Cloud Computing, Virtualization, IaaS, PaaS and SaaS - Part 1

What is cloud computing and why is it important?

On the question of importance, cloud computing addresses several business problems.

Perhaps the most mundane problem that cloud computing addresses is one of cost for getting applications up and keeping them running.

• Availability 
• Because of the underlying technology used in cloud computing (Virtualization - more on this next post.) it becomes relatively easy to implement failover and high availability for servers. This makes the customer experience better (fewer interruptions) and allows more routes to addressing business critical applications (lowers barrier to entry on some enterprise applications).
• Application deployment & maintenance 
• Depending on the level of the cloud you engage at (Infrastructure, Platform or Software - more on this next post), the level of IT expertise required to use the applications / services you want can be greatly reduced. Software patching, upgrades, hardware provisioning and maintenance is left to the cloud providers who have this expertise on staff.

These "mundane" aspects of cloud computing enable significantly less mundane capabilities. The most immediate of which are the new business models that become feasible.

• Software start ups galore
• Because compute power can be purchased on-demand and in relatively small units, capital costs for starting a software company are significantly reduced. This enables more players to try more things in search of the next big thing.
• F2P (Free to Play), Freemiums and ad-driven businesses
• Because the marginal cost of adding users to a centralized s/w application can be nearly zero when deployed in a dynamically scalable infrastructure such as the cloud provides, companies can explore business models that "give away" software, or more precisely: give away access to software, while closely tracking and tailoring the user experience more easily. This leads to businesses that thrive on micro transactions within the software or on ad revenue instead of from sales of the software itself.
• On-line special events
• Relatively low cost and rapid provisioning of compute, network and storage resources allows for companies to generate increased community engagement or media attention by using this burst capacity to host periodic special events. For a small fraction of the cost of buying and setting up the h/w and software required to gain this capacity, the same buzz generating potential can be realized.
• Mobile
• By using the relatively limited compute power of networked mobile devices to drive the user interface and pushing the computationally intensive tasks to servers in the cloud, the capabilities of mobile devices become nearly unlimited. This creates a new class of applications (e.g. voice recognition, navigation, etc) for entrepreneurs to explore and market, driving sales of mobile computing hardware (e.g. smart phones and tablets) or of the applications (as apps or as services) themselves.
• Distributed work force, virtual desktops and collaboration
• Because public cloud resources can be accessed from any internet connected device and data storage is easily centralized, the cloud makes it more feasible than ever to provision specialized applications to anyone, anywhere, to keep company data centralized and provide tools by which physically separated groups can easily interact and exchange information in real time in order to improve productivity.

As Corporate Social Responsibility (CSR) and sustainability concerns increase, the "green" aspects of cloud computing also become more important.

• Economies of scale in "green" data centers may mean that renting capacity via "the cloud" is greener than you can afford on your own.  
• Making an efficient data center requires high up front capital and expertise costs. Considerations like the ones below are more affordable by large businesses or by dedicated cloud hosting companies where the risk associated with the capital costs are more acceptable for the long term return.
• efficient server h/w
• low energy and passive cooling strategies
• occupancy based lighting, energy efficient lighting fixtures and daylighting strategies
• green power purchase agreements
• on-site generation via renewables (e.g. co-gen, bio-fuel based fuel cells, PV, Solar thermal, etc.)

Next time some details about the the "what" part of the question.