Cloud Computing - What is That?

in Cloud-computing

You may have heard a lot about Cloud Computing recently and maybe you are getting confused.  You are in good company. I saw a video recently where dozens of experts were asked what it is. And there were dozens of different answers (including 'when I use my laptop on a plane').  You may even have seen Larry Ellison's rant on YouTube:

"The computer industry is the only industry that is more fashion-driven than women's fashion. Maybe I'm an idiot, but I have no idea what anyone is talking about. What is it? It's complete gibberish. It's insane. When is this idiocy going to stop"

Lets lay down some definitions to clarify this confusion. Cloud Computing generally means that instead of running your application on your computer, you run it on someone else's computer and access it via a web browser.  The term comes from the ubiquitous use of a cloud to represent the Internet on PowerPoint presentations. Instead of buying your application from a software house, you run it from the Internet and pay for it when you need it. Last year this approach was called Software as a Service (SaaS).  However that was very 2008;  these days you refer to Cloud Computing.

Cloud computing 1970's style

Running an application remotely over a network is of itself not a very new concept.  In 1980 I produced a company budget using a teletype machine connected via a dial-up line to an ADP computer somewhere in the cloud that was the ADP network. I paid by the hour and all the budget runs cost about $3,000 in total. The following year I found I could save a lot of money and get a quicker result by running a brand new spreadsheet program called Visicalc on a $2,000 Apple II computer. Thus began the decline of cloud computing; 1970's style. 

Cloud computing 2000's style

Roll forward a couple of decades and networks have got a great deal faster and cheaper. The economics are different, and cloud computing is looking a good alternative to supporting individual PC applications or even your own mainframe.

Can you search on Google, find an application and be up and running with your new billing system the same day? Possibly not.  These are the people you might come across. provides the market-leading contact management service. This is now called either sales force automation (SFA) or customer relationship management (CRM) depending on whether you are dealing with prospective or existing customers. The Salesforce software is provided on their own mainframes and is accessed via a browser.  They charge per month per user.

In some industries, such as financial technology, is ubiquitous.  In fact they have such a high market penetration that to grow further they have to diversify.  Their chosen route is to create a website ( where other people can offer their applications to run on their platform.  They call it the AppExchange. 

There are over 800 applications listed, the vast majority of which seem to be add-ons to the system.  This is however obviously a very interesting concept and other non-salesforce applications are being added.


Netsuite is a complete CRM, SFA, Accounting, ERP (enterprise resource planning)  and ecommerce system provided as software as a service. They don't call their main application Cloud Computing, instead they have a 'Cloud' offering which consists of other peoples add-ons - a bit like the AppExchange concept.


Google have a suite of office applications that run 'in the cloud'. These could be very useful if you have a special need to share the documents with others. 


Amazon has a Cloud offering which in its raw state is a virtual private server (VPS).  This is a login to a Unix or Windows computer that looks and feels as if you have the computer all to yourself.  Physically you are sharing the computer with many others but this is all hidden from you. 

There are many VPS services on offer from many suppliers.  However the Amazon offering has a big difference.  When you create a server you can specify that it is to be preloaded with software from a library.  This is what transforms it into 'Cloud Computing' rather than just any old VPS. Because the library of functions is pre-tested and pre-installed the startup time and cost should be much reduced.

Hosting providers

If Amazon can market a VPS offering as Cloud Computing, then the door is opened for many others to do the same - but without the preloaded software bit.  You might see this as 'Cloud Hosting' instead. Thus the definition of the term is migrating as we watch it. 

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Cloud Computing - What is That?

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This article was published on 2010/04/01