This blog has told you that the cloud is not a fluffy magic box and given you a number of reasons, but yet, even though it is one of the seven deadly software sins, it would appear that many people are still holding on to this notion. Take this recent “panel from Ariba Live” (as covered in CRM Buyer) for example. Even though the experts admit that there are still issues to be addressed and problems to be solved, I get the feeling that many of them still believe that the cloud will solve all your woes. It won’t. And if you’re not careful, it might even create new ones!
First of all, do you even know what the cloud is? Is it the next form of SaaS? of IaaS? of PaaS? Is it truly computing-as-utility, or is it the next step in the evolution of computing on its journey to become a true utility service? Depending on which vendor you talk to, it might be any of the above, all of the above, or none of the above … and thanks to the proliferation of useless buzzwords, you might never know what your provider’s definition is (until the service goes down and they don’t fix it in a timely manner because it’s “not their problem”). Until there is a consistent definition of cloud, it can’t even be called a platform!
Secondly, it won’t necessarily lower costs or increase efficiencies. That is all dependent on your internal efficiencies, the provider’s efficiencies, and the platform your provider operates. With respect to software, one has to consider at least the following costs:
- License / Maintenancethe initial acquisition cost plus ongoing license / maintenance / utilization costs
- Supporting Softwareback end database, web/application software, and middleware
- Hardwareservers, SANs, routers, switches, etc.
- Powerraw energy costs
- IT Personnelsystem, server, and database administrators; network engineers; help desk / user support specialists; etc.
- Bandwidthinternet costs
which might not be reduced at all. Consider:
- License / Maintenancewill add up as the organization is paying monthly costs for infnity
- Supporting Softwaredoesn’t go away, it just gets rolled into the monthly cost
- Hardwarewon’t be any cheaper for the cloud provider than it is for any reasonably sized organization
- Powerraw energy costs could be higher if the cloud provider’s data center isn’t situated in a region with low power costs (from sustainable sources)
- IT Personnelare still required and still need to be paid a decent salary and the organization will only see savings if (a) the organization didn’t need full time resources which it would otherwise be paying for or (b) the cloud provider has resources that are more efficient
- Bandwidthcould go up as now all data is flowing back and forth over the internet, and not across internal networks
The cloud is only more efficient if the provider is able to take advantage of efficiencies of scale unavailable to the organization — and it’s only more cost effective if the cloud provider can pass the savings on and if the customer can pay only for what it needs (and not the shelf-ware that comes bundled with most current enterprise systems). This is never a guarantee as there are a lot of variables that have to be considered in the calculation of the lifetime total cost of ownership, which is the only true way to determine which system is the most cost effective.
Third, the contract, and the policies within, really determines the value. If the provider is not taking responsibility for delivering the whole solution, then there could be serious problems down the road. For example, if the provider is only delivering the software and using a third party for the infrastructure and the third party goes down, the provider might be down for days and leave you without recourse if the provider can claim “force majeure “.
Finally, the average executive doesn’t care how IT is delivered as long as it is cost effective. This says that the penetration of the “cloud” will be limited to those situations where it is truly the most cost effective solution and where IT is comfortable with a solution that stores corporate data off-site. Even in five years, despite the rosy predictions of some of the analyst firms, that’s not likely to be anywhere near 50% of the market.
So get your head out of the clouds (which bring asphyxia, hallucinations, brain-damage, and sometimes even death. It’s for the best.