The concept of cloud computing is being vociferously promoted by hardware and software companies, which stand to profit from any mass adoption of cloud-based services. But beyond the tightly focused confines of vendor marketing departments, the model does not appear to be widely understood by potential UK buyers.

“Everyone is going on about cloud computing, but if you walked into the top 100 FTSE organisations and asked them about it, they would probably say, ‘What the hell are you going on about?”, says Clive Longbottom, service director for business process analysis at research firm Quocirca. “It has been covered a lot in the press and by the analyst companies, but cloud computing is still not out there in people’s heads and there is an education issue that needs to be addressed.”

Ian Osborne is project director for Grid Computing Now (GCN), a publicly funded body charged with accelerating the development and deployment of grid, utility and cloud computing services in the UK. He admits that cloud computing is probably too bleeding-edge to register on most organisations’ radar, but he remains adamant that in the near future, few software applications will be delivered by any other route.

“It is probably a step ahead of how people are thinking right now, but cloud computing is the next logical step for software,” he says.

IT professionals might have a better idea of what cloud computing can do for their enterprise if they knew the exact nature of applications and services that it encompasses. As with so many other broad concepts within the IT industry, there is no strict definition for the term, and little agreement on what it covers.

“The cloud is not just a simple trend towards one model of computing,” says Daryl Plummer, managing vice president at analyst Gartner. “Cloud computing has been seen by many as a re-envisioning of other distributed and utility compu ting models that have been around for quite some time. Utility computing, on-demand services, grid computing, software-as-a-service (SaaS) and others all play a role in the evolution of this emergent phenomenon.”

But while there is a degree of crossover between the primary technologies and infrastructure involved in cloud computing, elements such as grid computing, utility computing and SaaS, should be treated separately from other on-demand computing models that deliver applications and services via the web, says Tom Rogerson from the consultant financial services division of IT services group Computer Sciences Corporation (CSC).

“The word ‘cloud’ is used by everybody, but everybody has a slightly different take on what it means. Consumer-oriented cloud entities such as Flickr and Facebook are well established, as is SaaS, but these are different from the new web services being offered by Amazon and Google, which are less well defined,” says Rogerson. “I think we are all peering through a glass darkly – ­ not just users and customers, but in some respects the service providers and cloud computing vendors themselves.”

Google and Amazon provide a network-connected “cloud” of thousands of servers around the globe that customers access via the web on either a pay-per-use or subscription basis, and which deliver everything from hosted business applications and data storage to search facilities and high-performance information processing resources.

The benefits for the user organisation is that it is spared the need to host those same IT resources within its own datacentres or server farms, and ­ – in theory at least ­ – can access only those it needs, when it needs them, and pay far less than it would if it owned the applications, servers or storage facilities itself.

“The customer now does not have to have a big datacentre, so they can move away from the skills required to run that datacentre and towards a much more s imple subscription model,” says Quocirca’s Longbottom. “If you have 1,000 users for example, you know exactly how much you are going to pay. In theory, it should be cheaper but it depends on the service provider. They have lowered their cost at the hardware base, but it is a question of whether they pass those savings on to the user, or see what they can get away with.”

Other advantages include better infrastructure reliability and application availability, Longbottom says. “If any one server fails, it has no impact on the wider performance of the infrastructure – the owner can rip and replace. This is where the service providers want to be in terms of providing equivalent services for corporates. If anything happens inside the cloud, the customer has no visibility of those problems so service level agreements go out of the window – ­ you don’t have to bother with them at all. They can charge for other services such as bandwidth,” he says.

Cloud computing vendors often cite cost savings as a key benefit, but CSC’s Rogerson is not convinced. “I don’t think there is a clear return on investment argument for cloud computing, but I am not convinced that cost savings are the primary argument for the cloud anyway,” he says. “It is mostly about scalability, performance and reliability. If an application running on an Amazon server costs 10 cents an hour rather than 15 cents if it were hosted in the organisation’s own datacentre, I’m not sure that is going to be a compelling financial argument when you consider the other factors involved.”

The problem for Google, Amazon and other service providers either actively offering or considering the introduction of these services, is that larger organisations have, for the most part, already spent large sums of money kitting out existing datacentres to provide exactly the same thing ­ – secure, reliable and flexible IT resources ­ – within their own distributed networks. These organisations are unlikely to suddenly scrap those investments in favour of subscribing to cloud-based services. CSC’s Rogerson points out that for the most part, cloud computing appears to have attracted only smaller businesses so far.

“The classic is Google Apps, which claims hundreds of thousands of companies as users, but most of these firms are tiny,” says Rogerson. “The customers CSC deals with are much bigger. They are not demanding a lot of advice or consultancy on cloud computing so far, either because this stuff is not ready for the big time or because the clients in question are simply too conservative.”

Another concern for big companies about cloud-based services is security. GCN’s Osborne says this is not as big an issue for some companies as it is for others, but many organisations, particularly those in the government sector, still do not like to think about providing users with access to services outside their own firewalls.

“There is a whole political agenda for some governments about data being shipped outside the country, and things are probably going to change. Some big firms that have invested in grid computing may not know where their information is but are far less concerned about it, but for others there will always be a level of concern about where data is stored, how it is secured and what happens to it if something fails,” he says.