To date, it has been younger companies, particularly within the technology industry itself, that have adopted the cloud, with established businesses treading more carefully. A classic example is the Australian wiki software maker Atlassian, whose entire business is run in the cloud.
Often these companies turn to suppliers who reflect their own spirit of entrepreneurship. That has been great news for Google and its partner companies, such as Brisbane-based Devnet. Devnet chief executive Craig Deveson says this year has brought increasing interest in Google's hosted services -- including spam filtering and e-mail archiving, and its Google Docs productivity tools -- and not just from start-ups.
"The benefits of cloud computing are coming to be better understood, and companies are facing increasing cost pressures," Deveson says. "But there is a need to look at doing things differently. When you come out of a boom, everything gets questioned. And companies start asking why they are hosting applications internally, and look at what they can move out to the cloud."
Glenn Gore, CIO at hosting company Melbourne IT, agrees that interest in cloud computing is growing rapidly. Within its data centres Melbourne IT runs eight clouds using virtualisation technology from VMware.
"We can now expose those clouds to customers, and do some interesting things," Gore says. "We have them using these clouds for capacity-on-demand, where they have projects or campaigns where they need to have something running for a short period of time and aren't too sure what the loads will be."
A recent example was the Beijing Olympics, where a number of customers wanted to run promotions or specific Web sites tied to the Olympics that only lasted four to six weeks.
"It is very hard for a customer to predict how much infrastructure they should throw at it, compared to when you put it on a cloud it becomes someone else's problem to make sure it scales. You just get charged for what you use."
This capability is playing very nicely against the emerging requirement for agile development, especially among larger companies.
"We see customers using [the cloud] to drive innovation cycles," Gore says. "By removing the two risks around contract length and upfront investment, they can afford to try different things that in the past might not have been feasible or been too risky.
"The other thing about the cloud is it moves you away from a capital expenditure model to an operating expenditure model, which a lot of companies find easier to sustain at the moment."
In the longer term, Gore expects the internal cloud model to fade as companies are driven to the public cloud by the attractiveness of additional functionality available at a lower cost than they can achieve themselves. He cites advanced security services, intrusion detection and protection, and advanced network load balancing.
"Being able to take advantage of some of the features of a virtual environment, like moving it around from host to host, and the fault-tolerance capabilities of the newer products, make it a very quick way of moving to a fault-tolerate architecture at low cost."
But right now the most common reason for adopting the cloud is the ability to avoid paying for equipment and licence costs upfront. For Andrew Fisher, former IT manager at OzMinerals and now a technology consultant for the resources company Citadel Resources, using the cloud has been a logical step in building that company's IT function.
"Citadel is an emerging resources company," Fisher says. "We have a Melbourne head office and are developing a copper and gold mine in Saudi Arabia. There's no formal IT group or function. Not having IT staff, we ideally don't want to have the responsibility of having to host a number of applications and servers in-house when we are still quite a small group."
When it came to implementing e-mail, Fisher opted for Microsoft's Exchange hosted with a cloud services company in the US called NetVigour.
"All of the care and maintenance associated with delivering Exchange to our users globally is handled by a third party. We looked at the cost of bringing Exchange in-house, and the benefit wasn't there. And for the foreseeable future, I don't see why we would change."
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