Stan Lepeak, Director, Research, Advisory Services

Unless you have been spending time under the proverbial rock you know that cloud computing is the “hot” topic in the business and IT services marketplace for 2011. There’s no denying cloud computing is a hot topic, especially among those vendors and service providers selling cloud offerings. The more interesting debate is around what is really new (or not) with cloud computing. Is cloud computing truly revolutionary, as some claim, or is it a savvy repackaging by marketers of mostly existing services and capabilities? More importantly, what are the true benefits cloud computing can bring buyers in the near to medium term, especially larger organizations with significant legacy infrastructure and systems investments? And finally, what are the challenges buyers must prepare for, address and balance against potential cloud benefits?

There are many potential “new” benefits cloud computing can bring its users. These include things such as more rapid deployment of software applications with lower upfront investment costs or faster provisioning of computing services such as servers or desktop environments.

There are also potential complexities and problems that cloud computing can bring its often unwitting users. One potential, and not-so-new problem, is more renegade procurement and implementation of point software solutions across the enterprise. This can raise support costs and further fragment IT architectures, supported standards, and compliance and security regimes. Related to this is the introduction of a proliferation of new service providers and applications, some of which will likely fail or be acquired in short order, complicating and raising the cost of supplier management and governance. This can result in a loss of economies of scale and create integration nightmares between cloud services and legacy IT environments. Many buyers are forgetting why the rage of the 1990’s was to move to integrated software suites. And even benefits such as faster provisioning of computing services can get bogged down by inflexible legacy policies, procedures, contracts and service level requirements.

All of these challenges are surmountable. But this surmounting has a real cost in terms of effort, time, money, resources and skills. These and many other cloud computing externalities form the “buyer beware” or at least “buyer be aware” manual for cloud computing. And this manual is not just for the CIO or IT professionals. Business unit leaders and even other CXO’s must understand the ramifications and opportunities cloud computing will have on and can bring their organizations.  Defining an executive’s perspective on cloud computing has been the emphasis of extensive research KPMG has conducted on the evolution of cloud computing. If cloud computing, regardless of its newness, is viewed as a natural evolution of the service delivery market, with pros and cons and a learning curve, then it is more likely to bring benefits to its adopters both tactically and strategically.

Filed under: Cloud Computing, Information Technology (IT), Process Transformation by EquaTerra