Cloud computing may be the hottest buzz word in the IT space, and, as such, is utilized by vendors, service providers and marketing teams in a variety of different ways. The end result is a muddled term that is defined more by its end goal – cost savings and elastic provisioning – than any specific form of technology.

With this in mind, Alcatel-Lucent (News - Alert) (ALU) recently put together an extensive white paper, The 2011 Cloud Networking Report, which details all things cloud computing, including the importance of a cloud-enabling network and the many ways that the industry will expand in future years.

However, the most interesting aspect of the white paper looks back at the sudden emergence of cloud computing and what it means for today's enterprises, IT organizations and service providers. 

Alcatel-Lucent states that the current goal of cloud computing is to provide cost-effective, scalable solutions that are "good enough." This means that the majority of IT organizations are providing the highest level of availability cloud computing services for only a few select services. This will change over time, says Alcatel, but today's distribution models simply don't allow performance guarantees for a wide array of services.

In fact, the service level agreements (SLAs) attached to many of today's cloud services are often "not worth the paper that they are printed on." However, it seems that enterprises understand this and have begun to look at the cloud like most consumer services; if you aren't getting what you expected, move on to another provider.

The lack of industry-leading SLAs in the cloud space will exist for the foreseeable future, says ALU, but organizations are still embracing hosted solutions because of their cost and scalability benefits.

The report also explores all three current classes of cloud computing: the public cloud, the private cloud and the hybrid cloud.

Private Cloud

The private cloud is an option embraced by many organizations that want to deploy a cloud solution within their internal IT department, keeping their data well guarded from outsiders yet still available to any machine with proper permissions.

Public Cloud

Public clouds, on the other hand, provide services over the Internet or a WAN connection. The public alternative is cheaper and easier to deploy than a private cloud. In fact, a survey cited in the report found that cost and a short time to market were the two main reasons that organizations chose public clouds over private ones.

On the other hand, concern over security and confidentiality were cited as the two main reasons that organizations steered clear of the public cloud.

Enterprises that go the public cloud route are faced with two basic options; they can either work with a Software as a Service (SaaS (News - Alert)) provider or an Infrastructure-as-a-service (IaaS).

The SaaS market is crowded with thousands of providers, ranging from large conglomerates like Google (News - Alert) to smaller app developers. These apps range across six main categories: CRM, Collaboration, Office Productivity, Human Resources, SCM and ERP.

Looking forward, the key challenges facing SaaS providers is improving the performance, management and security of their applications.

The IaaS market, on the hand, is made up of only a few select players, mainly due to the high barriers to entry. The sector is led by major names like IBM, Amazon and AT&T (News - Alert). IaaS services include cloud storage, load balancing and data transfer, among others. The SLAs and availability of IaaS services are perceived as being better than SaaS services, but the levels still vary significantly.

Alcatel-Lucent sees IaaS vendors facing the same challenges as SaaS providers: improving the performance, management and security of their applications.

Hybrid Cloud

The final piece of the puzzle is the hybrid cloud, which is in itself a bit of a vague term. The hybrid cloud can be viewed as a composition of two or more public and private clouds, or it can refer to the idea of cloud balancing, when service requests are routed across multiple data centers.

A cloud balancing solution is designed to support high availability and maximum performance by making routing decisions based on predetermined criteria, like the performance of each cloud, the cost of the routing and the value of the transaction.

Cloud Networking Services

Although the three cloud options are getting most of the attention in the IT space, a fourth term known as cloud networking services has begun to emerge. This new class of solutions is made up of services that have traditionally been delivered via an organizations internal IT infrastructure, and are a significant sub-set of the broader area of network infrastructure solutions. They include VoIP, UC, network and application optimization, security and network management.

Alcatel-Lucent believes that, if delivered properly, cloud networking services have the potential to create a fundamental shift in terms of how IT services are provided.  

This is the first of what will be a four part look at the insights contained in the complete white paper.  In the next few weeks a deeper dive will be provided on: the importance of the data center LAN, the role of the WAN and best practices on managing a cloud computing architecture.