Back in the days of yester-year when I.T. was in its infancy a term to describe a problem with a computer was named a bug. This is because a computer, or at least one computer called Colossus, was made from Valves and these glass cylinders ran so hot that an insect alighting on one could cause it to shatter and thus halt processing. The boffins from Bletchley Park thus coined the term “bug” to describe a problem with the computer operations.

In a similar vein the term cloud arises from the IT engineers convention of representing that amorphous mass of electronics commonly called the Internet as a cloud because trying to draw out the whole structure is simply impossible and using a cloud-shape is so much more aesthetic than, say, a square.

Cloud computing encompasses many services that can be offered from the Internet such as online storage, email, web-hosting (which are the ones everyone is used to) or newer products collectively termed as Software-as-a-Service or SaaS. These can be Accounting software, Office-type apps (word-processing, Spreadsheets etc) or more targeted applications such as helpdesk, CRM or Support products.

For businesses the main benefits are a lower entry-level threshold as the cost of establishing your own infrastructure to run these applications is all but eliminated though good data communication links are a must. The cost of the I.T. hosted online becomes OPEX rather than CAPEX which my accountant always assures me is a good thing.

My cynicism also suggests that now the big IT vendors cannot make enough money out of the old licensing models with the advent of open-source software they have opted for pushing online, subscription models as an alternative way to build stable revenue streams.

Certainly, now that Office 2010 is out, Microsoft is rolling out all sorts of online offerings and have hosted Exchange (mail), Sharepoint (Document Storage and sharing) and meeting software (Office Live) out already with the Office applications (Word, Excel etc) due to be released this year online. Companies such as Sage and Intuit already have accounting services available online and niche SaaS offerings proliferate.

So should we all use SaaS products. Well, next week we’ll look at the possibilities.