks a consensus definition or even a loosely shared understanding among IT buyers and business decision makers. In fact, even some of Silicon Valley’s most famous IT visionaries seem to be at a loss.

"I have no idea what anyone is talking about," replied Oracle’s CEO Larry Ellison when talking about cloud computing at a financial analyst conference in September 2008. "It's really just complete gibberish. What is it?" Ellison went on with his rant, "When is this idiocy going to stop?"

2009 survey research by Version One revealed that two-thirds of senior business executives and 41% of senior IT professionals admit that they "don’t know" what cloud computing is. Of the remaining 59% of IT managers who profess to know what cloud computing is, 17% characterize cloud computing to be internet-based delivery while 11% believe it is a combination of internet-based computing, software as a service, on-demand software, outsourced or managed service and a hosted software service. The remaining respondents understand cloud computing to be a mixture of each of the elements.

Much of the confusion stems from the tech industry’s fascination with buzzwords and jargon – or in this case, the desire to leverage a softer, friendlier term than the all too typical techno-babel or TLA (three letter acronym). In fact, from the media and marketing perspectives, cloud computing is a phrase which suggests a vision, destination and general understanding that data processing and storage leverage the ubiquitous and limitless scale of the Internet and are ultimately housed in an almost make believe place only known as ‘the cloud’. Notwithstanding the need for clarity, cloud computing is a more approachable, more conceptual, near self evident and non-threatening term when compared to predecessor terms such as Application Service Provider (ASP), Utility Service Provider, On-Demand Application Delivery or even Software as a Service (SaaS) (or the continual run on of SaaS deviations such as Platform as a Service (PaaS) and others).

Vendor Self Serving Definitions

Technology manufacturers, SaaS providers, IT suppliers and a host of industry participants have latched on to and leveraged the cloud computing headline as a catchall phrase to encompass almost every online, subscription-based or Internet delivered service imaginable. The IT community’s media participation comes in many forms, whether rebranding existing solutions, enhancing or evolving the headline phrase to overlap existing IT products or just exploiting the term with clear disregard to industry acceptance. As with any other headline phrase, cloud computing is ill-defined by the marketplace in largest part due to the marketplace’s competing interests.

How individual technology companies choose to employ the cloud computing term is likely to be influenced by how the term can be used to promote their solutions. According to Forrester Research analyst Frank Gillett, the technology manufacturers and suppliers in categories such as grid computing and virtualization are attempting to co-opt the word for self promotion. Gillett calls this process "cloud washing."

In reality, cloud computing’s origins go back decades and can be partially witnessed in the popular metaphor and image used in PowerPoint presentations and Visio diagrams to represent Internet connectivity or the online pipe between two or more destinations. However, despite a well recognized symbol, definitions and industry growth remain a matter of opinion.

Analyst Definitions

Research firm IDC describes cloud computing as "an emerging IT development, deployment and delivery model, enabling real-time delivery of products, services and solutions over the Internet." Using this definition, IDC estimates the cloud computing market will reach $42 billion in 2012.

Analyst firm Gartner defines the new technology pitch phrase as "a style of computing where scalable and elastic IT-enabled capabilities are provided 'as a service' to external customers using Internet technologies." Under this definition (which includes online advertising), Gartner estimates global industry revenue will rise 21.3% in 2009 to $56.3 billion. Merrill Lynch chooses not to define the term but does project cloud-computing revenues will reach $160 billion in 2011.

SaaS analyst firm THINKstrategies defines cloud computing as a set of web-based tools and services which permit users to acquire computing resources and development capabilities to build or support applications, or perform specific IT functions on a pay-as-you-go basis.

This blog author believes cloud computing is simply a style of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet.

While analyst definitions vary, most of the thought leaders share the key ingredients of Internet delivery, subscription pricing, outsourced management and elastic or expandable on demand utility. Today’s definitions continue to be largely focused on IT components and thereby leave the IT buyer to determine the business value based on their particular objectives, constraints and environment.

The Future of Cloud Computing

So what’s the future for cloud computing? According to Alex Bochannek, a curator at the Computer History Museum in Mountain View, CA, cloud computing may join past high flying technical terms such as ‘cyberspace and ‘Web 2.0’ that initially described a game changing technology but were ultimately replaced by the next industry catch phrase. Bochannek comments, "The problem isn't so much the term but the extended usage of it to subsume other things." I think Larry Ellison would agree, according to the Oracle CEO, “The computer industry is the only industry that is more fashion-driven than women's fashion." However, not to be left off the media power wagon, Ellison himself now describes Oracle’s upcoming software releases as “cloud computing ready.”

