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Be Clear about the Cloud

As the dominant IT paradigm continues to shift, companies need to manage critical components of the migration.

Companies still face plenty of questions regarding cloud computing. Increasingly, however, the dominant question is not whether to do it, but how intensely.

In fact, given the pace at which companies are offloading at least part of their IT infrastructure to public clouds (generally defined as third-party services that host computing workloads in multi-tenant data centers), those that don’t move aggressively may risk being left behind. Research firm Gartner estimates that global spending on cloud services will hit $68 billion this year, a gain of 16% over 2009, which is more than triple the expected growth rate for total IT spending.

Not that it’s an equal opportunity for all. For many small companies, it’s almost a no-brainer to outsource nearly everything to “the cloud,” which both removes the traditional barrier of upfront capital investment in IT and provides the scalability needed to accommodate fast growth or spikes in demand. For large companies with heavy sunk costs in on-premises equipment — and the in-house expertise needed to make the most of it — the savings proposition requires a more careful calculation.

But even larger enterprises are signing on for a growing list of popular cloud-based services, from
e-mail and sales-force automation to collaboration environments and human-resources management. As companies of all sizes gain more experience with cloud computing, an emerging body of best practices is beginning to take shape. Here we address some of the most common current concerns. (For more on moving to the cloud, see “Your Cloud or Mine?” July/August.)

Stay Alert

A big-bang cutover from the old paradigm to the new is highly unlikely. Instead, opportunities to minimize your physical IT infrastructure will probably present themselves piecemeal. A smart approach for CFOs is to ask whether and to what degree a cloud option has been considered as part of each funding request submitted by a business unit or the IT department.

For example, as servers become obsolete or fully depreciated, consider whether it makes more sense to move the applications that run on them to the cloud, rather than investing in another hardware-refresh that may be in the service of aging software.

Also, avoid investing in server capacity based on what is needed to meet peak demand (such as to support a new marketing campaign) but that will, for the most part, saddle you with more than you need. “In many cases you’re not sure exactly what the peak is going to be, so you should leverage the scalability of the cloud,” says Bernard Golden, CEO of HyperStratus, a cloud consultancy.

Test-and-development environments are also ideal for the flexibility inherent in cloud computing. Historically, many companies have had huge resources tied up in preproduction systems that sit idle most of the time until some testing is required that entails installing new software. It costs far less to share infrastructure in the cloud with a large number of other companies.

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