During his keynote speech at the Society for Information Management's SIMposium 08 conference in the US, author Nicholas Carr drew an analogy between cloud computing and the transition that manufacturers made from generating their own power to relying on utilities in the early 20th century.

In Carr's opinion, IT "is going to be the next great business resource that makes a similar shift," particularly as organizations look to increase their server and storage utilization rates without dedicating an even more sizable portion of their IT budgets to the salaries of the workers who support those systems. Carr's points are echoed in his new book, The Big Switch: Rewiring the World, from Edison to Google, in which he details his case that cloud computing will enable companies to lower their capital equipment costs and reinvest IT money in other areas, such as new product development.

After his speech at the SIM conference, Carr spoke with Computerworld about the expected cloud computing shift and other challenges that IT executives are facing. Excerpts follow:

Amazon.com's EC2 and S3 cloud services have gone down several times, as have parts of Google Apps. Why should Fortune 1,000 CIOs trust the reliability of the cloud?

It's a good question. If you look overall at the records of Amazon.com and Salesforce.com, they're actually quite good. But they're not perfect, and I don't think they'll ever be perfect anymore than any company's internal systems are perfectly reliable. But I think what we're going to see is that over time, the reliability of these cloud systems is going to steadily increase. And eventually, if not already, they're going to be more reliable than the average company's systems are.

We'll see different things move to the cloud in different stages, and one of the criteria will be, "How reliable do you need this system to be?" For instance, I was speaking a few weeks ago to some federal government CIOs, including some from the intelligence community, and it's pretty clear that there are some sorts of systems that need to be basically bulletproof. And I think it's going to be a long time before companies and governments are going to trust those types of applications to the cloud.

But from what we've seen already, whether it's Amazon's infrastructure or various software-as-a-service offerings, even now the reliability is good enough for a lot of corporate applications.