“Cloud computing” is the term du jour in the IT industry, but what does it mean? Is it just another name for software-as-a-service or grid computing? Will it transform the enterprise software industry, or is this much ado about nothing (new)?

In last week’s InformationWeek cover story, “Alternative IT,” Mary Hayes Weier writes, “There’s no question that licensed, on-premises software, run by internal IT, will remain a mainstay of most organizations, but it will be complemented by alternative models, and in some cases replaced by them. The alternative approaches to software arrive under many names, but they all point toward making software cheaper, simpler, more flexible, and more accessible. Alternative IT models are gaining ground because, in many cases, they make too much sense to ignore.”

Last Thursday, The Association for Retail Technology Standards, the standards division of the National Retail Federation, announced the draft release of “Cloud Computing for Retail,” a white paper that will provide “unbiased guidance for achieving optimum benefit of this computer technology.” The press release goes on to say, “Cloud Computing, which effectively lowers IT costs for retailers, is an emerging computing model by which users can gain access to their applications from any location, through any connected device, making the infrastructure transparent to the user.”

Also last week, John Parkinson wrote a blog posting in Harvard Business Online (“Will Cloud Computing Ever Be Up to the Challenge?”) where he wrote the following: “So why would you venture into cloud computing? Answer: Because it’s cheaper to operate. It’s easier to scale. It’s faster to provision. And you don’t have to find, hire, manage, and retain increasingly expensive technical talent to run it. It really is the better model — until, that is, that critical infrastructure suddenly isn’t there anymore,” referring to service outages in the cloud, such as the recent Microsoft and Sidekick outage. The risk of service outages is something that we have also written about (see “When a Software-as-a-Service Solution Goes Down” and “SaaS TMS and Supply Chain Risk Management”).

Want to know what Larry Ellison, the CEO of Oracle (an ARC client), thinks about cloud computing? He goes off on the topic in the video below from TechPulse360.com, taped last month at the Churchill Club. In a nutshell, Mr. Ellison says ‘cloud computing’ is simply a new marketing term to describe what his company and others have been doing for years.

What is cloud computing? Is cloud computing new?

These questions don’t interest me as much as the one alluded to in Ms. Weier’s article: How can software vendors make their solutions cheaper, simpler, more flexible, and more accessible? Cloud computing (however you define it) is certainly one approach, but is it the only one? If you were launching a software company today, what business model would you use?

I’ll address these questions in a future posting, but post a comment and let me know what you think.