Writer Nicholas Carr will earn the enmity of even more tech veterans with his newest prediction: Cloud computing will put most IT departments out of business. "IT departments will have little left to do once the bulk of business computing shifts out of private datacentres and into the cloud," Carr writes in his new book, The Big Switch: Rewiring the World, from Edison to Google.

An exaggeration? Of course. But to be fair there is a kernel of truth beneath the hyperbole. Cloud computing, once a concept as murky as its name suggests, is becoming a legitimate emerging technology and evoking the interest of forward-thinking CIOs. Out-of-control costs for power, personnel and hardware, limited space in datacentres, and above all, a desire to simplify, have encouraged a significant number of start-ups to move more infrastructure into a third-party provided cloud.

"The concept of cloud computing makes enormous sense," says Andreacute Mendes, the CIO of the Special Olympics. "It helps the CIO to abstract another layer of complexity from the organisation and concentrate on providing the higher levels of value." Mendes, who's now moving much of his datacentre outside his enterprise by means of conventional hosting services, expects to move toward the cloud in the next few years.

But why now? Enabling technologies, including nearly ubiquitous bandwidth and widespread server virtualisation, plus the lessons learned from the rapid ascent of software as a service, are encouraging CIOs to think further outside of the datacentre.

Cloud computing is however, a relatively new phenomenon and concerns around security and application latency, two of the most pressing issues raised by the IT community, are real. Also, providers have not fully formulated their business ad pricing models, which is one reason why some CIOs who failed to reap the desired ROI from SaaS now view cloud computing with a sceptical lens.

Yet another issue: transparency. Entrusting mission critical applications and data to a third party means the customer has to know exactly how cloud providers handle key security and architectural issues. How transparent providers will be about those details remains an open question.

A New Level of Scalability

Unlike many "next big things" cloud computing didn't just spring fully-formed from the brain of a Silicon Valley whiz kid. "It's the logical corollary of what happened in computing over the last 30 years. In a sense, it's a return to the past; time sharing on steroids," says Mendes.

True enough, but it's easier to get analysts and IT insiders to talk about the features and goals of a cloud than it is to pin down an exact definition. Purely since different vendors will spin cloud computing differently, for example the Salesforce.com vision of the cloud looks much like the SaaS you know today, while the IBM vision includes mash-ups of massive customer data sets on the fly. "The cloud is basically a combination of grid computing, which was for the most part about raw processing power, and software as a service," says analyst Dennis Byron of Research 2.0. "In effect the cloud is network virtualisation."