“We are all in” bellowed Microsoft’s ceo Steve Ballmer to an audience of 10,000 partners. The venue was the Walter E. Washington Convention Center, in the heart of downtown Washington, USA. The event was the eighth Microsoft Worldwide Partner Conference in the heart of a sweltering capital. He was, of course, talking about “the cloud” now described as the latest disruptive technology to hit the industry.

So what does it all mean and how is it going to change things in future? Quite simply, it will change the way in which information technology will be produced and consumed. The traditional model is to install the systems that the company needs on premise. This means purchasing and installing the servers and licenses required to run the network services. It also means employing the necessary IT resources to deploy and support the applications.

In the brave new world of “the cloud” customers would have no need to purchase the necessary server hardware to run their systems. Access to the internet would suffice. Applications such as Microsoft Office, Exchange, SharePoint, CRM and SQL Server would all be run in giant system centres manned by skilled systems technologists. These would take care of security, data back-ups, problem solving and user support. The theory is that it would free up IT staff to focus on applying their skills to tackling business issues.

The reality is that the main obstacle to this approach is one of trust. Companies are used to calling on their IT personnel to get themselves out of all sorts of difficulties. Relying on strangers to provide the level of service that they are used to is not going to be easy to accept. Nevertheless, the reality is that everybody is under the cosh to reduce costs and this approach is regarded as financially attractive.

Furthermore, one of the biggest beefs against software suppliers is the perennial issue of upgrades. However it is pitched, companies are resistant to undergoing the trials and tribulations of the upgrade process. As a result, many companies operate with software that is many years out of date. This means that they miss out on the new features designed to improve user productivity.

In the cloud, this is no longer an issue. The hosting centre provides the clients with access to the latest software releases at all times. Furthermore, rather than having to shell out capital on the latest server and software assets, the service is paid for on a subscription basis. This is based on the user headcount and can usually be varied in line with the needs of the business. This has the potential of engineering a win-win situation where the client gets the productive gains of the latest applications without the usual upgrade disruption.

The question is; will it catch on? If the figures shown by Microsoft this week are a guide, it already has.

David Hurley is managing director of Anglia Business Solutions