The Cloud Isn't New, Just More Attractive

To understand the significance of the purchase of RightNow by Oracle Corp. (Nasdaq: ORCL), you need to go back only three years to when Larry Ellison, the CEO of Oracle, trashed the cloud, calling the idea "gibberish".

The shift in Ellison's perception is understandable. According to IDC, revenue from public IT cloud services is expected to hit the $55.5 billion mark by 2014 -- a compound annual growth rate of 27.4 percent, or roughly five times that of regular IT products.

The continuing economic downturn has accelerated adoption of the cloud by businesses that are looking at the cost savings it provides. The cloud eliminates dependence on hardware, ends the war of PC versus Mac software compatibility, and reduces the cost of software purchasing. In addition, one of the most compelling reasons companies are moving data, storage, and applications to the cloud is that they can rent what they used to buy.

Yet the savings go beyond the obvious reductions in IT expenses. By 2020, US companies that use cloud computing can achieve annual energy savings of $12.3 billion, or enough oil to power 5.7 million cars for a year.

The word "cloud" may have had a different meaning to most people only a few years ago. Experts looked at the cloud as hardware-as-a-service, and laymen may have been puzzled by it or at best thought of it as software-as-a-service. Today, thanks to the awareness brought to the public by the news media, the cloud has a definite meaning and value. To most, a solution is either on the premises, where they can physically touch the hardware, or in the cloud.

A Samsung study examining how workers actually use IT in the workplace and how this affects things such as productivity, health, and security found that employees spend an average of seven hours a week fixing IT headaches. Such issues are drastically reduced by utilizing cloud-based applications, since IT support, patches, and upgrades are handled by the cloud vendor.

In the past, companies primarily bought cloud solutions if they had remote staff. It was their way of connecting all their workers. However, today so many app developers have focused on cloud-based offerings as their flagship product that many companies are using cloud services when all their employees are under one roof. Companies receive better apps and have fewer headaches.

Companies as diverse as General Electric Co. (NYSE: GE), Wells Fargo, Mercedes-Benz, and Medtronic utilize cloud-based applications to create a consistent user experience across all devices, including tablets, benefitting from the shift to a pay-per-use model.

Last year President Obama signed the Telework Enhancement Act into law, requiring all government agencies to determine which employees are eligible to telecommute and to develop policies and processes allowing them to do so. Agencies are turning to the cloud to find the tools and applications that will help teleworkers do their jobs seamlessly.

Security issues are often cited as a significant concern, but most cloud-based services are more secure than legacy systems maintained by agencies or corporations. Money under a mattress may be closer to you, but money in a bank is safer, because the bank has experts in charge of security. Cloud services may not have CIA-level security, but they are by far more secure than laptops and servers in back offices.

Companies such as InfoStreet, a leader in cloud-based services, have been providing platforms and applications to enterprise customers since 1994. Their customers have lowered direct and indirect costs, reduced IT headaches, and equipped themselves with the tools for a mobile workplace. Oracle, Microsoft Corp. (Nasdaq: MSFT), and Apple Inc. (Nasdaq: AAPL) built their companies on the sale of hardware and proprietary software. Yet they are all accelerating their cloud services, either through acquisition or invention, because of customer demand for precisely what InfoStreet has been providing all along.