Clouded thinking

Digital and Cloud now compete for our mind-space as a whole lot of interested parties have found that with a little twist here and there it can be made more interesting than a Bond film. No I am not being frivolous but dead serious. I have already written on the cavalier way in which ‘the digital’ is being bandied around. I find it (continuously) ironic that an age characterized as the information age has so much ignorance. Many accused former President Donald Trump of being a purveyor and victim of alternate reality but I think this can be said of many more people. Across ages and beliefs.

Let us get down to basics. What is meant by cloud be it cloud storage or cloud computing? Storage is just that – storage. Computing has been variously defined although use of computers is common across; understood rigorously, refers to the use of writing software or making calculations. Clearly, calculations ought to refer to something vastly more than what we can do with calculators. Let us refer to a definition: “Cloud computing is the delivery of different services through the Internet. These resources include tools and applications like data storage, servers, databases, networking, and software. Rather than keeping files on a proprietary hard-drive or local storage device, cloud-based storage makes it possible to save them to a remote database. As long as an electronic device has access to the web, it has access to the data and the software programs to run it” (https://www.investopedia.com/terms/c/cloud-computing.asp). This is an evolution from mainframe to PCs and client server architecture to web-based systems to cloud. Each came with a different (however slight) set of skills. The progression is neither natural nor guaranteed. Often, in business, success can be rationalized with ‘appropriate’ explanations.

A bit of history is helpful. It was Amazon which launched, in August 2006, EC2 – elastic cloud computing – and AWS in 2006 (although it was launched in 2002 as a developer tool) as a means of turning its own storage and computing prowess into a business. The fully functional AWS came into being in 2006 transforming its own infrastructure into an operating system (https://mediatemple.net/blog/cloud-hosting/brief-history-aws/). Google followed. Later Microsoft, IBM and a whole lot. All realized, some early and some a little late, the potential in building a business in cloud (what a strange expression!). And this is the point that gets glossed over in all the fascination in the media with the cloud but this really the crux of it. The fact that cloud is accessible is only because someone has considered it a viable business.

The business in the cloud

What is important here is the word ‘elastic’. All of us understand what elastic means – ‘ability to encompass much variety and change; flexible and adaptable’. Keep this in mind because the word elastic is central to cloud. Some people use remote access as a key to defining cloud but I am skeptical because you can remotely access even a dedicated server or your colleague from IT can remotely access your PC provided both have the same app that lets this happen. To be sure, this can only happen over a network, which could be an open network or a virtual private network (VPN) or whatever. Whether this amounts to cloud is debatable and I don’t wish to pursue it but am merely referring lest anyone pick this out.

And even this is not new. In 2000, I was working in a small team in a company which was already developing this facility. Perhaps, the timing was not ripe as there were other services and products to be developed then. In any case, many things have to come together for success to materialize. In what follows, I will steer clear of any technical discussion.

One way of understanding cloud is to have a negative definition – no dedicated resources such as for example a server. In a fundamental sense, this was already present in the early stages of the growth of the internet. When companies set up their websites, everyone didn’t need a dedicated server. As a result, you had multiple websites ‘residing’ on one server, through ‘partitions’. These are not physical partitions in the same sense in which the equator is not a physical line. Naturally, there were many businesses focused only on offering such services. I remember people talking then about building a ‘server farm’, offering space and computing prowess to anyone who needed. Today we use a different language. That’s all there is to it, in essence.

As I mentioned earlier, the key word is ‘elastic’. During the pandemic, some businesses such as online food aggregators experienced a huge increase in volumes as many were ordering food to be delivered home. Now, if this were going to be permanent, the business will consider increasing their investment in the appropriate infrastructure but that would take time. What do you do meanwhile to address the higher volume? You rent space. In fact, any business which expects a spike only at some time can resort to such services rather than investing in additional infrastructure. But the point is that someone has to! The requisite infrastructure, in this case, is data centres, now specifically called cloud-enabled data centres, emphasizing the technical dimensions of this business.

The cloud business took a while to build scale because of users’ fear over security. The tech industry went through, in the first decade of the 21^st century, intense debate over public and private clouds and hybrid, which included elements of both. The debate continues.

Cloud and the pandemic: The name of the game is name

There has been so much talk about the pandemic and cloud but I haven’t been able to understand why the cloud is linked to the pandemic and digital transformation, driving it, as the media would have it. Digital transformation can take place even with dedicated infrastructure. During the pandemic, certain businesses experiences a surge in demand which were easily addressed by cloud service providers. But this is basic. There are companies that help you hire people, without adding them to the company roll.

The transition to the cloud and digital was already happening at different degrees of pace in different industries and countries. Naturally, the current cloud (and digital) narrative in the media falls right into the lap of companies who will only be happy to intensify the debate, as it is in their interests, highlight only what suits them.

The universe periodically has a honeymoon with something and everyone joins the bandwagon, until the next, when the current fascination peters out. In the 1990s Harshad Mehta had a company called Mazda Leasing and Finance. Fascinated by his success, there were suddenly many companies calling themselves leasing & finance. After the success of Infosys, IT or software or technology got tagged to company names. A little later fintech, after Financial Technologies went public. And biotech. Now it is digital, cloud and crypto. Tomorrow it will be something else. Everything is cloud or digital today with some firm calling itself cloud kitchen! Seriously? But look at their valuations! Who says we live in an informed age?

If you have watched both the IPL (in India and the UAE) and the ICC T20 Men’s World Championship, you would have seen a spate of advertisements covering education, investment, medicine delivery, crypto currencies, to mention the most prominent. It is obvious that these are targeted not just at potential customers but investors too. Anyone even reasonably familiar with Indian stock markets can recall the number of companies which vanished without a trace after collecting substantial sums of money. But, many will say, it is different this time now because there are institutional investors such Private Equity who are involved. I can only leave you with the wise words of Franklin Templeton who once cautioned: The most dangerous words in investment is ‘this time it is different’. Chew over it!

Takeaways

There is too much indifferent use of the word ‘cloud’

The word has crossed over technology into other areas!

There is an orchestrated campaign to create an aura about ‘cloud’ as about ‘digital’

Names of companies have been altered to allow the latest ‘big thing’; today it is cloud and digital

Valuations are going through the roof