When it launched in 2009, the Qatar Cloud Computing Center was the first of its kind in the Middle East. QLOUD, as it is nicknamed, is a joint effort set up by IBM, Qatar University, Carnegie Mellon University and Texas A&M University after Qatar decided the nascent technology could help it shift from an oil-based to a knowledge-based economy. But the center has had to contend with its share of skeptics, who question the usefulness of the technology — which provides remote network computing that companies "rent" from a third party over the Internet. "Almost no one was talking about cloud computing nor were they interested in it," recalls Qutaibah Malluhi, a professor and director of computer science and engineering at Qatar University.
Not much has changed today. "There's still a lot of skepticism," Malluhi says. "Although Qatar is one of the most advanced [countries] in the region, we're still demonstrating the relevant applications that can be done with the project." That includes using it to build an Arabic search engine. And cloud computing has aided oil and gas exploration — for example, by processing huge amounts of information collected over decades from the ocean and oil fields to find new fuel reserves.
Because of its speed and efficiency, supporters of cloud computing believe it represents the future of global corporate IT. "I tell people that in five to eight years, cloud computing will be the normal way to do work," notes Ric Telford, Raleigh, North Carolina-based vice president of IBM cloud services.
That could be the case in the U.S., but other markets are more reluctant to adopt the technology. For example, privacy laws in the European Union are obstacles for the growth of cloud computing there. In Asia, it has taken hold in Japan and Singapore, but is in its infancy in China and India for a host of reasons, ranging from difficulty for providers finding local business partners to general lack of awareness among business users. In the Middle East and Africa, while many of those obstacles also apply, slow Internet connections and physical security concerns also present challenges.
Fast and Cheap
Yet early cloud computing adopters have had impressive results. When Getronics, a Dutch computer services company, developed a new pay-per-use model for its clients recently, the company's IT department estimated it would need four weeks to set up servers and design, test and launch the service. IBM's cloud computing division helped Getronics get the model up and running in a few hours, at considerably less cost.
It was a similar story in London, when an international bank wanted to launch a new computing application for its clients. The bank's IT department thought it needed 11 weeks to complete the project. The cloud computing division at Hewlett-Packard did it in about 90 minutes, thanks in large part to its use of high-speed Internet and leveraging economies of scale when using the cutting-edge infrastructure it rents to clients. "A straightforward service can be done in seconds," says Ian Brooks, HP's U.K.-based European head of innovation and sustainable computing.
One of the increasingly popular uses for cloud computing is for data storage. Instead of storing servers onsite, companies can access a virtual server through third parties, such as HP and IBM, as well as Google, Amazon.com, Microsoft, Salesforce.com and CA Technologies. Such firms have thousands of machines housed in data centers across the globe, renting the space, hardware or software to customers, usually on a subscription basis, over the Internet. Aside from being cheaper for companies than if they ran such IT themselves, the system is also flexible: A company can hire servers according to its needs, for example.
By outsourcing the purchasing and managing of software and servers, "the greatest advantage [of cloud computing] would accrue to smaller players, which include start-ups in large countries and new entrants in developing countries," says Eric Clemons, a Wharton professor of operations and information management.
Jay Fry, vice president of marketing for cloud computing at New York-based CA Technologies, agrees. And beyond the cost savings, setting up such a system means it can take a company seconds to start reaching customers and making money, he says.
Private: Keep Out
But security is a concern. Many current and potential adopters of cloud computing in Western Europe, for example, worry that data being sent over public and private networks is at risk of being lost or stolen. A researcher for the EU's European Network and Information Security Agency told news website GlobalPost.com that he couldn't give complete assurance about security because there wasn't enough transparency from the third-party providers or a standard system for evaluating data protection systems.
Supporters say the potential advantages outweigh the potential disadvantages of cloud computing — such as helping companies in the EU's 27 member countries tap into IT infrastructures that transcend borders and language barriers. But many EU governments aren't convinced, and cloud computing has become entangled in the region's data privacy laws.
