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What Are The Barriers to Companies Moving to The Cloud?

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What Are The Barriers to Companies Moving to The Cloud?

By: Sandy McMahon

Cloud computing as a concept dates back to the 1960s when John McCarthy opined that "computation may someday be organized as a public utility." Cloud became a much more prominent concept in 1990s when it began to be used as a metaphor for services being delivered over the Internet. The technology that makes it a practical reality has advanced significantly (virtualization, web services, SOA, utility computing). Broad business adoption, however, has been varied depending on the type of deployment architectures used. What are some of the barriers to enterprises "crossing the chasm" and embracing moving to the cloud?

Notes from a conversation with Jim Kaskade, Global Executive and most recently SVP, and General Manger, SIOS Technologies, Inc.:

Let's start with some definitions. There are three cloud deployment architectures or market segments to consider when defining the barriers to entry (and the opportunity):

* Software as a Service - SaaS - represented by distinct B2B applications like Salesforce.com, Google Apps, SuccessFactors, Workday, Zuora, Marketo, SpringCM, Adaptive Planning, and Netsuite, and B2C applications like Apple's iCloud.

* Platform as a Service - PaaS - represented by application platforms targeted at application developers includes examples such as Microsoft Azure, Google App Engine and Amazon Beanstalk.

* Infrastructure as a Service - IaaS - provides on-demand access to low-level IT infrastructure (essentially allowing staff to log into a box or more accurately, a virtual box), This delivery architecture provides computer, storage, and networking infrastructure in a virtualized, self-serviceable, pay-as-you-go environment.

The elephant in the room is that, relative to global IT spend, the use of public cloud is in its infancy. Adoption of the cloud varies by business size and IT structure.

Start-ups use all three segments, particularly technology start-ups. The rationale is simple. It is easier and conserves capital to use all three above delivery segments as an expense rather than invest in IT infrastructure capital expense. Another benefit is that these companies are very nimble.

Mid-sized companies: with up to hundreds of employees, these companies have more challenges.

* They start with SaaS applications to get their feet wet. Primary concerns are availability and security. If they are in a location with good, dependable Internet access, then these barriers are low.

* Using a PaaS is also attractive but begins to compete with internal, existing platforms. Mid-sized companies will typically have their own IT and a strong suite of developers who may want to use an internal platform. The company's choices are also limited to a PaaS system that is similar to the current development platforms though this is becoming less of an issue with a growing number of public PaaS platforms.

* The barrier to IaaS adoption is the IT staff itself. If the IT staff is savvy, they can maintain and run their internal data center less expensively than IaaS services. The question comes down to whether building and maintaining a "crazy smart" IT group is core to the company's business model.

Enterprise companies - Fortune 100s or even 1,000s - have far greater challenges. Their current IT outsourcing model already has moved to a mix of 30% in-house and 70% outsourced with partners like CSC, Accenture, Capgenimi, Wipro, Tata, Deloitte, and others. Many of the large System Integrators have begun to build their own data centers where they can not only provide the resources to manage the enterprise application suite, but they also provide completely managed infrastructure as well.

* Most Enterprise CIOs begin their use of "cloud" with a migration to SaaS. The barriers to PaaS are that their systems are tailored to customer-specific applications and internal infrastructure, limiting PaaS use to small, non-critical applications which requirequick, global deployment.

* The barriers to using IaaS services are similar to PaaS, where CIOs struggle with tradeoffs between agility (being able to on-board new systems quickly) and issues of cost, security, and availability.

* The Achilles' heel of these companies is that 80% of their IT spend is just keeping the lights on. For them, the concept of leveraging externally managed on-demand IaaS, PaaS, and SaaS services can relieve internal resources to becoming more strategic - effectively growing that 20% of budget in time and resources to leverage more strategic initiatives.

The implication of all this is that the cloud is ideally for small to medium companies, some of which will become large enterprises. If you can succeed with a migration of legacy applications to cloud-based services you will, undoubtedly, become more nimble in responding to your customer's needs - this being the biggest upside to cloud services in general.

Article Source: http://articles.tiptopweb.info

Sandy McMahon is publisher of Ceo2Ceos (Ceo2Ceos.com), a non-commercial site for executives to share best practices. He is also President of Executive Forums of Silicon Valley. With over 20 years of executive experience, Sandy has a BA from Brown, an EdM from Harvard, and an MBA from Duke.

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