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Can Cloud Computing Help Enterprises Weather the Economic Storm? Product Image

Can Cloud Computing Help Enterprises Weather the Economic Storm?

  • Published: May 2009
  • 37 pages
  • Datamonitor

The rapid pace of proliferation of the term "cloud computing" is nothing short of astonishing. However, many doubts remain regarding the exact scope and definition of the term or the long-term impact of the business model it denotes.


- Defines cloud computing, describes its model of operation and provides a classification of cloud computing services.

- Considers drivers and inhibitors of cloud computing adoption in the context of the current global recession.

- Outlines the emerging competitive landscape for cloud computing services and related technologies.

- Recommends the stance that enterprises, technology vendors and service providers should adopt regarding cloud computing.

Highlights of this title

In merely 18 months the neologism "cloud computing" has gone from obscurity to pervasiveness. Although elusive to define, the emerging paradigm is clearly capturing the imagination of the IT market. It is believed that the level of interest in the alternative models of IT consumption is driven by the ongoing commoditization of IT technology.

Datamonitor defines cloud computing as an IT consumption pattern that relies on abstracted READ MORE >

Introduction to Cloud Computing
The term cloud computing is quickly becoming ubiquitous
Cloud computing is a new pattern of IT consumption but it is proving elusive to define
Cloud computing overlaps with many adjacent categories, rendering the definition difficult
Cloud computing: an IT consumption pattern based on the delivery of commoditized resources as a service
IT commoditization has occurred through the history of computing
Cloud computing may resemble the mainframe era, but it is a fundamentally different phenomenon
Cloud computing marks the culmination of the commoditization process
Outsourcing, hosting and ASP services persist with the management of identifiable resources
Electricity provides the most powerful analogy with cloud computing
Both electricity and IT are enabling technologies that went from strategic to commodity assets
Unlike electricity, computing is a far more complex phenomenon and far less fungible resource
The cloud computing taxonomy
Software-Platform-Infrastructure (SPI) model offers the basic cloud computing classification
Further refinement of the SPI model should not rely on the proliferation of as a Service neologisms
Detailed taxonomy schemas focus on segmenting the infrastructure layer
The fabric/instance spectrum captures variations in the granularity of computing services provision
Do private clouds exist?
Ownership should not be the central tenet of cloud computing
Technologies enabling local or hybrid cloud infrastructures are readily available
Economies of scale dictates that the public/private gap will matter, but bridging the divide will be possible

Benefits of cloud computing
The benefits of cloud computing are the benefits of services over products
Cloud computing allows enterprises to focus on their core business processes
Cloud computing closes the gap between IT capacity and IT demand
Elasticity is not built into the cloud computing model but ease of provisioning mitigates this effect
Variable costs and usage-based models are the principal benefits of cloud computing pricing
Capex/opex accounting strategies do not describe the full range of cloud computing pricing models
Cloud computing is associated with a broad range of pricing models based on variable cost
Cloud computing could act as a deflationary force in the enterprise technology IT market
The combination of elasticity and utility pricing engenders IT new economics
Inhibitors to cloud computing adoption
Trust and migration to an unfamiliar model are the primary inhibitors to cloud computing
The substitution of products with external services renders the issue of trust extremely acute
The question of trust in cloud service providers also relates to the emotional issue of lock-in
Until legal implications are better understood trust issues will continue to be raised
Each cloud service model is associated with a specific set of trust challenges
Cloud service adoption and management challenges are currently potent inhibitors
Matching workloads with the optimal mode of IT delivery may be difficult
The business case for cloud computing is often compelling, but may be hard to formulate with precision
Enterprises procurement and spend management practices will have to evolve to accommodate the cloud
The migration of business processes to the cloud is not frictionless
Cloud services need to remain dynamic without disrupting existing enterprise IT architectures
Conclusion: benefits and inhibitors of the cloud computing model

Competitive Landscape
The roll-out of cloud infrastructures is an opportunity for commodity hardware vendors
Migration into the cloud will boost thin clients, netbooks and handhelds
Cloud infrastructure services
Online retailer Amazon.com has emerged as the early leader in infrastructure provision
GoGrid leads the wave of hosting providers offering instance-based cloud computing infrastructure
Others could offer cloud infrastructure services, but may prefer to compete in software or platform layers
Infrastructure management platforms have emerged as the critical part of the cloud infrastructure stack
Cloud platform competitive landscape is particularly vibrant
Proprietary development platforms backed by SaaS vendors are proving popular with ISVs and users
Platforms supporting generic development frameworks may lend more control to developers
A long tail of standalone platforms relies on intuitive proprietary development and execution environments
SaaS vendors now feature in virtually every segment of the enterprise application market

Datamonitor Opinion
Those that manage to harness the cloud computing model stand to benefit
Cloud computing is here to stay, albeit not as the sole model of IT consumption
The Global Recession will accelerate the adoption of cloud computing
An elastic model that relies on flexible, usage-based pricing will be particularly attractive in the downturn
Unchecked proliferation and inadequate management of cloud computing services can fuel the backlash
Successful vendors will capitalize on short-term opportunities and prepare for long-term implications
Vendors may not have to venture into cloud services, but strategic adjustments will be necessary

Action points for enterprise technology vendors
Action points for enterprise IT decision makers

Further reading
Ask the analyst

List of Tables
Table 1: A selection of SaaS vendors by solution area, presented in alphabetical order

List of Figures
Figure 1: Only one in three CIOs are comfortable with their departments maintenance workload
Figure 2: Cloud computing appeared in the market in 2007 and has risen quickly to universal prominence
Figure 3: Cloud computing overlaps with a range of related terms
Figure 4: Cloud computing as an IT consumption model
Figure 5: Cloud computing can be contextualized as the ongoing service-based commoditization of IT
Figure 6: Software-Platform-Infrastructure (SPI): the basic cloud computing taxonomy model
Figure 7: A reference cloud computing taxonomy combining the SPI and Youseff-Butrico-DaSilva models
Figure 8: Cloud computing services are floating along the fabric/instance provision spectrum
Figure 9: A private cloud is analogous to an intranet; public clouds are approximate the scale of the internet
Figure 10: Adopting a service-based IT consumption strategy allows greater focus on strategic issues
Figure 11: Gap between IT capacity and demand creates inefficiencies
Figure 12: Non-concurrent peaks in demand increase the utilization rate of cloud infrastructures
Figure 13: The balance of the principal elements of service provider trust shifts with the mode of provision
Figure 14: Outline of the cloud computing competitive landscape segmented by the SPI model
Figure 15: Enterprises are likely to blend locally managed resources with public clouds

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