The cloud computing model: What midmarket CIOs need to know now..
By SearchCIO-Midmarket.com Staff
14 Jul 2009 | SearchCIO-Midmarket.com
As the cloud computing model slowly makes its way into midmarket companies through lower-priced Software as a Service (SaaS) and other forms, concerns over information security, service uptime and control of resources remain. But are the savings and efficiency of essentially outsourcing parts of your IT infrastructure too great to ignore?
This SearchCIO-Midmarket.com Quick Guide brings you the latest thinking on this emerging topic, from what to expect when introducing cloud computing services into your midmarket organization to advice for cloud computing platforms that CIOs can act on now.
What can midmarket organizations realistically use the cloud for now?
Software testing: Many midmarket companies have a backlog of software testing and quality assurance (QA) projects waiting in a queue for months, but cloud service providers are offering a tempting alternative: Put your application development and QA labs in their virtual IT labs.
Application hosting: Application hosting pricing is expected to decrease by up to 20% over the next two years thanks to increased competition on a number of fronts, including the advent of cloud computing, as well as reduced provider expenses, according to Gartner Inc. But not everyone will be in a position to renegotiate their contracts and take advantage of the cuts.
Driving the price declines are a number of factors: the rise of new offerings, in particular infrastructure utility services for SAP and other packaged applications with lower price tags than application hosting service providers'; competition from on-demand or utility-like models such as SaaS and the cloud computing model; and lower infrastructure costs that providers are passing on to customers.
Cloud computing costs
Cloud computing services let CIOs reallocate up-front costs for hardware and software, but spreading such expenditures out over months and years will eventually catch up to your bottom line. And along the way, you may encounter many of the same challenges with data protection and content management that you would in your own data center.
Cloud computing costs creeping up over time to match and possibly surpass one-shot up-front costs is a reality that Dave Banks, chief technology officer at PropertyRoom.com Inc., says he's willing to live with.
Banks calculates that the Mission Viejo, Calif.-based Web business, which auctions, stores and ships seized and abandoned properties for 1,800 police departments and municipalities, saved about a half million dollars up front by putting its new auction engine in cloud computing services provider Savvis Inc.'s data center. The savings encompassed servers, network infrastructure, software licenses and staff resources to configure the servers and network.
IT innovation in the cloud
Based on the number of articles and columns on IT innovation, you might get the impression that IT lacks innovation. Google IT and innovation or do an advanced search on the exact phrase IT innovation and it's clear that there are many experts and pundits telling us IT needs to be much more innovative.
You can also read a lot of articles these days that suggest that CIOs may not need to drive innovation anymore. The cloud will do it for us, just like managed services, outsourcing and a list of other magic bullets that were going to do it for us.
Cloud computing change management
The cloud computing model is met by many skeptics today, but during the next few years more standards will emerge and most concerns about cloud security and compliance will be addressed. Ten years from now, companies that sat on the sidelines and bypassed the cloud computing movement will find it hard to compete due to higher costs of assets, less flexibility, higher headcount and a higher ratio of maintenance versus innovation. So to take advantage of these disruptive technologies, get your house in order by decoupling business processes from your software applications, a process that will involve transformational change in the form of service-oriented architecture (SOA) and business process management (BPM).
NOTE: This Article was published in Mid Market CIO News Letter, i am using this for my reading Archive purpose only.
