A kinder, gentler cloud

October 22, 2009: 7:00 AM ET

Remember how cloud computing was supposed to kill client/server? Turns out it's more of a wedding than a funeral.

First, some background: The hype surrounding cloud computing in recent years has been nothing short of wild. If you believed the popular wisdom, the traditional computing model was toast. Businesses were going to stop loading specialized programs onto workers' PCs and buying expensive software and servers for data centers.

Instead, we'd have the cloud. Service providers like Salesforce.com (CRM) and Amazon (AMZN) would own the hardware and software, and let companies plug in over the Internet and use it on demand.

Things aren't working out that way. A survey commissioned by Avanade, a joint venture between Microsoft (MSFT) and Accenture (ACN), shows that enterprises are taking a more cautious approach to cloud computing. While 62% of the 500-plus executives surveyed said they plan to increase their use of cloud-based software over the next year, they had no intention of simply shipping their proprietary data out to some third-party service provider n the process. Some 80% of U.S. enterprises will instead embrace what's being called a "hybrid" cloud model – they'll let third parties handle basic stuff in external clouds, but keep vital information on company-owned servers inside the firewall.

Meanwhile, tech titans are also taking aim at the "everything in the cloud" crowd. According to a CNET report, Hewlett-Packard CEO Mark Hurd this week said that security is a major issue that doesn't get enough attention in the cloud debate; if HP CIO Randy Mott told him he wanted to put the company's financial records in the cloud, "I'd say, 'Go back to work, we're not doing that.'" Oracle (ORCL) CEO Larry Ellison has also taken shots at cloud boosters.

It might be tempting to dismiss all this as self-serving resistance from the old-school techs – but even the biggest cloud cheerleaders are now embracing the hybrid concept. On a stage near the Oracle Openworld conference last week, Salesforce CEO Mark Benioff embraced Dell (DELL) CEO Michael Dell to announce a partnership to sell customers on the hybrid cloud idea – an initiative called "The Best of Both Worlds."

For Benioff, who until now has marketed Salesforce with a "Software is Dead" slogan, that's quite a shift. But since enterprises aren't about to ditch their client/server IT investments and put all their secrets on the Internet, it's also a wise one.

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