Capitalizing on the Cloud
Gartner calls it "transformational" but the enterprise potential of cloud computing depends on the resolution of four key issues for technology vendors.
By M.R. Rangaswami, Sand Hill Group
Sep. 22, 2008
"Cloud computing" is the latest in a long, illustrious line of technology buzzwords. Depending on who you believe, the cloud will be the next "Internet-like" revolution in enterprise computing
Or it might just be SaaS with lipstick.
The reality is most likely somewhere in between. Startups and megavendors alike have rushed to position their cloud offerings and businesses are increasingly taking part. Today's technology companies must answer four important questions in order to spur customer adoption and best position themselves for success in the cloud computing era.
The Emergence of the Cloud
$95 billion. That's Merrill Lynch's global forecast for the value of the cloud computing market in the next five years - at which point, 12 percent of the software market could be sucked into the cloud. Another recent study found more than two-thirds of Americans use some kind of Web-based services - email, photo storage, online applications or storage.
It is clear that the concept of cloud computing is gaining traction. The flexibility of an access-anywhere, highly scalable, pay-as-you go computing model has benefits for both vendors and clients. Software companies only need to manage one version of their software at a time and enjoy recurring revenue streams. Customers get world-class IT capabilities at a reasonable cost without the staffing, management and headaches of managing the function in house.
Although the cloud has had many similar incarnations, today's technologies and business models have combined to enable the potential for a genuine computing platform for the enterprise: greatly improved infrastructure, universal browser-based access, virtualization, and the proliferation of numerous SaaS/on-demand applications.
The Importance of Customer Adoption
Customers have embraced these components of cloud computing - and now they're showing a sincere interest in moving more into the cloud. Small and mid-sized businesses have been the early adopters of the cloud. But enterprises are gradually jumping in.
To take customer adoption to the next level, vendors must work to address the many questions and concerns enterprises have about cloud computing. Security is always at the top of that list - "If I can access my data with a browser, who else can?" Reliability is a close second. Every time a service interruption occurs - such as Google's recent outage - analysts and potential customers raise legitimate questions about the real potential of the cloud.
Other concerns are equally significant. Regulatory issues differ by country - where the data is physically stored impacts the ability for a business to move a specific function into the cloud. Performance management is a growing concern - can vendors guarantee service levels? And customers are becoming increasingly savvy to the potential for good-old-fashioned vendor lock-in: it is easy to move your database into the cloud, but what if you ever want to get it out?
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Or it might just be SaaS with lipstick.
The reality is most likely somewhere in between. Startups and megavendors alike have rushed to position their cloud offerings and businesses are increasingly taking part. Today's technology companies must answer four important questions in order to spur customer adoption and best position themselves for success in the cloud computing era.
The Emergence of the Cloud
$95 billion. That's Merrill Lynch's global forecast for the value of the cloud computing market in the next five years - at which point, 12 percent of the software market could be sucked into the cloud. Another recent study found more than two-thirds of Americans use some kind of Web-based services - email, photo storage, online applications or storage.
It is clear that the concept of cloud computing is gaining traction. The flexibility of an access-anywhere, highly scalable, pay-as-you go computing model has benefits for both vendors and clients. Software companies only need to manage one version of their software at a time and enjoy recurring revenue streams. Customers get world-class IT capabilities at a reasonable cost without the staffing, management and headaches of managing the function in house.
Although the cloud has had many similar incarnations, today's technologies and business models have combined to enable the potential for a genuine computing platform for the enterprise: greatly improved infrastructure, universal browser-based access, virtualization, and the proliferation of numerous SaaS/on-demand applications.
The Importance of Customer Adoption
Customers have embraced these components of cloud computing - and now they're showing a sincere interest in moving more into the cloud. Small and mid-sized businesses have been the early adopters of the cloud. But enterprises are gradually jumping in.
To take customer adoption to the next level, vendors must work to address the many questions and concerns enterprises have about cloud computing. Security is always at the top of that list - "If I can access my data with a browser, who else can?" Reliability is a close second. Every time a service interruption occurs - such as Google's recent outage - analysts and potential customers raise legitimate questions about the real potential of the cloud.
Other concerns are equally significant. Regulatory issues differ by country - where the data is physically stored impacts the ability for a business to move a specific function into the cloud. Performance management is a growing concern - can vendors guarantee service levels? And customers are becoming increasingly savvy to the potential for good-old-fashioned vendor lock-in: it is easy to move your database into the cloud, but what if you ever want to get it out?
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