Has your chief information officer already mentioned cloud computing to you? If not, he will do so soon. The research firm Gartner estimates global spending on cloud services will hit $68 billion this year, a gain of 16 percent over 2009. That is more than triple the expected growth rate for total IT spending. It will be difficult to avoid the cloud, but as with most hot technology trends, there is more to it than what the gurus are telling you.
Cloud computing offers the opportunity to better utilize computing assets in a shared IT infrastructure environment. Gartner defines cloud computing as “a style of computing where scalable and elastic IT-related capabilities are provided ‘as a service’ to customers using Internet technologies.”
This means that computing resources — hardware, software and communications — are offered to users on demand and are priced on a “pay as you go” basis. In essence, a computing task moved to the cloud becomes a service provided by a third party in its own data center, allowing companies to scale down their huge investments in IT hardware, software and staff.
Quite aware of this trend, the IT industry is expected to step up development of products specifically designed for the cloud. According to research firm IDC, 80 percent of new software offerings will be available as cloud services in 2011.
Beyond the easy access provided by the Internet, the key technology driving the advent of the cloud is virtualization. Virtualization allows multiple hardware components to act as if they were a single system while creating separate logical compartments that empower systems from different companies to run simultaneously. Virtualization tools allow data centers to operate cloud computing services, providing access to IT resources to different businesses concurrently and in a seamless manner.
But cloud computing is not for everybody and for everything. While it is the best alternative for business environments that have significant volume shifts or for one-off computing needs, there isn’t an airtight business case for cloud computing when it comes to day-to-day information processing needs.
The industry has not demonstrated that the complex systems that allow you to sell, invoice, collect and generate your reports can be more efficiently run on a cloud environment. In fact, there are still very few studies that help answer this question.
As with any other business decision, prudence is the best approach. There is no need to be at the forefront of technology until the economic imperative is proven and documented. Your business needs to be a steady operation and that is better served today by your current IT infrastructure, be it in-house or outsourced to a third party.
On the other hand, there may be some situations that are better served by applications that run on the cloud. If your e-mail service is truly mission-critical — as it is to most businesses — and you cannot afford to build the redundancy required to ensure uninterrupted, around-the-clock service, you may want to consider outsourcing it to a cloud provider.
If your CRM requirements are covered by one of the standard software-as-a-service offerings where you do not need to buy infrastructure, you may want to go with a cloud solution.
Be cautious when it comes to your core systems, especially the ones you have been building over the years. An effort to move processes to the cloud that are currently being run by complex, customized applications might present interoperability, migration and other technical issues.
You do not want to be left out of the cloud computing revolution. But at the same time, you do not want to put all of your eggs in the same basket. The economic environment is challenging enough without volunteering to put your company at risk by being the guinea pig for the newest trends in the tech world.
Claudio Muruzabal is CEO of Neoris, a global business and IT consulting company that specializes in SAP and application outsourcing. You can visit the company atwww.neoris.com.