the cloud - advantages, disadvantages

Look out CIOs - CEOs are adopting new business models – look to the Cloud! by Allan Sommer, CIO

No doubt Information technology is at a breaking point, and there is a critical need to improve technology’s impact on the businesses we serve. Research* shows that as much as 85% of computing capacity sits idle in data centers, seventy percent of IT budgets are typically spent on maintaining current IT infrastructures, but only 30% are typically spent on new business capabilities. So clearly, one of the challenges we face as CIOs is to free up non-productive infrastructure budget for new investments and accelerate the deployment of capabilities needed by the business.

As many CEOs look to new business models, the cloud can be adopted to support these changing business dynamics. More than ever CIOs must be aware of the all-in costs associated with migrating from fixed to variable asset based operations.

The cloud provides two categories of fundamentally dissimilar benefits – cost and capabilities. The first category is all about optimizing cost benefits. This often translates into a discussion of cost savings. In today's economic climate the desire to save operating budgets is part of many CIO/CFO and CEO discussions. However, cloud computing does not always save operating costs. In some cases it can drive cost up if used simply to replace on-site infrastructure or services with an exact duplicate in the cloud. Knowing when to redesign or when to avoid using cost savings as a justification for cloud computing is critical and will define CIO careers going forward.

The second category is about capabilities and references the ability to do things that otherwise couldn't be done either technically or economically without the use of cloud services. Examples include developing new business applications and can in many cases reduce the go-to-market life cycle. Another example is the elasticity in most cloud service models. Most CIOs worry about scalability and the businesses need to grow or shrink with often little notice; the cloud serves these challenges very well.

At the end of the day, for most businesses it's cheaper to use someone else’s infrastructure then it is to use your own as long as you understand the issue of …. timing.

*IBM Global Business Services “How Cloud drives value in IT strategy” September 2009