The term Cloud Computing is getting a lot of air play these days — it is the computing equivalent of a U.S. Presidential Election. It has loads of twists and turns, plenty of eager participants, lots of money being spent on it and it gets to consume large amounts of the news cycle...often without a lot of new information. We are only just beginning to imagine what a true Cloud-based Enterprise Application can mean in terms of the new business model opportunities it will create.

1. While it never lived up to the pre-bubble hype, hosting has become a real business. Loads of companies are outsourcing some or all of their datacenters. Even on-demand players look to datacenter specialists to take care of things like power, Internet connectivity and physical security. It has also driven new standards and efficiencies as we shift from servers and switches being the products to uptime and bandwidth.
2. For PaaS, there is a lot of historic precedent for the perspective that owning the most popular development platform is a strategic goal in and of itself. (For those of you old enough to remember it is worth recalling the Steve Ballmer “develper, developer rant“). You can argue whether Cloud Computing itself is the new platform, or just the infrastructure for PaaS providers.
3. In the world of domain specific applications, connectivity has become table stakes. (Salesforce talks to facebook talks to LinkedIn talks to Workday). Not only it is imperative for these applications to expose APIs and to provide excellent tools for people to manipulate them, the connectivity between applications and services is rapidly moving to point-and-click. Integrations that used to take a busload of consultants are now delivered more like a google mashup (albeit with enterprise-class security and availability).

It’s About Business

Each of these models and approaches is fundamentally dependent on the existence of the Cloud. I firmly believe that the most important part of Cloud Computing is around the new business models it engenders. In the same way that Google and others have broken the mold in terms of business models for the Internet, I think that Cloud Computing is going to fundamentally change the rules in the Enterprise Application space — and i think we’re only beginning to understand the changes that are possible. However, it stands to reason (at least to me), that when you tear down the walls that surround Enterprise Applications and you start making them interoperable and massively extensible, then new and unplanned things are going to happen.

And the encore…

Here at Workday, we are working on some very specific problems we want to solve with Cloud Computing, focused on what our customers need to run their businesses. Right now, we are making it easy for key third parties such as Healthcare providers and Payroll providers to plug into our applications. This enables us to create specific business value for our customers — our HR systems just work with their existing payroll and benefits providers. No big integrations, no patches, no upgrades. The connection is part of the service.

Over time, our strategy is to expose more and more of our application functionality as Web Services, and we are only just beginning to imagine what a true Cloud-based Enterprise Application can mean in terms of the new business model opportunities it will create. What’s potentially most exciting, is that as we connect to more applications and expose more of our functionality, the community contributing ideas will expand well beyond our current ecosystem. That may be the most important new business model of all.