Technorati: Technology Media, Cloud Computing, SaaS  Technorati Add to Technorati Favorites Technology Media, Cloud Computing, SaaS Save this page to
Posted In:   Cloud Computing  PermalinkPermalink  CommentsComments (3) TrackbackTrackback (1)


Trackback URL for this blog post:


By Brian Campbell
Are cloud computing business software applications less expensive than traditional applications over the software's useful life?

Generally yes, however, to make an informed decision you will have to assemble an apples to apples comparison. Comparing the SaaS or cloud annual subscription amounts to the up-front capital expenditure for on-premise software will be straightforward. However, the most material financial investments for traditional business systems are the costs for implementation, training, maintenance, hardware, staffing, integration, customization and/or upgrades. These post-application procurement expenses are often called the hidden costs and most recognized analyst firms suggest that the ratio between hidden costs and business application investment is at least 2 to 1 (e.g. for every dollar spent on business software license, two dollars will be spent on hidden costs) and very often 4 to 1 or higher.

Some legacy vendors throw FUD at SaaS and cloud computing TCO by suggesting that these newer delivery models cost more over the long run. While cost projections vary by vendor and customer, several analyst firms have produced SaaS TCO schedules which demonstrate that SaaS solutions are not more expensive over the life of the software when all relevant factors are considered.


By Allan Walker
I think I have been left behind with software as a service. What are the business benefits of SaaS - in business terms please?

While gains vary by recipient, the most commonly cited SaaS benefits include:

  • Lower up-front costs; SaaS changes the pricing model from an up-front capital investment to a subscription.
  • Lower total cost of ownership (TCO); TCO varies by customer, but several recognized analysts firms have demonstrated superior TCO when comparing on-demand with on-premise business systems.
  • Accelerated implementation time and time-to-value. With no servers to configure and software to install, the implementation time and costs are reduced. Shorter software implementations also reduce risk.
  • On-demand scalability. Computing resources can be dynamically provisioned and scaled as needed. Companies are no longer required to procure, implement, manage and upgrade incremental servers and hardware just in case the company grows.
  • Increased focus on core competencies; On-demand systems deliver a dramatic reduction or elimination of IT administration, maintenance and management. When company management are not required to manage IT, they are freed to focus on core company competencies.
  • True vendor partnerships; The SaaS business model is predicated on customers actually using the applications. If the customer is not successful in implementation or thereafter is not satisfied and chooses not to renew their subscription, the SaaS vendor’s business model fails. On-premise systems charge the full purchase investment in advance and there are no refunds if the implementation fails or the client is dissatisfied – which contributes to the massive amount of ERP shelfware (ERP software which has been purchased, never implemented and stored on a shelf). The SaaS business model finally evolves the customer-vendor partnership past the historical lip service and to a true point of interdependence.

While SaaS is gaining market momentum at an increasing rate, it is not a panacea and must be carefully evaluated against clear objectives and company specific constraints. Below are some of the drawbacks of SaaS.

  • While SaaS has several high profile success stories such as Amazon's web service stack, Yahoo's Build Your Own Search service, Google's App Engine and's for CRM software systems, each of these technologies and APIs are largely proprietary and reside on private clouds.
  • Continuing the above point, today's SaaS vendors operate private clouds. For companies acquiring multiple line of business or piecemeal SaaS solutions, replacing stovepipe applications with stovepipe clouds will continue the need for system integration projects and management.
  • Hardware and platform software (i.e. operating systems, databases, backup, security, etc.) costs can be small relative to enterprise application software. For this reason, Infrastructure as a Service (IaaS) solutions will deliver a lesser payback than SaaS solutions.
  • Several pundits (and vested interests) have suggested that SaaS business software systems are less accommodating to system integration and software customization than on-premise systems. However, while that may have been the case in years past, these arguments are unfounded with the current portfolio of SaaS enterprise software systems.


By Sabrina Sherman
Are customer relationship management systems from and NetSuite cloud computing systems? and NetSuite would claim that their CRM systems are cloud computing solutions. In reality, they are browser-based, subscription-based, thin-client hosted applications leveraging the cloud hype for brand and marketing association. Prior terms used by and NetSuite to promote their CRM applications include Software as a Service (SaaS), On-Demand computing and utility computing (and even ASP if you look all the way back to 1999).


Send comments to blog[at]

Home Blog Home













Services | Methods | Markets | Brands | Company | Media | Blog

Home | Search | Sitemap | Directory | Resources | Links | Terms | Contact | Privacy | 508