Who Wants the Cloud, and Why?

Ann All

Looking ahead, most analysts are predicting healthy growth for cloud services over the next several years. IDC, for example, says cloud services will grow 26 percent over the next four years, becoming a $45 billion market and accounting for 10 percent of IT revenue by 2013.

 

But who is leading the drive to the cloud? Is it IT executives, business execs or lower-level employees?

 

Paul Cheesborough, CIO of the UK's Telegraph Media Group and a participant in a Business Cloud Summit earlier this month, said much of the cloud's momentum is coming from business users. A FinanceWeek report about the event quotes him:

For so long, CIOs and CFOs have used issues like security and uptime availability as an excuse but that's starting to wear thin. It's only a matter of time before we see the cloud being embraced at CFO and business user level. There's a pincer movement forming. In the next three or four years, time will run out for those arguments and people will no longer be able to move the cloud to one side.

Aberdeen Group analysts Bill Lesieur and Carol Baroudi, writing in a research report titled "Business Adoption of Cloud Computing," say impetus for the cloud may be coming from boards of directors. They likened cloud buzz to board-level interest in outsourcing in the 1980s and in the Internet in the 1990s. From the report:

Beyond cloud as a transformational technology, the CFO and board level are looking at the economics of cloud, specifically converting traditional fixed capital expenditure ... spending to variable operating expenditure [or opex] spending.

The cloud's ability to shift spending from capex to opex might not appeal to CIOs as much as their counterparts in the C-suite. Last month I cited a post from silicon.com's Naked CIO, which speculated that cloud computing could adversely affect IT bonuses and incentives, since they are often based on operational performance. Even scarier from IT's perspective, the cloud could threaten the livelihoods of at least some internal IT staff.

 

The Aberdeen report implies job loss might not be a huge concern for enterprises, at least not in the near term, as their cloud deployments tend to involve more complicated IT environments, creating plenty of work for those who can assist with integration and migration strategies. Thanks to existing investments in virtualization, large companies also are more likely than their smaller counterparts to create private clouds. According to Aberdeen, 56 percent of enterprise IT organizations are building private cloud-based infrastructures, while only 20 percent of SMBs are doing so.


 

Still, as Computer Economics Research Director John Longwell told me when I spoke to him earlier this year, the recession could lead companies to restructure their IT organizations. He said:

Recessions can force restructuring that sticks. Will IT organizations come out of this recession leaner? Outsourcing, SaaS, cloud computing are all strategies that in some way push operational functions from IT shops to outside service providers. You wonder whether the recession will accelerate some of these trends and whether some of the layoffs we're seeing will become permanent. We don't have hard evidence of that yet, but it's a possibility.

While these are legitimate concerns for IT executives, overt resistance to the cloud is likely to get them pegged as not doing enough to meet the business need for speed and agility. Practically everyone, including me, is predicting most companies will end up with mixes of on-premise and cloud infrastructures and applications. As IT Business Edge's Mike Vizard notes, based on his conversation with Champion Solutions Group's Chris Pyle, many companies are already moving in this direction, initially using the cloud for tough-to-manage applications like e-mail and unified communications and secondary apps such as backup and recovery.



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