The technology world loves buzzwords. We take terms that have trivial meaning and turn them into the next big thing. Think about a “social network”; ten years ago, someone would have looked at you sideways for mentioning that — what’s wrong with this guy and why is he giving a fancy term to his circle of friends? And now “social network” isn’t just a mainstream word, it’s a business industry, a verb, even a movie.

The same thing can be said about the cloud. In the tech industry, everything is about the cloud these days. And while it hasn’t turned into something that grandma is talking about, it’s become a common talking point in offices beyond just the IT staff. But what exactly IS the cloud and why is everyone so hyped up about it?

What exactly is the cloud?

Let’s be clear here, we’re not talking about those fluffy things in the sky. However, the term came from the notion that data was stored and transferred “in the sky” — that is, not using hardware physically located on a local computer. Technically, this has been around for about two decades, since HTTP (Hypertext Transport Protocol) came about in 1990. In business terms, though, the cloud refers more to the use of applications that are accessed via the internet. These applications also store all saved data online, so no local hard drives are used.

Case in point: cloud-based business software isn’t quite in the mainstream yet, but Google Docs is probably the closest thing to it. If you’ve signed into your Google account to access Gmail, Reader, or one of Google’s other services, you may have seen a tab up top for Documents. That’s the link to Google Docs, and from there, you can use Google’s word processor, spreadsheet, or presentation software. Everything is stored online through your Google account, meaning that you could work on a report on the go: you could start the document at home in your pajamas with a cup of morning coffee, edit it via your smartphone on the train, finish it on your office computer, and proofread it on a laptop in a conference room. And if you provide access permissions to other people, they can log in, comment, and edit in real time. That’s a start-to-finish document with collaboration and saving, all sans data transfer via physical media.

Google Docs is a good demonstration of the power of cloud computing. We’re starting to see a general trend towards some, if not all, cloud-based applications in industries where collaboration is key — namely, business software. Digital asset management (DAM) has turned into an industry all its own, with applications like WebDAM being completely web-based. This allows users to upload directly to the DAM library, with other users seeing the results instantly thanks to the real-time syncing through the cloud.

Customer Resource Management (CRM) is another industry with a successful venture into the cloud. SalesForce has established its cloud application as one of the most robust solutions out there, and its web- and mobile-access allows users to carry instant data with them as they handle face-to-face customer interactions.

Collaboration and web-access are fairly heady benefits for the cloud. Some companies, such as WebDAM, have put all of their resources into developing and evolving a cloud-based solution. On the other hand, Google has its hands in so many cookie jars that Google Docs fails to provide the amount of features as Microsoft Office. Now, it’s important to note that Google Docs continues to iterate further and further, with features constantly being added and tweaked. However, there are still major gaps — for example, Docs’ word processor lacks the depth of Word’s spelling/grammar check while Docs’ spreadsheet can’t match Excel’s macro capabilities.

Cloud drawbacks: networks to integration

That’s the drawback from an application perspective. Stepping back to view the bigger picture, there’s always the most basic issue with cloud computing: what if either your network or the provider’s network goes down? There’s simply no going around that; without internet access, you can’t get to your files. So while you may have the ability for anywhere collaboration and usage, the anytime notion comes with an asterisk — anytime access is dependent on network uptime, both on your end and on the provider’s end.

Keep in mind that major providers like SalesForce and WebDAM have their revenue driven by the cloud — their business depends on uptime and availability. Established cloud-based companies invest heavily into redundancy and minimizing downtime, and in most cases, they provide stable and reliable services. Smaller providers may not necessarily come with this guarantee.

Another potential drawback stems from the way systems have become further integrated with each other. Thanks to Application Programming Interfaces (APIs), many systems can now talk to each other despite coming from different developers and publishers. For example, WebEx’s video conferencing tools can easily integrate into Microsoft Office thanks to APIs bridging the communication gap between the systems. However, much of this “talking” takes place locally, and with the actual host for cloud-based systems located with the developing company, this integration is simply impossible. Cloud-based developers are enabling additional user options and plug-ins thanks to APIs, but it’s simply not the pick-and-choose menu that you get with local control.

Preparing for the apocalypse? 

We’re well into 2012, and if you’re into conspiracy theories, that means the end of the world is nigh. If you believe that, then jumping on the cloud bandwagon probably isn’t for you — it’s a viable option for many things but we’re still on the cusp of greatness. If you’re not a believer in the Mayan calendar’s doomsday, then your best option is to consult with a qualified IT firm about what your needs and budget are. In some cases, a cloud option may be a perfect fit for you; in other cases, it may be a simple case of checking back in six months or a year down the road.

Zack Schuler is the Founder & CEO of  Cal Net Technology Group.