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Technology: Cloud-computing -- Web-based Applications Take off

What's New in Technology

September 2008

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Technology: Cloud-computing -- Web-based Applications Take off

You may have heard of “cloud computing” but what you may not know is that some of the world’s biggest computing companies are joining the cloud computing bandwagon. Some may approach the new infrastructure more tentatively than others, but all recognize that we are seeing a major change in the way corporate America obtains computing services and capacity as well as software. Here’s how the big guys –both users and providers—are tapping into the convenience of cloud computing. Its rapid growth has implications for all small business owners who are looking for ways to stay responsive and competitive in a tough economic climate.

What Is It?
“Cloud computing” was first deployed by a web-based company called Salesforce.com to provides software to customers via the Internet. The idea of also delivering hardware –in the form of additional server or storage capacity –in the same way— hit the big time when it was picked up by Amazon and others. Now today, Google, Yahoo and others provide an ever-increasing audience with the option of acquiring Web-based software applications or computing services (like additional server capacity) via the Internet. The ranks of companies involved in cloud computing have grown to include a virtual Who’s Who of Internet heavy hitters including Amazon, Oracle, IBM and Microsoft.

The range of Web-based applications available may have grown, but the fundamental idea remains the same. Cloud computing providers allow customers to tap the Internet to get software platforms and applications – email, documents and calendars/appointment scheduling— as well as hardware needs at significantly lower costs. Off-site services (storage or server capacity) are available on demand—a boon for companies involved in businesses where sales volumes can surge and decline without much prior warning. Cloud computing gives its customer companies the option of delegating certain tasks to the provider’s large data centers rather than handling them on-site using their own resources. Web-based server hosting is affordable (in the range of 75 percent less than more conventional options) giving smaller companies the chance to do more with a modest IT budget.

Here To Stay
Industry analysts believe that “cloud computing” is not only here to stay, but that it will generate a world-wide market of some $90 billion by 2012. Some expect that more than 10 percent of the software market will be “cloud-based” by this time. Large traditional computing companies like Hewlett-Packard and IBM are building huge centers to accommodate cloud-computing customers, who want data managed off-site. And, in an interesting move, both Dell and Microsoft, companies with a huge investment in existing technology infrastructure, are developing computing platforms and less costly software products for the new cloud computing market.

Reliability
Not surprisingly, most businesses test the waters first—perhaps trying the free applications for email and appointment scheduling, etc. Some IT professionals have expressed some concern about the overall reliability and security of services that are most critical to a business’s success. Many are leery of using the very public Internet for data that must remain private.

If service goes down at a large provider –which has happened and lasted for 5 hours in one instance—it could create huge problems for customers whose data has become inaccessible. Likewise, reporting of data (healthcare, financial disclosure, etc.) which involves compliance with legislative mandates and government regulations brings further issues to the table. Innovators are tackling security and reliability concerns. For the time being, industry observers think that larger companies will be inclined to use both traditional infrastructure and cloud computing for their computing needs, using the newer framework for lower-priority, non-sensitive applications. For those who can cheerfully deal with the possibility of occasional down-time, cloud computing offers major cost incentives, and better communications and sharing among their workforce.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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