Defining “Cloud Services” and “Cloud Computing”

Posted by Frank Gens on September 23rd, 2008

As a company that makes its living analyzing, sizing and forecasting market opportunities, IDC takes market definitions and taxonomies very seriously. We’re pretty good at distinguishing real markets from hypey ones, We recently gathered a broad group of IDC analysts to develop a point of view on just what cloud computing is.well as articulating how new market opportunities fit in with, differ from, and complement or compete with existing ones.  

And so we recently gathered a broad group of IDC analysts to develop a formal point of view on just what cloud computing is, as a necessary prelude to discussing how big an opportunity it really offers to the IT marketplace, and what it will take to capture that opportunity.   

“Cloud Computing” versus “Cloud Services”

When most people talk about “cloud computing”, they usually refer to on-line delivery and consumption models for business and consumer services.  These services include IT services – like software-as-a-service (SaaS) and storage or server capacity as a service – but also many, many “non-IT” business and consumer services.  

Indeed, the vast majority of these online services are not, in the mind of the user, IT or “computing” at all – they are about shopping, banking, selling, collaborating, communicating, being entertained, etc.   In other words, most people using these services are not “computing”, they are living! These customers are not explicitly buying “cloud computing”, but the “cloud services” that are enabled by cloud computing environments; cloud computing is hidden underneath the business or consumer service.  And so, in our definitional framework, we distinguish between:

Cloud Services = Consumer and Business products, services and solutions that are delivered and consumed in real-time over the Internet

Cloud Computing = an emerging IT development, deployment and delivery model, enabling real-time delivery of products, services and solutions over the Internet (i.e., enabling cloud services)

In short, a cloud service is virtually any business or consumer service that is delivered and consumed over the Internet in real-time (that’s the 5 second definition; more important detail below).  Cloud computing, an important, but much narrower term, is the IT environment – encompassing all elements of the full “stack” of IT and network products (and supporting services) – that enables the development, delivery and consumption of cloud services.

Any discussion of cloud computing must start with a discussion of what the attributes of cloud services are, and – consequently – what attributes cloud computing environments need to enable.

What Are “Cloud Services”? An Eight-Point Checklist

I recently received a reader comment on IDC eXchange that suggested that Cloud Computing and Cloud Services are just a rehash of the same old stuff:

“One thing 30 years in the IT industry has taught me is that the more things change, the more they stay the same. Another is that the only memory we seem to access is short-term. Yet another is that techno-marketers rely on that, so they can put labels like ‘revolutionary’ and ‘innovative’ on platforms, products and services that are mere re-inventions of the wheel ? and often poor copies at that. A good example is all the buzz about ‘Cloud Computing’?”

This reader and other skeptics cite prior industry models and offerings, like service bureaus, mainframes, virtualization, application service providers (ASPs), et al., as having already delivered much that is promised through the cloud model.  But these perspectives miss the critical differences that define the new and substantial benefits cloud services offer.  

Surveying the wide range of cloud offerings, here are eight attributes that, in our view, define the new generation of commercial cloud services, and provide the basis for those benefits:

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• Offsite, provided by third-party provider - “In the cloud” execution, which for most practical purposes means offsite (really, location-agnostic).  Specifying “third-party provider” simply highlights that the services we’re focused on in our analysis are commercial cloud services.  [CIOs could implement the cloud model within their own organization, for use by their own employees, something referred to as an "enterprise cloud".  And, indeed, we expect many will, as the next step in their transition to a next-generation, "Dynamic IT" services delivery model.  For those who want to include "in-house" cloud services delivery in their market view, they can simply eliminate the "third-party provider" attribute.]
• Accessed via the Internet - standards-based, universal network access.  This does not preclude service providers offering security or quality-of-service value-added options.
• Minimal/no IT skills to “implement” - online, simplified specification of services requirements; need is eliminated for lengthy implementation services for on-premise systems that support the service (the service provider offloads this).
• Provisioning - self-service requesting, near real-time deployment, dynamic & fine-grained scaling.  
• Pricing - fine-grained & usage-based pricing capability.  (As a convenience to some customers, providers may mask this pricing granularity with long-term, fixed price agreements.)
• User Interface - browser & successors.  Browsers will evolve, for a wider variety of devices, and with richer capabilities.  But the basic aspects of a browser ? intuitive/easy-to-use, standards-based, application/service-independent, multi-platform ? remain the attributes of cloud services UIs.
• System Interface - Web services APIs, providing a standards-based framework for accessing and integrating with and among cloud services (and web services-based/enabled in-house systems).  In our view, this is a critically important aspect of cloud services: that they provide well-defined, programmatic access for users, partners and others who want to leverage the cloud service within a broader solution context.
• Shared resources/common versions - the shared asset approach improves supplier and customer economics; there is some ability to customize “around” the shared services, via configuration options within the service,  workflow/process management among services, et al. 

These attributes, together, make business and consumer cloud services easier and cheaper – and often better – to consume than through traditional delivery modes. These attributes lower costs (for customers and suppliers), speed and simplify access, speed and fine-tune provisioning (in line with true demand/usage), greatly increase the number and variety of available services (thanks to lower development and deployment costs, and standards), and improve the potential to integrate.

What, Then, Is “Cloud Computing“?

Since cloud computing is the IT foundation for cloud services,  it consists of a growing list of technologies and IT offerings that enable cloud services, as defined by the attributes listed above.  A partial list includes:

• Infrastructure systems (e.g., servers, storage, networks) that can economically scale to very high volumes, and preferably do so in a granular fashion.
• Application software that provides web-based UIs, web services APIs, multi-tenant architecture and a rich variety of configuration options.
• Application development and deployment software that supports the development, integration or runtime execution of cloud application software.
• System and application management software that supports rapid self-service provisioning and configuration, usage monitoring, et al.
• IP Networks that connect end users to “the cloud” and the infrastructure components of the cloud to each other, leveraging network-embedded technologies for quality-of-service, security, and optimized application delivery.
• For all of the above, pricing agreements for cloud services providers that scale technology costs with their cloud services volumes/revenues.

Of course, in addition to supporting the unique IT requirements of cloud services, cloud computing offerings must also support the perennial “must haves” of enterprise IT environments, including:  manageability, reliability, availability, security and price-competitiveness.  Further, because a growing number of enterprise customers will be running a portfolio of both on-premise and cloud-sourced systems, there will be increasing demand for IT offerings that span both on-premise and cloud-based systems.