Original post via www.wired.com by Todd Nielson

Cloud computing is without a doubt one of the biggest innovations to ever hit the technology industry. While the basis of what is “cloud” has been around for years, the term and its effect are gaining significant traction. In some ways I find it nauseating, but at the same time I am in awe at the many technology service companies and managed services providers that are not strategically playing out what is happening all around them, and are thus denying that it will have any effect on their future. I am also in awe at the businesses and executives that are not treating cloud computing as a strategy to improve their company. In this article I will talk about Technology Innovation, Internet Availability, and The Generation Factor; and how their continued commoditization will contribute to create great opportunities for some, and dangers for others.

Technology Innovation’s Effect on Cloud Computing

The technology innovations that are continually being developed are phenomenal. Hardware is becoming smaller while at the same time, getting more and more powerful. Software is becoming smarter and more intuitive, and there are many more software options available to solve problems. With 100-core processors soon available and 1,000-core processors on the horizon; along with the myriad many other technology innovations, will combine to create greater commoditization, which will bring prices further and further down. With these conditions, the appeal of cloud computing to a smart business owner or executive becomes increasingly attractive. Most computers and especially servers are dramatically more powerful than we will ever need. Why spend money on technology that you will never use to capacity, when in the cloud you can pay for what you use and dynamically increase and decrease the services you need? This is the mindset that every CFO and CEO will grow to love as they seek to preserve cash flow and increase performance. One side to commoditization is when products are so powerful and reliable that consumers no longer need to differentiate between brands. This is an important concept to remember in how cloud computing will affect business.

Internet Availability’s Effect on Cloud Computing

Bandwidth continues to propagate the earth at alarming speeds, while at the same time decreasing in price. Many people claim bandwidth as the big limiting factor of cloud, yet it is continually becoming extremely prevalent and fast. Aso, 4G, fiber optic, wireless, and better technology to increase speeds over copper, will continue to diminish this road block. This increase in availability also creates commoditization as broadband services become faster and the difference between brands decreases. In this scenario, consumers usually buy the cheapest since they all appear the same. As this happens, availability as a reason to not move to cloud computing will disappear.

The Generation Factor’s Effect on Cloud Computing

The Generation Factor is the most important of the three factors to understand. Younger generations are growing up in a world of instant gratification of technology needs. The concept of going to a store and buying music and software is dying. That effect is no different than the appeal of cloud computing. One can get music any time, from any location one is, and very cheaply, and that will be the mentality for IT services, thus increasing the demand for cloud computing.

In addition to the instant gratification, software is so much easier to install now than it was years ago. Interfaces are also simpler; heck, my 3-year-old knows how to use my iPad. He can get around applications, open and close them, play games, make choices and get back into apps when they crash. This generation is and will influence decision-makers and ultimately will be the ones starting businesses. This generation growing up is not going to go out and spend $10,000 on a server to run their new startups, when they can get something more powerful and cheaper from the cloud. So now we see that knowledge commoditization plays an important role in the proliferation of cloud computing. There will always be a need for advanced and specialized IT professionals, but knowledge commoditization, mainly due to this generation factor, will influence the solution provider market, and who cloud computing services are delivered by.

The Perfect Storm for Cloud Computing

So if I could break this thought process down into a mathematical formula, it would look like this: (Technology Innovation × Commoditization) + (Internet Availability × Commoditization) + (The Generation Factor × Commoditization) = A Perfect Cloud Computing Storm. The storm is full of opportunities for some, and dangers for others. Now is the time to create opportunities, instead of waiting for the dangers to happen to you. Please comment below with your thoughts on these three factors and any other factors that you feel are contributing to the perfect storm for cloud computing.

Todd Nielsen has served as CEO, COO, President, & Vice-President, of various IT & Telecommunications companies. He writes about  leadership & management at his blog: A Slice of Leadership, as well as IT Channel topics geared to solution providers at IT Channel Insight.

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