OVERVIEW
Internet-based technology is driving economic change at a level not seen since the spread of industrial technology in the late nineteenth and early twentieth centuries. What became known as "Web 2.0" and the business and consumer applications it brought about have continued to evolve, and what has emerged is now known as cloud computing, software-as-a-service, and social media.

There is as yet only a short history of using these technologies and they continue to evolve. So we have much to learn, but it is quite clear that they are leading to disruptive changes in the way we communicate with each other and in the IT infrastructures that companies use to support their business operations.
The spread of cloud computing is an excellent example of the phenomenon known as "creative destruction," which was popularized by the economist Joseph Schumpeter. Schumpeter pointed out that in capitalist economies, there are waves of change where the introduction of a new technology or new process for doing things upsets and replaces the previously dominant technology and the people and companies who used that technology. Cloud computing is having this effect on vendors who sell traditional versions of computing technology, and on the people who make their living operating this technology.
Companies that have large investments in traditional in-house computing technology will not abandon those investments immediately, nor should they. The transition of companies to cloud-based technology will be quicker for some and slower for others, depending on their individual circumstances. But the change will happen. History shows over and over again that resistance to the spread of new technologies is almost always futile (and often fatal). People and companies that resist are finally forced out of business and replaced by others that do adopt new technology. Clearly the best strategy for people and companies is to actively explore the opportunities for cloud computing, begin appropriate projects to gain experience in its use, and understand its strengths and weaknesses.
A COMBINATION OF TECHNOLOGIES CREATE CLOUD COMPUTING
Since the turn of this century, several different but related kinds of information technology have been evolving rapidly, and they are now being combined to make it possible to deliver computing resources on demand to companies almost anywhere in the world. The combination of technologies, such as the Internet, Web browsers, server virtualization, parallel computing, and open source software, produces a whole new set of possibilities for delivering computing resources. The term "cloud computing" is now used to describe the result of combining these technologies. IT vendors are offering combinations of these technologies to companies that want to outsource some or all of their traditional IT operations such as running data centers and operating traditional application packages, like enterprise resource planning (ERP), customer relationship management (CRM), and other business support applications.
SOME WORKING DEFINITIONS OF CLOUD COMPUTING
The exact definition of cloud computing is still evolving. Cloud computing is both a model for delivery of business computing services and a method for managing and operating computing hardware and software infrastructure. Different IT vendors put their own spin on their definitions, but they share more commonality in their definitions than differences. Here are several working definitions:

• "Consumer and business products, services, and solutions delivered and consumed in real time over the Internet" (IDC)[2]

• "A style of computing where scalable and elastic IT capabilities are provided as a service to multiple customers using Internet technologies" (Gartner)[3]

• "... a broad array of Web-based services aimed at allowing users to obtain a wide range of functional capabilities on a ‘pay-as-you-go' basis that previously required tremendous hardware/software investments and professional skills to acquire." (Jeff Kaplan)[4]

• "... a way of utilizing resources wherever they may be when you need to use them. In that sense you just need to insure that your networking, security, and hardware infrastructure are robust enough to deliver the resources when needed, but just as important, your applications need to be able to execute well in that environment. To me, it is having what you want, when you want, through your virtual desktop no matter where you are." (Frank Enfanto)[5]
From these definitions and lots of other definitions (do a Web search on "cloud computing definition"), there are three characteristics that everyone seems to accept when it comes to describing cloud computing. Everyone agrees that cloud computing has the characteristics of:

1. Practically unlimited computing resources. Resources such as computing power, data storage space, and additional user sign-on IDs for applications are

available on demand as needed, and this enables a high degree of agility and scalability in meeting evolving business needs.

2. No long-term commitments. Computing resources are immediately available and they may be used as long as needed and then retired because they are

acquired on a month-to-month or even a minute-to-minute basis.

3. Pay-as-you-go cost structure. Because there are no long-term commitments, the cost of cloud computing resources is a variable cost, not a fixed cost;

cost fluctuates depending on the amount of usage.

CLOUD COMPUTING HAS THREE COMPONENT LAYERS

The pace of change in cloud computing technologies is rapid. Certain components are changing so fast that the names and technical details of how they operate alter significantly every six to twelve months. Nonetheless, it is possible to group cloud computing technologies into three basic categories or layers. These layers support each other, and the relationships between the layers and the way each layer operates are relatively stable. We will use these three layers to create a basic model of cloud computing and provide a stable framework to discuss cloud computing technology (see Exhibit 3.1). The three

layers of technology used in cloud computing are:

1. Hardware virtualization

2. Data storage and database management

3. Applications and application development environments

Hardware virtualization is a term that refers to the abstraction of computer resources so that many different computers or application servers seem to be available to run different application system, even though there may be a much smaller number of physical computers actually present. The term "virtual machine" (VM) refers to a software implementation of a computer or application server that executes programs like a real physical machine. Hardware virtualization enables companies to optimize the use of physical server resources and improve server administration. Virtualization is a common practice on mainframes and is becoming widely available for other computer architectures, such as computer servers built from low-cost computer chips and commodity hardware. In the cloud computing world, this layer is also referred to as infrastructure-as-a-service (IaaS).

Hugos is a name you will soon come to recognize easily. He is a prolific blogger and writer for CIO.com. You will have no difficulty supplementing your positions in this conference. He carefully outlines the emerging cloud computing environment, and no one will dispute the vitality of this IT sector for a variety of reasons. I use cloud computing for storage, web services, student information systems, trouble ticketing, blogs, course ware delivery. Curiously, I did move email from the cloud back inside the buildings for here the cost of Outlook on the cloud was considerably higher than running it on an in house server. But all of us have cloud email accounts, and what you pay for "in house" is branding only. How important is branding? Not terribly important in my view. So let's address the chapter with a memory of Flemming. Discuss the ABC/M and the SPM considerations attached to the modeling at the CIO presents in making the case for or against cloud computing in a knowledge based industry(as opposed to a manufacturing industry)