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Cloud computing used to be one of those wispy technical phrases that was hard to define.

Was it a new name for outsourcing? A different kind of computer network? Or just marketing nonsense?

But the overcast outlook is beginning to clear.

With cloud computing, shared resources, software and information are provided on demand. Customers pay only for what they use and they can temporarily boost their server space to deal with high-volume traffic to their Web sites.

His reason: Cloud computing is an inexpensive way to launch a new business for which demand is unknown.

And it’s drawing players large and small. Software titan Microsoft Corp.  is dabbling in it. So is conglomerate 3M.

Locally, a Delta Township company is seeing a sizable expansion in the cloud computing arena.

In January, Liquid Web Inc. , founded by Matt Hill, launched “Storm on Demand,” its own cloud hosting platform.

Rather than commit to buying or leasing computers, telecommunications lines and data storage, Graham rents them.

3M’s new business, called Visual Attention Service, lends itself to cloud computing. 3M software analyzes advertising agency photos to help determine, in less than a minute, whether the picture actually directs a customer’s eye to the object being sold.

This work has typically been done by experts but 3M’s automated process is cheap and quick.

But will it sell?

Since 3M can’t predict the demand for the service, introduced in January, it didn’t want to commit to long-term data center use. Graham’s new business has become a cloud computing pilot project that the rest of 3M is watching.

Small business use

If it works, 3M could be one of the first big corporations to widely adopt cloud computing, which so far has attracted mainly small and medium-sized businesses seeking to lower costs.

Big companies, which have voiced more concerns about privacy and security, haven’t embraced it.

But cloud computing providers are pushing it hard.

Besides Microsoft, St. Paul-based Lawson Software Inc. and Eden Prairie, Minn.-based VISI Inc. are renting out their data centers for cloud computing.

“Most of our customers are small businesses with five to 500 employees,” said Johnny Hatch, VISI’s product manager for computer hosting operations.

“They can sign up online and start using the service. We can set up a server for them in about a minute.”

Redmond, Wash.-based Microsoft is aiming for bigger corporations, and admits it’s a hard sell.

“Retailers and manufacturers are the most amenable to cloud computing” because its flexibility accommodates annual variations in their employment rolls, said Donald Leeke, general manager of Microsoft’s seven-state North Central District.

“Financial services and health care are slower to adopt it” because of privacy concerns.

A megatrend?

Some in the computer industry consider cloud computing a megatrend.

“We are in the midst of a transition in how computing services are delivered,” industry journal CIO Magazine wrote recently. “We are moving from a custom, manually-intensive, expensive approach to a standardized, automated, inexpensive approach.”

Leeke said cloud computing can save customers 20 percent to 30 percent of their IT costs. Changes can be made quickly.

“I can turn on 10,000 users tomorrow if you want,” Leeke said.

For customers who aren’t ready to embrace remote data centers, Microsoft is developing an intermediate solution.

Computer centers shared by many corporations are called the “public cloud,” but it’s possible to create a smaller “private cloud” within a company. That way, company divisions would be able to get on-demand, pay-by-the-hour computing service to better manage their budgets.

New data center

The privately owned Web hosting company, with about $27 million in revenue in 2009, opened a new, $80 million, 90,000-square-foot data center and headquarters last fall in Delta Township and a software development office in May in Scottsdale, Ariz. It has been ramping up its work force to support its new product.

Liquid Web, which has two other sites in Delta Township, employs 200 and is averaging four to 10 new hires a month, said spokesman Travis Stoliker.

Hill plans to have more than 600 employees and 25,000 computer servers in about three years as part of an overall expansion.

“Cloud computing in general is a rather new market, so the size of the market isn’t quite as large, but we’re seeing most of the growth come from the cloud computing side,” he said. “That’s mainly fueled by all of the advantages cloud computing provides compared to traditional hosting.”

‘Next evolution’

Stoliker said he expects more Web companies offer the new technology, which he called “the next evolution of the Internet.”

“You’ll see literally everybody from municipalities to government to corporations all adopting cloud computing over the next five years,” Stoliker said.

Just ask Jim Graham, a 3M Co. technical manager, who has launched a new software business from his St. Paul, Minn., research lab without using any 3M computers. Instead it lives “in the cloud,” which means 3M’s software resides on computers in Microsoft Corp. data centers around the world.

Source : lansingstatejournal.com