Cloud Computing –Transformation or Hype

Cloud computing has a lot going for it - a world that has just been in recession and understands the perils of high investments, an IT concept that works on optimization of costs through shared facilities and increased utilization and hence highly appreciated. Just what the doctor ordered!

Contrary to the old English saying that a rolling stone gathers no moss, in today's world, anything that is marketed well gathers hype in addition to reality, as it rolls on and it is no different for Cloud Computing. In the last year or so, arguably the maximum attention in the IT world has been given to Cloud Computing and naturally a lot of hype has developed, in addition to the transformation values it brings in.

Well, below I've separated the "hype" from "transformation" for each of the beliefs of Cloud Computing.

Belief # 1 - Cloud Computing helps meet changing market demands
Cloud enables provisioning of IT based on the requirements of an organization. Since the provisioning can be rapid, it allows the organization to flex their IT based on their business and market expansion (or contraction) needs and hence this is a significant departure from the past.

However, this is not a universal truth; rather, it is far from it. Issues such as integration to an existing IT ecosystem, compatibility of Applications to the Infrastructure, applicability of the standardized Cloud application to the business process of the organization are all points of concern. This could increase provisioning time and may not provide the necessary flex to meet changing market demands.

Belief # 2 - Minimizes IT issues
Since Cloud Computing is SLA based and the management and maintenance is the responsibility of the Service Provider, it should definitely minimize IT issues for an adopter of Cloud. Secondly, as the Service Provider caters to multiple organizations, there is a good chance he will recover faster from failures due to the fact that it affects all his Clients and this could result in better SLAs than an individual organization can hope to achieve. Further, it also removes obsolescence risk hence reducing the time for IT decision making.

However, the complexity of a hybrid of a Cloud solution plus an On Premise solution can spring considerable surprises, most of which may not be pleasant, unless it is planned and executed well. Such complexity could even lead to breakdowns in business processes.

Belief # 3 - Helps optimize budgets and lowers Total Cost of Ownership (TCO)
The Service Provider is able to share infrastructure, applications and support costs across multiple Clients and is able to match the peaks and troughs of demand across Customers to reduce costs. This sharing of infrastructure also removes the "30% buffered capacity" that exists in dedicated infrastructures. The conversion of all Capex to Opex also ensures optimization of budgets.

However, the TCO calculation needs to take into account all parameters such as Change Request Costs and Exit Costs, in addition to the "Run" costs since these can add up to quite a bit. And it is certainly not true that TCO is reduced "always".

In conclusion, while Cloud Computing has its benefits and is a concept that is here to stay, it requires careful evaluation on a case by case basis to determine whether the balance shifts towards hype or towards true transformation.

About the Author

Anand Ramakrishnan

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