According to Wikipedia a Cloud is “A visible mass of droplets or frozen crystals floating in the atmosphere above the surface of the Earth”. It is amorphous and very loosely structured. A Cloud has no specific strength, organization or output. A hurricane on the other hand is “a storm system characterized by a low pressure center and numerous thunderstorms that produce strong winds and flooding rain”. A hurricane is organized, has form, purpose and an outcome. The center or eye of the hurricane is where the system is the most powerful and at the same time the calmest portion of the system.

Cloud Computing is interestingly fraught with the same issues of its vapor filled synonym. It is amorphous and lacks specific direction from a business perspective. It promises a world of flexibility and responsiveness, but little is said about its’ form, organization, power and ability to generate an outcome, namely productivity and efficiency for revenue generation. Cloud Computing has been given an inordinate amount of power through press and hype, as though it were in fact a hurricane and not just a formless blob of vapor. But if it is truly a hurricane, what form does it have, what direction is it going and where is its power center? Who will pay for the “Cloud”? What is the model that produces enough inertia to keep it going and make money with it? The answer is simple. Applications!

What most experts neglect to write about in the dawning of this new age called Cloud Computing is its distant and ugly cousin, Applications Services. Why? Because it is so painful to recall the disastrous outcomes of the ASPs of 1999-2000. But if we don’t scrutinize and learn from the past, how will we succeed by simply changing the taxonomy. The revenue generating end of the Cloud is applications and Software as a Service is the platform by which these applications will be delivered.

So much has changed since the Application Services model first came on the scene 10 years ago. Bandwidth is cheaper, web applications have evolved (or have they?), security is much better, and the virtualization of data centers is becoming common place. Hosting providers have become much savvier and have carved niches out to produce revenues. How? Through the efficient delivery of applications or Software as a Service. The golden child in this space is Salesforce.com for CRM, but what about the 2,000+ hosting providers in North America alone who service the SMB? In many cases these hosting providers supply the same applications that failed so miserably in 2000. What’s changed? A model that now allows flexibility of application delivery to the end point in a secure, efficient way AND a mass of customers willing to pay for it.

So if SaaS is a growing market (most analysts believe it is now $3-5 Billion for the SMB with a CAGR of 20 %+), where is all of this money coming from? In this current economy Small and Mid-sized companies are looking for every possible way to save a buck. They are using SaaS to minimize operating expenses that used to be a part of their every day processes. But even in the best of economic times, using SaaS provides a huge amount of flexibility and is great for cash flow. In one survey, over 70% of the SMB respondents reported SaaS is helping them to lower overall costs and increasing their speed of implementation and delivery of applications. These are two killer assets especially given the current economic situation. No wonder this is a growth market in a declining economy.

Citrix is addressing the entire spectrum of the Cloud. From Infrastructure as a Service (XenServer) to Desktop as a Service (XenDesktop) through application delivery providing Software as a Service (XenApp). This approach goes beyond theory to the basic elements of revenue generation. The very core technology of XenApp, for instance, is based on the concept that software should be ‘delivered’ as a service, not deployed. As the market continues to evolve, Citrix will emerge as a leader in this space because we had it in mind twenty years ago when we began to evolve server based computing.

The hurricane is where Citrix is focused, not just the Cloud and we already have the technology to power a significant revenue generating engine for which service providers will gain efficiency and bottom line cost savings. Citrix XenApp provides the infrastructure for Hosting Service Providers to more efficiently generate revenues from the delivery of applications… in the eye of the “Cloud” storm.

This is the first in a series of topics regarding Software as a Service and the growing need to develop virtual application delivery platforms to meet the demand of this quickly growing market place. Topics include ‘SaaS – What is it really?’, ‘Is there room for Virtualization of applications in the Cloud’, ‘Are all Hosting/Managed Services Providers the same?’, ‘Web Apps – Are they universal?’, ‘Is SaaS for Hosted/Managed Services Providers or for ISVs?’, ‘What is the role of an SI in SaaS’, ‘Where are the Telcos?’, ‘What is Citrix doing in SaaS?’

Key contributors to this series will include Brad Pedersen (Chief Architect and Senior Fellow), Juliano Maldaner (Senior Architect), David Wagner (Principal Product Manager) and Kurt Moody (Senior Manager).

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