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Cloud computing and the issue of privacy

This article appears in the issue July/August 2008, [Vol 17, Issue 7]
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Cloud computing remains a promising solution to the challenges of on-premises installation of enterprise applications. The increasing interest in software as a service (SaaS) as a way to control some information technology costs is evident in the Google/Salesforce.com tie-up.

For those of you unfamiliar with the jargon and the players in the growing trend to shift from traditional on-premises software to cloud-based software, let’s work through some terminology.

First, cloud computing means that an application sits on a server in a data center. The twist is that the software vendor assumes responsibility for maintaining the application and ensuring quality of service. The company using a cloud-based service pays a monthly fee. The burden on the company’s in-house information technology staff is greatly reduced. The idea is a variation of outsourcing to reduce certain costs.

Easing some IT burdens

Cloud computing is what you do when you use Internet services for word processing—Google Docs or Zoho, for example. Microsoft’s cloud-based services are one way for Microsoft to address the complexity of some of its products. Installing SharePoint and other Microsoft servers can be complex. Recovering from an SQLServer crash can be tricky. The constant flow of updates and bug fixes can break installations. Microsoft appears to see its cloud-computing initiative as one solution to those challenges.

Second, is SaaS. That acronym is a 2008 synonym for application service provider and managed services. It’s a two-fisted acronym that relies on cloud computing and the pickup truck of acronyms for the technology that allows an employee behind a firewall to use a service located somewhere "out there" in a data center, and have access to information wherever it may reside, including on a server in the company’s own behind-the-firewall system. SaaS, in short, eliminates the notional boundaries that once separated in-house information from external information. You don’t need me to remind you that in this type of setup, security is job number one.

Control is at the core

The next term is "on premises." In its simplest form, a company has a server, and it is down the hall from the boss’ office. In addition to mental peace of mind, an on-premises server and software running on it give the company the illusion of control. Over-the-network upgrades and remote diagnostics undermine that naïve assumption about control of on-premises software installations. To muddy the conceptual waters, on premises may not mean in a facility owned and maintained by the software licensee. Enterprise application vendors allow a licensee to install the application in a data center that is under contract to the software licensee. The idea boils down to control. And control is at the core of cloud computing for the enterprise.

Finally, the company Salesforce.com is the poster child for the cloud-computing and SaaS business sector. The company was the brainchild of a former Oracle executive, and the Oracle relational database management system is the data management heart of the company. Salesforce.com was among the first cloud computing companies to market to companies unable or unwilling to pay for traditional enterprise customer relationship management systems from Oracle, Microsoft and RightNow, among others. In the last year, Salesforce.com has become a development platform so its customers can build more robust applications or customize the basic Salesforce.com services.

Now into this mix cometh the Google.

A year or two ago, a Google employee told me when I asked about Salesforce.com, "We really like those guys." Google does like Salesforce.com, but it doesn’t love them; otherwise, Google would have purchased the company. Maybe Google will buy Salesforce.com at some point in the future. What’s happened in spring 2008 is that Google has asked Salesforce.com to go steady.

Going steady

The two companies have cooperated to make it easy for a Salesforce.com customer to participate in Google advertising. Salesforce.com explains the expanded "going steady" relationship this way: "With Salesforce for Google Apps, you can now run your favorite desktop applications and your Salesforce applications side by side by accessing Gmail, Google Calendar, Google Talk and Google Docs all seamlessly from within Salesforce." See http://blogs.salesforce.com/blogs/2008/04/announcing-sale.html.

The implications of that deal are significant for Microsoft. Google is exerting more pressure on the Microsoft hegemony in the enterprise. The deal also signals the IBMs, Oracles and SAPs of the world that Google—despite its protestations of beta testing and exploring—is circling the enterprise market in preparation for a larger-scale invasion. My hunch is that if Google finds that going steady with Salesforce.com is comfortable, Google may acquire Salesforce.com and use the company as a platform for a full-scale assault on the enterprise market.

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