When multiple applications run on large banks of virtual servers, the private cloud becomes the most effective way to manage those pooled resources. You need private cloud software to help translate commercial application hardware requirements to VM requirements; to dynamically allocate compute and storage resources among multiple applications; and to accurately charge back stakeholders for the resources they consume. These are not trivial problems -- and without the software to solve them and automate processes, the burden of manually maintaining that shared infrastructure can become too heavy to bear.
Underneath all that, so-called converged infrastructure helps make the private cloud sing. Storage and data share the same high-bandwidth, general-purpose network. Old, dedicated switches get consolidated into programmable 10Gbps switches, so that I/O can be sliced and diced as needed. The sheer number of devices needed to run a data center drops dramatically -- saving not only hardware costs but also management overhead.
The private cloud as it is emerging today may not be what CIOs had in mind originally, but the result can be a massive increase in efficiency and agility.
The return of client/server
Right now, you'd be hard-pressed to find a company that doesn't subscribe to some public cloud service or other. In terms of dollars, the money is still going to SaaS. More will be headed that way if Microsoft has anything to do with it.
By now everyone is familiar with the pure SaaS model -- and the major SaaS providers, including Salesforce.com, NetSuite, Epicor, and Workday. The basic dynamic is the same as it ever was: If you're a small business, SaaS often makes much more sense than the hassle and expense of locally installed and maintained enterprise software. If you're a big business, integrating SaaS into the rest of your existing application and security infrastructure can be tough.
Microsoft's Office 365 exemplifies a different approach -- what might be called the "gateway" model of SaaS, where back-end services in the cloud support locally installed software (Office 2010, in this case). Few customers want to be in the business of maintaining Exchange or SharePoint servers, so why not pay Microsoft to do it? Microsoft obviously sees the gateway model as critical to its future -- and you can expect nearly every conventional software vendor with a foothold in the enterprise to pursue it.
Interestingly, this approach -- much like client/server, only the server resides in the cloud -- also describes the mobile application model. The idea that the client should be a superthin Web app for the sake of cloud purity is ridiculous; it makes sense to run a rich client locally, as long as the local instance can be upgraded on the fly.