Microsoft senior architect Miha Kralj says the infrastructure for cloud computing is already here, but privacy issues, reliability and security mean software as a service is only just beginning.

Speaking to NBR today at Microsoft’s tech-ed 2008 conference in Auckland, Mr Krajl says many businesses are already migrating services from software to the web, taking advantage of packages like Google Gears  and Microsoft Livemesh.

Essentially these are applications that allow users to synchronise information across multiple platforms, such as a work computer, home laptop, and mobile.

For example they can create a word processing or spreadsheet document at work that is stored “in the cloud,” to be accessed from a home computer, or allow other work colleagues to access – and modify – that document from their computers. Or it can mean automatically updating an address book on a work, home computer and mobile whenever each connects to the internet.

The advantages to business of these technologies are obvious, such as the ability for groups to work together remotely on projects, being able to access “real time” information remotely, and in Google’s case the cost – free – is a big saving on using Microsoft’s Office suite of applications which range from $399-679.95.

However, larger organisations, particularly in critical areas such as hospitals and banks, are unlikely to adopt this soon given the need for redundant backup and the sensitivity of their information.

Mr Krajl that these types of organisation won’t migrate until there is greater regulation of the IT industry –there is currently zero, unusually for such a large and critical industry, and there will probably be a mixture of legislation and litigation that drives this process.

For smaller business owners such as retailers or farmers, Mr Krajl advises that they need to start thinking about differentiating their products as commodities, given that they are now, or will soon be, competing worldwide (online), and need to find a way to apply a premium to their commodity.

He cites the example of an American company that sells “digital energy,” or premium branded power; the lesson being if you can sell “premium” power, you can add a premium to any commodity.

While Mr Krajl predicts telecommuting will lead to reduced travelling (and thus costs), he cautions that it is a myth that the IT industry is green.

It is actually one of the dirtiest – as dirty as the aviation industry at 2 per cent of total global carbon emissions – because of the inefficiencies of transporting and cooling energy.