Friday, August 1, 2008

Cloud computing bursting on the corporate scene

By Christopher Calnan

Roman Stanek has lived through technology hypes before. For example, the CEO of Cambridge-based business intelligence software maker Good Data Corp. previously founded companies at which he experienced what he called the “unfulfilled promise of service-oriented architecture.”

But, unlike the well-promoted SOA, he has fully embraced cloud computing and its pay-as-you-go concept to reduce costs. And that’s why his 30-person company operates without a single server. Instead, Good Data relies on Amazon Web Services from Amazon.com Inc. for its computing power — which varies in cost depending on customer demand.

Local entrepreneurs more frequently are basing their businesses on a cloud computing model — which refers to the use of a network of servers, via the Internet, for application and data storage as needed — and others are developing technologies to take advantage of the trend, offering tools to software companies using cloud computing. The approach, fueled in part by server virtualization technology, has reduced costs for software startups, and as it has succeeded, it has raised the comfort level of those still on the fence about buying such Internet-based services.

For example, Waltham-based TownConnect Inc., a website that enables suburban families to create social networks, has reduced its computing power costs 90 percent since switching from a conventional data center to cloud computing provider Amazon Web Services in February, CEO Mike Ford said.

Despite the praises for cloud computing, some concerns remain about whether placing a business’s IT on the servers of Google Inc. or Amazon is a smart long-term idea. Also, it remains to be seen whether acquisitive tech giants such as Google or Microsoft Corp. would buy a company whose business is based on technology provided by vendors such as Amazon, said Simeon Simeonov, a technology partner at Waltham-based Polaris Venture Partners.

But such concerns haven’t stopped its adoption locally. At Pixily Inc., a Waltham company that digitizes documents, buying computing power and storage through the web has saved the company about 80 percent of the cost of a data center, CEO Prasad Thammineni said. It also has saved the seven-person company a $100,000 investment in servers, he said.

“Cloud computing has done to hardware what open source has done to software,” Thammineni said.

Regardless of concerns, Simeonov said, the benefits of cloud computing have been difficult to ignore. “It’s good for businesses because they spend less money, and it’s good for investors because they use less precious capital. And it’s good for consumers because they see more things.”