The European Data Privacy Directive, which regulates cross-border data transfers, was drawn up in 1995 to protect consumers from identity theft and other fraud if personal data fell into the hands of cybercriminals. The project has been slowing down, and sometimes preventing, data from flowing freely between companies in different countries. Revisions to the law are expected next year, but companies currently have to receive approval from each nation's regulators as a user's data passes through their borders.
Adding to the complexity are the numerous interpretations of regulations that EU member countries apply within their borders. For example, customer data might be allowed to be stored for six months in one country, but two years in another. This year, Europe is forecast to account for less than one-third of global cloud computing sales, according to Gartner, an IT research company.
Cloud computing providers are learning how work with the privacy laws while also lobbying to ease them. Peter Coffee, director of platform research at San Francisco-based Salesforce.com, says, "The laws reflect technology from 30 years ago. This makes cloud computing more complicated."
As a result, some cloud computing providers are focusing national, rather than regional, strategies in Europe. Others are simply treading carefully by, say, trying to encrypt private data before it is sent into the cloud. "It's mostly fear of the unknown. It's just like the early days of the Internet when people were afraid to put their credit card information [online]," Telford says. "The industry has a lot of education to do, but all these issues are addressable."
In July, IBM opened its largest European cloud computing center in Ehningen, Germany to run alongside a three-year-old center in Dublin. Why Germany? Because it has some of the strictest data rules, which might offer greater assurance to nervous clients, says Telford.
The issue of privacy isn't an unmanageable obstacle in Europe though, says HP's Brooks. "It depends on the use. If it's military or hospital records, yes, cloud computing is more of a hard sell. But when it comes to software testing and marketing, it's not a problem."
The Middle East also has privacy concerns, but of a different nature: Terrorist attacks being a constant worry. But rather than fear about those attacks taking place in cyberspace, companies in the region are more focused on the safety of the physical infrastructure where there data is housed. "People want to know if the walls of the data center will stand up to a [rocket-propelled grenade] where there are complicated security situations," notes Coffee of Salesforce.com.
It's a concern heard often by Nasser Saleem Ahmed, Google's enterprise sales engineer in Dubai, when speaking with current and potential clients. But he points out that all information is copied and encrypted six or seven times so if a data center is damaged, a customer's virtual assets are safe. "Google will never lose the data," he maintains.
The Middle East isn't the only emerging market where adoption has been slow, says Kartik Hosanagar, Wharton professor of operations and information management. Similar situations are playing out in India. He cites a number of Indian cloud computing start-ups, such as Impel CRM, Synage and Cnergis. But he says these firms need to think globally since "the local market for cloud applications is currently quite small in India so there is limited focus there."
There is also the issue in the Middle East of companies simply not knowing enough about cloud computing. "Because cloud computing is still relatively new in the Middle East, organizations may still be coming to terms with this delivery model and how best to take advantage of it," says Jesper Frederiksen, vice president for Europe, Middle East and Africa, of Symantec Hosted Services. Countering the lack of knowledge, some local firms are using their on-the-ground advantage to win clients. United Arab Emirates-based software developer, Wirestorm, announced last month the launch of its cloud computing services for customers in the UAE. In addition to offering solutions for small and large customers, Wirestorm provides full Arabic language support. "We have seen our revenues grow by more than 500% in the past year based on the demand from clients for innovative and customized software solutions," says Abdul Munem Miri, CEO of Wirestorm Innovations.
To further help win over skeptics, the big cloud computing players are partnering with universities around the world. In addition to contributing software and training to QLOUD, for example, the company recently signed an agreement with Jordan University of Science and Technology to build a cloud computing center. HP's worldwide cloud computing research center is associated with Bristol University. Meanwhile in the Middle East, IBM will help deliver the hardware, storage and networking, virtualization, and service management software to QLOUD in Qatar.
"Seeds are being planted in the university world," notes IBM's Telford. "Students will graduate and cloud computing will be the style of computing they're used to…. Just look back at the Internet; 10 or 15 years ago, nobody knew what a browser was. The cloud delivery model will be the normal way to deliver IT."