Cloud computing is one of those unfortunate labels that has become so overused that it has lost its meaning for a lot of line-of-business decision makers. The phrase apparently first made it into the public domain (there is some debate about this among people who want to own the term), in a 1997 paper from the Massachusetts Institute of Technology (MIT) entitled The Self-governing Internet: Coordination by Design. But to many, it simply means the Internet.

That turns out to be one of the biggest impediments to acceptance of the concept of cloud computing as a viable computing architecture to support vital business processes. For historically good reasons, many business CIOs have believed that if a technology is vital for the daily smooth functioning of the enterprise, then nothing short of owning the technology will do. In fact, that is the basis for existence of most IT shops today – to support all that stuff that the business owns. The idea of throwing a critical business function onto the Internet, which many view as a great uncontrolled digital wilderness of hackers, spammers, texting teens, and sexting Congressmen, seems fundamentally irrational.

Like most new technologies, cloud computing has been oversold and misunderstood. The popular press hasn’t helped either. For example, Newsweek magazine in June, 2008 ran an article entitled Living in the Clouds, rhetorically asking the question “Is computer software becoming obsolete? “ For those who are developing cloud-based solutions for businesses, the question is kind of silly. The software that runs any cloud of technology resources is inherently more complex than anything most businesses want to tackle internally. And development of those software capabilities is proceeding at a rapid pace, even while business leaders fret about how best to take advantage of on-demand services that run in a cloud.

In November 2008, RSR commented on the direction of venture capital investments in and around Silicon Valley (The Glass Is Half Full In Silicon Valley, 11/4/08). At the time, we reported that two top areas of focus for technology investors were cloud computing and infrastructural core technologies (storage, networking, etc.). As we quoted one VC insider at the time, “Silicon Valley believes that this is the proper architecture for the future. “

That trend has only continued, but money interest isn’t confined to VC’ers. For example, last year IBM acquired two companies, Cast Iron and Sterling Commerce. Sterling automates the space between enterprises, enabling partners to collaborate about the movement of goods from manufacturer to customers. Cast Iron offers cloud services integration. The combination of the two is a potentially powerful B2B solution to enable strong intra-corporate supply chain integration as an on-demand service.

Meanwhile, Back In Silicon Valley…

Developers and investors in new technologies are quickly moving from infrastructure plays to solutions as the technologies around cloud begin to mature. But like consumer mobile electronics, it’s a very fast moving world, and the line between the development of enabling technologies and deployment of new solutions is getting hard to see.

One example is a new company called CloudTran. CloudTran is a cloud-based data processing manager, offering a new approach to transactionality that scales in cloud architectures. The company’s solution promises to manage the complexities associated with processing data over a widely distributed environment, with the objective of offering virtually infinite scaling of transaction systems. That’s all pretty technical stuff, but even as the company is seeking a new round of VC funding to bring the concept to market, it is already developing business applications that use the CloudTran technology to solve interesting problems – in the cloud.

RSR talked to two of the CloudTran management team, Tom Henn and AJ Brown, last week to find out more. Both Tom and AJ are early stage technology veterans. They met up in the early 1990’s at Red Brick Systems, one of the first UNIX-based data warehouse platforms brought to market (Red Brick, which was acquired by Informix in the late ‘90’s, is still available from IBM).

Brown explains the rationale for their new company’s technology this way:

“Some people have told the world that the cloud is only about sharing photographs of family members, as a simple way to store and retrieve information. What’s been missing is the ability to process that data at a business level. If you think about a business transaction and a workload and a logical flow of that data, it has not been available‘on the cloud. CloudTran has added that business logic and that transactionality so that data can now be more than just stored and retrieved — it can be processed as part of application workflows. That enables a new breed of applications to the cloud, such as point of sale, inventory management, supply chain automation, and loyalty programs — things that couldn’t previously go there because it (the cloud) was a storage/retrieval kind of capability at a very simple level, without the reliability, scalability, and security that business data really needs. “

HubaHuba

As if to prove the point, Henn and Brown described a new CloudTran-enabled solution that the company is developing, called HubaHuba. Henn describes the solution as a social loyalty program, where retailers and manufacturers work together to build brand awareness to potentially huge networks of interested consumers. Says Brown, “just as in the manufacturing and process with supply chain automation, there’s a loyalty chain. Loyalty is more than just the repeated purchase of a product by a consumer; it’s the manufacturer, distributor, retailer, customer, the customer’s friends and family. Understanding that entire loyalty chain is what HubaHuba wants to do, and it’s the cloud that makes that possible. For the first time, we now have a computing architecture that allows us to move that kind of data around and involve all the constituents. This isn’t an end-run around traditional loyalty programs, but an integration of the loyalty chain top to bottom. It goes beyond where you might think loyalty programs end. Because it doesn’t end when the customer buys a product – it ends when the customer talks about the product to friends and family. “

Both Brown and Henn pointed out that at this point in their company’s three-year history, the HubaHuba loyalty solution does two things: first it delivers real tangible value in a new and interesting way, and secondly, it proves the viability of the underlying CloudTran cloud-based data processing capability.

Henn could only disclose that CloudTran is talking to interested parties about HubaHuba and is offering early access to mid-tiered specialty retailers who service consumers with specialized needs and very discriminating tastes. In other words, to a very targeted group of manufacturers, retailers, and consumers. Stay tuned….

Post-Hype ….

The hype surrounding the cloud is giving way to industrial strength solutions as companies like CloudTran deliver some of the missing pieces that enable the kind of robust performance and scalability that businesses demand – in an affordable pay for what you use model. CloudTran’s Henn sums it up best: “the cloud is real because the infrastructure is coming together now so that applications can be built on it, and you can take advantage of the scalability, performance, and obviously, extreme affordability. “