Without getting into the umpteenth discussion about what, who and where is the Cloud, I think we can safely assume that for average people, and especially for businesspeople, Cloud Computing is when you run an application or store some data on someone else’s server somewhere out there “in the Cloud”. By this definition, Salesforce.com, just to name an instance, fits just about everybody’s idea of Cloud Computing .

Oracle’s Larry Ellison would beg to differ, and he actually traded insults onstage at Open World 2010 with Salesforce’s boss Marc Benioff, whom he accused of “just running a few applications on some servers.” To which Benioff memorably replied: “You can’t run a cloud in a box, Larry” – referring to Oracle’s jumbo-sized „Exalogic Elastic Cloud“ which Ellison had just introduced.

Which is funny, because according to Chandar Pattabhiram, VP Product Marketing at Cast Iron Systems, a small Silicon valley startup recently acquired by IBM, the box metaphore is actually a pretty good description of Salesforce itself.

The problem with most SaaS applications (and Salesforce is regularly cited as the best-known example of SaaS at work) is that they are completely self-contained, meaning that they have no connection to the other systems a company may be running. In fact, many CIOs will tell you if they’re honest that they don’t know if anyone is running Salesforce in their company, since they probably didn’t ask IT’s permission in the first place. This, by the way, is a prime reason for the paranoia many CIOs feel towards Cloud Computing in general, since it implies a loss of control over what is going on in the company, IT-wise.

The folks at Cast Iron have decided to address this problem, and they seem to be doing a very good job. At least good enough to convince IBM they should invest. Whether they actually invented the term “cloud integration” I don’t know, but they have at least gotten a big head start in making it happen.

Basically, Cast Iron creates a link between Cloud (or at least SaaS, if you are a purist) applications and your backend systems like SAP or Peoplesoft where all the nice data resides. That way, it becomes truly part of your existing IT, and the owners and operators of the SaaS appliance no longer need to retype in data they pull from the other corporate systems.

“It’s a productivity app for the Cloud”, Chandar boasted when I visited him last week in Mountain View. It also is itself a neat instance of Cloud Computing, being cloud-based and offering the typical “pay as you go” model dear to the hearts of many business managers who are using SaaS as a way to leapfrog expensive in-house software development projects.

But Chandar also thinks his product will make cloud providers happy, because it can help lower the churn rate of subscribers to SaaS services. I didn’t know there was a churn problem in the industry, but Chandar quickly brought me up to speed there: “Anything between .75 and one percent per month is considered normal”, he maintained, so cloud providers are losing about ten percent of their customers every year. Okay, some of them are simply going out of business, but most of them apparently suffer from disillusionment or overly inflated expectations. And in some cases, presumably, the CIO finally finds out someone in the company is practicing IT without a license and stomps on it.

According to Chandar, Cast iron can help providers lower their churn rate to about one percent per annum, thanks to integration with backend systems which he says creates loyalty by necessity. “It’s a stickiness app for cloud providers”, he says. Tying the SaaS or Cloud app into the existing IT infrastructure makes it more difficult for users to opt out.

If you want to know just how Cast Iron does it, try talking with Chandar or his colleagues. According to them, it’s based on a "configuration, not coding" approach and simply involves installing a few TIPs and PIPs (“Template Integration Processes” and “Packaged Integration Processes“) and engaging in a bit of “UI mashing”.

Frankly, I don't care how they do it. However, I seriously recommend we all consider tbringing the Cloud down to earth: By creating a separate, unconnected “second IT”, companies aren’t really solving their problems – they’re creating new ones.

One reason that business departments tend to wander off on their own towards Cloud Cuckoo Land is that IT departments are too slow in responding to the needs and wishes of business. And here is where they really have to take their point of departure. Yes, you can do SaaS if you want, CIOs should say to their friends on the other side of the company, but please, at least tell us about it and let us help you make sure your application can actually access the data you need in a timely and managed fashion. Oh, and please, please let us make sure that the SaaS app you are running on the side is covered by our Identity and Access Management systems and policies so we can all be sure that you aren't bleeding vital data out into the cloud or letting people in we would rather keep out.

If by doing so, CIOs can dispel their own deep-seated angst about Cloud Computing, so much the better..