Cloud computing -- using remote data centers over the Internet instead of buying computers -- has been quietly creeping into companies under the noses of corporate executives.
Departments are using it without permission by putting it on company charge cards, and employees widely use some common cloud applications such as Google Docs or Salesforce.com, said Bill Martorelli, an analyst at Forrester Research in Cambridge, Mass.
"Corporations really need to reconcile themselves to cloud computing," said Martorelli, who will be the keynote speaker Tuesday at the Enterprise Cloud Summit at the Minneapolis Institute of Arts that's sponsored by Wisconsin-based TDS Telecommunications. "But they also have to find the balance between empowerment of employees and corporate control."
Surprisingly, the most attractive thing about cloud computing isn't cost savings, which have been widely predicted but often don't materialize, Martorelli said. Instead, cloud computing is a way for midsized companies to be nimble. Entering a credit card number online can instantly turn on a full-scale remote computer center as if one were flipping a light switch, he said.
Other industry observers see the same trend.
"I'm hearing about a fair amount of cloud computing going on here in town," said Isaac Cheifetz, president of Open Technologies Consulting in Minneapolis. "It's becoming robust enough that a lot of people are taking it seriously."
Some in the audience of the Cloud Summit will be considering how far into cloud computing they should go. One of them is John Carroll, the senior systems administrator for GovDelivery, a St. Paul firm that creates websites and handles e-mail, text messages and Twitter feeds for state, local and federal government agencies.
"We're doing a trial to find out how easy it would be for us to move into the cloud, and how much control we can retain over what's in the cloud," Carroll said. "I think the cloud will mostly save me time as an administrator, and time is money in that sense."
But cloud computing isn't for everybody, Martorelli said. Companies that perform a lot of financial transactions or intensive database searches probably will find cloud computing doesn't scale up in a way that's practical for them, he said. Other companies will worry about security issues in the cloud, where the same computer servers handle data for many customers at once.
"People worry that their data may be on the same server with a competitor's data," Martorelli said. "Or they worry that they just don't know where, geographically, their data is being stored."
For example, health care companies have largely stayed away from cloud computing because it has been unclear exactly where cloud data is physically stored, raising privacy questions about whether the information is safe from unauthorized snooping.
TDS, which offers cloud services through its Visi operation in Eden Prairie, is trying to get more midsized corporate customers by solving some of those problems, said Clint Harder, product strategy vice president for TDS's hosted and managed services. Visi will now guarantee where cloud data is being stored, he said.
"We literally tell you what computer center your data is in, right down to the computer cabinet," Harder said. "You can specify that your data be kept in Minnesota if you want. You can get a dedicated server that will be used only by your organization. You can have your data encrypted, so that even if someone got access to it they couldn't read it."
Harder concedes that TDS and other telephone companies are playing catch-up in the computer outsourcing business that blossomed in the last decade. They see cloud computing as one way to do that.
"I see compelling economics in cloud computing when it comes to being faster and more agile," Harder said. "Companies can buy computing capacity as they need it instead of buying their own hardware and growing into its capacity over time."
Steve Alexander 612-673-4553