When I first heard about Windows Azure (the cloud computing OS from Microsoft) I had a common misunderstanding about what is really cloud computing. A lot people maybe like me might believe that Microsoft is getting into the web hosting (or data centre outsourcing) business via Azure. In actual sense cloud computing is a lot different from web hosting, perhaps the correct term for cloud computing would be utility computing. Think of utility like your power computer (called Tenaga in Malaysia) and web hosting companies looks like local town supplier of electricity (which I never see one in Malaysia) You see unlike a outsourcing business, cloud computing (or most Software as a Service) vendors do not operate based on SLA contracts. If you having power cut, you can’t penalize Tenaga for any compensation because most likely the whole block in your neighbourhood got effected and there is no guaranteed uptime from Tenaga to you. Cloud computing operates almost the same way (if you recall the incident of a prominent web mail vendor which is the king of search now having some uptime issues this year where users can’t access the service for days) so in the end they lost out in terms of customer loyalties but not lost of money dues to direct compensation to customers.Worse case to them is some customer might switch back to buy packaged software like MS Office or they change their SaaS vendor.

So why need utility computing supplier if they are not here to guarantee uptime based on a SLA (or a totally different SLA model)? Well look at it this way, utility computing platform needs to be available to worldwide (or regional) audience and generic enough to have different applications running on it. At the same time it also need to be cost effective (and cheap la of course). So the traditional model of web hosting might not make sense here, or it would be too expensive which customers might as well build their own data centres.

But that does not say that a cloud computing platform without SLA like Azure does not appeal to big enterprises like oil & gas companies or banks. In stead they need to look at the usage of cloud computing from different angle and see which applications fit best on cloud computing. For example less business critical business. Or the other way round is too have redundancy built into your infra on the application. Like factories which cannot operates without electricity, they simply standby backup power supply locally in event of power outages.

This is why Microsoft vision on the next software evolution make sense here. The concept, known as Software + Services advocates that applications be designed to be deployable in different environment, from local intranet to multi channel platform sitting on the Internet. Users (or customers) will then have a choice on where to locate their application (and provide redundancy with minimal effort) while at the same time the changes is transparent to them. So customers end up having the best of both world, software applications that is accessible anywhere with rich user experience that is available to them all the time (because absent of the cloud will lead the client application switch back to regional or local mode)