SaaS Summit: Cloud Computing Is Here to Stay

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Includes: AMZN, CRM, GOOG, MSFT
by: Sam Diaz

At the SaaS Summit in San Francisco Thursday morning, the discussions are kicking off with plenty of questions and a dose of reality.

What exactly is cloud computing? We’re hearing buzz terms like Software as a Service, Platform as a Service, Utility Computing, Grid Computing. Aren’t those all a form of cloud computing? For some, cloud computing is a fancy, albeit meaningless, buzz term for the larger umbrella that encompasses all of the above. But the general feeling is that cloud computing is a catch-all term that will help catch all of the forms of computing mentioned above while they make a name for themselves in the marketplace.

Is it safe? What are we doing about security?

The short answer is that there are still concerns about security and no one seems to be able to answer that question with real authority - which means that there are definitely some issues remaining. After all, we just learned that a glitch on Google Docs exposed many of the files publicly. But some at the sessions here have argued that glitches by the Googles, Amazons and Salesforces of the world are few and far between. A bigger risk is disgruntled or sloppy employees who expose critical files - something that could happen with or without a cloud solution.

What are the largest forces pushing companies into the cloud? That one is easy. It’s all about the dollars. Actually, that’s probably an oversimplified answer to that question but panelists so far overwhelmingly agree that companies in this economy are looking directly at their bottom lines. A panelist Thursday morning mentioned the cost savings for the city of Washington DC, which shifted 38,000 employees to Google Apps last year and reduced its software licensing costs from $4 million a year to $475,000. As one panelist said, “It all comes down to cost, cost cost.” But is that really true? In one session, a panelist said the software - no matter how much cost savings is involved - still needs to improve efficiency. If the software doesn’t do the job it should, then the cost savings actually look more like money wasted.

Will these new cloud startups be around in another year or two?

Ah, the fears from the last dot-com bust have not gone away, I see. Sure, plenty of companies from the last dot-com boom disintegrated when the boom busted. But there’s also a general feeling that the tech industry learned its lessons from the last tech downturn. There are big companies out there with plenty of cash on-hand - Google and Microsoft (NASDAQ:MSFT) among them. Smart solution startups that are feeling the pinch of the economy could be ripe for pennies-on-the-dollar acquisitions - and that could allow the services themselves to survive, even if the companies don’t.

Who’s buying into the cloud - the large corporations or the SMBs? Cloud computing - and all the other SaaS and PaaS offerings that fall under that umbrella - are attractive for businesses of all sizes, panelists say. The reality - at least at this point in the game - is that SMBs aren’t as bogged down with bureaucracy, which allows them to make quick decisions and easily implement new technologies. Large enterprise companies will have a tougher time “just doing it” but eventually will be driven by the cost savings.

The overlying message: Cloud computing - or whatever you want to call it - is here to stay. There’s a new generation of leaders who understand the power of the cloud. And, in this economy, the CIOs and the CEOs are eager to hear about anything that could beef up the bottom line at the end of the day.