Announcer: You are listening to the University of Michigan in Ann Arbor.

Male Speaker: Cloud computing has the potential to change the game for businesses of all sizes and the competitive landscape of the IT industry. Here to talk about some of the specifics is Ross Professor M.S. Krishnan. 

M.S. Krishnan: Cloud computing is a concept where you have the computing resources right from the hardware, or servers, plus the software and the application layer on top of that. We take that from inside an enterprise, or inside a home and take the entire piece back into the cloud, okay, which is the Internet. That is the cloud computing concept. Google Doc is a good example because again, as you can see the content is stored, the infrastructure is provided from the cloud and then you access that.

Male Speaker: How widely is this being embraced by companies, by large companies with IT means?

M.S. Krishnan: The cloud computing concept in my opinion has got advantages for both large and small companies in different ways. If you look at the piece of taking the entire IT infrastructure inside a large company and take that company to the cloud that means that there are significant advantages in terms of reducing the capital investment. You don't need to have the huge form of servers inside the company. You can actually co-locate it with some other place, with other companies to kind of leverage the scale.

Now the benefit for the bigger companies are; number one, reduction in capital investment. Second, the capacity for them to access the information from any different place.

The third advantage would be scalability. Once you put it in the cloud, then you could scale up and down depending upon your requirement. And finally, so it's a shift from ownership of resources to access to services. So you could actually pay based on what you access.

So it's very powerful, especially from the point of view of smaller organizations, because what it does is, in some sense, it democratizes the access to information, like imagine that you are a small start-up company out of small or medium organization, you may not have the budget to access the big servers of Oracle or SAP, software systems and things like that.

Male Speaker: On the provider side, how is it changing the competitive landscape? I read an article where former partner CISCO and HP are now competitors.

M.S. Krishnan: I think that's an interesting question because it is going to fundamentally change the landscape of competition because so far the model on which companies have been competing is, I will sell you products to a large or smaller customers and then make the transaction based on products. I think this is shifting now more towards platform. What you would see in cloud computing era is that a few major consolidated platform players whether it is Amazon, Google, and who actually control the platform of the cloud and then there will be a number of companies who will actually provide applications and services on the cloud. There will be a kind of echo system of companies, which will be platform providers and application and service providers on the cloud. So this ecosystem will kind of evolve over time and certainly you would find that sometimes companies will be competing and sometimes they will be collaborating.

Male Speaker: This sounds like it could provide a lot more penetration of IT services and data services, point of sales services to smaller businesses that don't have it now.

M.S. Krishnan: Absolutely. Going back to my point earlier, problem was a lot of small and medium organizations never had the resources that depth in their pocket to kind of go out for set up these servers, and infrastructure inside, this cloud computing is all about access to the services which means you democratize the access just based on usage-based pricing. So you use it, you get value, you pay for it and you don't have to invest in a technology based on faith.

Male Speaker: M.S. Krishnan is the Joseph Handleman Professor of Information Systems and Innovation.

Announcer: This has been a production of the University of Michigan News Service. Visit us on the web at www.umich.edu/news.