Thursday, June 24, 2010, 11:00pm CDT | Modified: July 12, 2010, 11:00 PM

It's right to have your head in the cloud

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Cloud computing is becoming an increasingly hot topic these days and is the subject of plenty of hype, controversy and misconception. It’s hard to open a newspaper or technical magazine and not read something about “the cloud.” But what is it exactly, and why should businesspeople care?

In a nutshell, the cloud refers to a new computing paradigm in which highly scalable computing power and storage are hosted in massive data centers by third-party providers, and accessed on-demand over the Internet. Cloud computing customers do not own the physical information technology infrastructure, thereby avoiding capital expenditure. Instead, they consume computing resources as a service and pay only for the resources they use. Major cloud vendors include Microsoft Corp., Google Inc., IBM Corp., Hewlett-Packard Co. and Amazon.com Inc.

By the way, the term “cloud” has historically been used to describe the Internet itself, but it is increasingly being used interchangeably to mean the Internet or cloud computing.

In the very near future, the cloud will essentially turn storage and computing power into a public utility. This availability of nearly unlimited processing and storage capacity will fundamentally change the economics of IT and enable innovation on a scale we haven’t seen since the Internet boom. Just as the public power grid enabled the Industrial Revolution and the Internet turned communication into a public utility powering the Information Age, cloud computing will drive IT for the next 20 years. It’s just a matter of time before it becomes an integral part of your IT infrastructure and strategy. Just as most companies do not generate their own electricity today, very soon most companies will not be able to justify owning and running their own data centers — it simply won’t make economic or business sense.

I realize all this sounds a little futuristic, and I acknowledge that cloud computing is still evolving and has its share of critics and nonbelievers. So while cloud vendors continue to address issues such as security, privacy and regulatory compliance, consider two tangible ways you can benefit from cloud computing today.

If you’re a startup, you no longer have to buy a single computer server. Everything you need to start and run your business already exists in the cloud, mainly in the form of software-as-a-service, or SaaS. You can find affordable online solutions for sales force automation, accounting, file sharing, email, e-commerce, collaboration and much more.

And if you’re a software startup and your end product is SaaS, you’ve just hit the jackpot. You can design and build your solution in the cloud right out of the gate. You no longer need the up-front capital expense and long-term commitment of building a large computing farm to start your business. If you’re successful, the cloud will enable you to instantly scale up globally to meet customer demand. And if you’re not, you can scale back down instantly and explore your next concept — all at very low cost and risk.

If you’re a more established company and have already made significant investments in IT, then you should consider moving your commodity IT applications, such as email and file sharing, to the cloud today. There is simply no valid business reason to keep your email or file server in your own data center. Hosting those basic applications in the cloud is cheaper, more secure and more reliable than your current implementation.

If you’re still not convinced, let me ask you two questions: When was the last time you actually tested your backups? And did you know that your network and email administrator can read your emails?

If either of these questions is unsettling to you, then you should consider moving those commodity applications to the cloud immediately. For example, if you use Microsoft Exchange, as most companies do, you can easily and cost-effectively migrate your email and shared files to Microsoft’s cloud, enjoy the same functionality and benefits you do today, and never have to worry about those two questions again.

Sam Goodner is CEO of Catapult Systems Inc. www.catapultsystems.com, an information technology consulting company. He was a 2008 Ernst & Young Entrepreneur of the Year Award winner for Central Texas.