Saleforce.com's chief scientist has slammed the concept of private cloud, claiming that the whole point of cloud computing is that resources, costs and risk are shared between multiple parties.
Speaking at the Cloud Computing World forum in London today, JP Rangaswami said that cloud provides the scalability and flexibility that organisations need to survive in the modern age. However, organisations that choose to adopt private rather than public cloud will miss out on the benefits.
"Whenever anyone uses that phrase to you, just ask them who are you sharing costs with. If all the costs you're sharing are just with you, you're just kidding yourself, it ain't a cloud" said Rangaswami.
"The only way it has value is if someone else is taking the risk, and you can step it up or down. This isn't just a question of infrastructure; IT is not just about hardware. Your processes have to be able to scale, your ability to put things on and take things off has to be able to scale - everything you do has to be able to scale in both directions."
Rangaswami said that organisations have to move from thinking about scalable efficiency to thinking about scalable learning. While in the past, the focus was on reducing costs as a business grew, trends in globalisation, offshoring and outsourcing are forcing now companies to work differently.
In particular, companies will have to employ social strategies, as increased competition and reduced barriers to entry make it harder to get a strong return on investment, according to Rangaswami.
"The reason for the social enterprise is because your return on assets is low. You had better connect up your customers, because if you don't they are going to remain connected up and leave you out of it," he said.
"In five years time they're going to be here and you're not. The social enterprise is as much a survival play as anything else, because of the incredible level of change that is taking place."
Rangaswami pointed to companies like Facebook, which puts the individual at the centre of the distribution network rather than at the edge, as a model of how businesses will have to operate in the future. He said that if the Web was big in 2004, Facebook is going to be bigger.
"Businesses used to be hierarchies of product and customer, they are now networks of relationship and capability," he said.
"We have learnt how to value product and customer over 600 years, but we have very little knowledge about how to value a relationship or how to value a capability, which is why we're really ill-equipped to deal with the changing world in this paradigm of the information age."