In the most difficult economic climate in decades, CIOs are reevaluating their strategies and looking for new ways to reduce data center costs and overhead while improving responsiveness to business requirements. Cloud computing has emerged as a much more agile and efficient approach than what companies have done in the past: adding more compute, storage and networking capacity or trying to get more out of what they already own.

Cloud computing did not emerge from a vacuum, but has its origins in three technology "megatrends" that most CIOs are already familiar with. These developments were all born out of the same need -- to drive down costs, simplify data center operations and allow IT to be as agile as possible. As these megatrends have become pervasive, they've helped put the cloud in the CIO's strike zone:

The drive to consolidate: Consolidating sprawling data centers has become a top IT priority as companies struggle with out-of-control costs for hardware, power, administration and service. Many companies have seen their data centers grow beyond anything they ever anticipated, with the result that in many cases they're not only running out of space, they're increasingly running out of power and cooling as well. In response, they look for innovative ways to reduce their data center footprints - to move out anything that adds cost and complexity, and takes up extra real estate.

The growth of virtualization: Many organizations now operate in virtualized environments, where applications can be quickly deployed to available resources, rather than assigning them to a specific physical machine. Not only does this optimize utilization of equipment, it allows IT to become much more responsive to the needs of the business.

Emergence of SaaS: The Software as a Service (SaaS) model has become widely accepted, in which applications are hosted by outside service providers that can apply specialized expertise, the right hardware and economies of scale. The idea of running certain apps outside the walls of the organization is recognized as not only acceptable but often preferable, where an external provider delivers the service just as well (if not better) than companies trying to do it themselves.

Cloud computing builds on these megatrends, and goes several steps further, providing new capabilities for enterprise computing:

• Not just consolidating the data center, but creating the optimum environment both within the DC and in the external cloud, to match changing demands for computing resources

• Not just virtualizing applications across internal systems, but across whatever environment is most appropriate and cost effective

• Not just software as a service, but enterprise applications running in the cloud on the cloud provider's infrastructure

The ability to run applications in the cloud promises to radically alter the balance sheet by which IT projects are judged, where initial capital expense and ongoing operating costs are factored against value delivered and how quickly resources become available. CIOs now have the opportunity to do something much more significant than make small incremental improvements -- particularly as new cloud deployment and management tools come to market. That's why more and more IT executives are making cloud computing a top priority as they plan their strategies for 2010 and beyond.