While cloud computing is about a very simple idea—consuming and/or delivering services from ‘the cloud’ —there are many issues regarding the types of cloud computing and the scope of deployment. This makes the idea of cloud computing not nearly so simple.

Everyone has a perspective and an opinion—confusion is rampant. Misconceptions abound, especially as they relate to cost cutting. The cloud is often part of cost-cutting discussions, even though its ability to cut costs is often a misconception.

Another part of the discussion is centered around capabilities, agility, speed and innovation. Potential benefits can be overlooked if hype fatigue sets in. The impact of cloud computing will be felt widely as we deal with the real and hype-driven changes that many consider to be a re-envisioning of other distributed and utility computing models, such as utility computing, on demand services, grid computing and software as a service (SaaS).

Scenario 1

Through 2012, Global 1000 IT organizations will spend more money building private cloud computing services instead of offerings from public cloud computing service providers

Key Findings

• Many large enterprises are interested in cloud computing, but are concerned about security, regulatory compliance and uptime.
• The term ‘private cloud computing’ describes the style of computing used by a modern internal IT provider which is similar to that of an external cloud-computing service provider.
• Almost all Global 1000 organizations have server virtualization projects in place, and many consider those the basis for their private cloud computing strategies.

Market Implications

Cloud computing has a promising future, but many large enterprises will invest in the near term on private cloud-computing services, especially in the area of infrastructure-as-a- service (IaaS). Virtualization of servers and storage will be the basis for most (but not all) of these architectures, but virtualization alone is not sufficient.

Large enterprises will be investing in technologies that enable service automation, chargeback and selfservice. These changes will also help drive cultural, political, funding and organizational changes that will make a future migration to external cloud computing services an easier and more viable choice. This will also spur more enterprise IT organizations to operate like a business.

Private cloud computing will not make sense for all organizations. Investment in private cloud computing requires a business case, and a return on investment before external cloud computing services mature. Private cloud computing will primarily make sense for larger enterprises, and enterprises with unique security and service requirements.

Recommendations

• Understand your IT service portfolios, service-level requirements and service costs before building a private cloud service.
• Develop a separate strategic plan for all services under consideration, as well as an analysis against external service offerings.
• Build a private cloud service only after you have developed a complete business case analysis for doing so— it’s all about return on investment, in terms of cost and business value.
• Evaluate and constantly benchmark yourself against external cloud service offerings, and ensure that you design in flexibility to migrate in the future.