95 Comments

Summary:

As important as cloud computing is for startups and random, one-off projects at big companies, it still has a long way to go before it can prove its chops. So let’s turn down the noise level and add a dose of reality. Here are 10 reasons enterprises aren’t ready to trust the cloud.

Many entrepreneurs today have their heads in the clouds. They’re either outsourcing most of their network infrastructure to a provider such as Amazon Web Services or are building out such infrastructures to capitalize on the incredible momentum around cloud computing. I have no doubt that this is The Next Big Thing in computing, but sometimes I get a little tired of the noise. Cloud computing could become as ubiquitous as personal computing, networked campuses or other big innovations in the way we work, but it’s not there yet.

Because as important as cloud computing is for startups and random one-off projects at big companies, it still has a long way to go before it can prove its chops. So let’s turn down the noise level and add a dose of reality. Here are 10 reasons enterprises aren’t ready to trust the cloud. Startups and SMBs should pay attention to this as well.

  1. It’s not secure. We live in an age in which 41 percent of companies employ someone to read their workers’ email. Certain companies and industries have to maintain strict watch on their data at all times, either because they’re regulated by laws such as HIPAA, Gramm-Leach Bliley Act or because they’re super paranoid, which means sending that data outside company firewalls isn’t going to happen.
  2. It can’t be logged. Tied closely to fears of security are fears that putting certain data in the cloud makes it hard to log for compliance purposes. While there are currently some technical ways around this, and undoubtedly startups out there waiting to launch their own products that make it possible to log “conversations” between virtualized servers sitting in the cloud, it’s still early days.
  3. It’s not platform agnostic. Most clouds force participants to rely on a single platform or host only one type of product. Amazon Web Services is built on the LAMP stack, Google Apps Engine locks users into proprietary formats, and Windows lovers out there have GoGrid for supporting computing offered by the ServePath guys. If you need to support multiple platforms, as most enterprises do, then you’re looking at multiple clouds. That can be a nightmare to manage.
  4. Reliability is still an issue. Earlier this year Amazon’s S3 service went down, and while the entire system may not crash, Mosso experiences “rolling brownouts” of some services that can effect users. Even inside an enterprise, data centers or servers go down, but generally the communication around such outages is better and in many cases, fail-over options exist. Amazon is taking steps toward providing (pricey) information and support, but it’s far more comforting to have a company-paid IT guy on which to rely.
  5. Portability isn’t seamless. As all-encompassing as it may seem, the so-called “cloud” is in fact made of up several clouds, and getting your data from one to another isn’t as easy as IT managers would like. This ties to platform issues, which can leave data in a format that few or no other cloud accepts, and also reflects the bandwidth costs associated with moving data from one cloud to another.
  6. It’s not environmentally sustainable. As a recent article in The Economist pointed out, the emergence of cloud computing isn’t as ethereal as is might seem. The computers are still sucking down megawatts of power at an ever-increasing rate, and not all clouds are built to the best energy-efficiency standards. Moving data center operations to the cloud and off corporate balance sheets is kind of like chucking your garbage into a landfill rather than your yard. The problem is still there but you no longer have to look at it. A company still pay for the poor energy efficiency, but if we assume that corporations are going to try to be more accountable with regard to their environmental impact, controlling IT’s energy efficiency is important.
  7. Cloud computing still has to exist on physical servers. As nebulous as cloud computing seems, the data still resides on servers around the world, and the physical location of those servers is important under many nation’s laws. For example, Canada is concerned about its public sector projects being hosted on U.S.-based servers because under the U.S. Patriot Act, it could be accessed by the U.S. government.
  8. The need for speed still reigns at some firms. Putting data in the cloud means accepting the latency inherent in transmitting data across the country and the wait as corporate users ping the cloud and wait for a response. Ways around this problem exist with offline syncing, such as what Microsoft Live Mesh offers, but it’s still a roadblock to wider adoption.
  9. Large companies already have an internal cloud. Many big firms have internal IT shops that act as a cloud to the multiple divisions under the corporate umbrella. Not only do these internal shops have the benefit of being within company firewalls, but they generally work hard — from a cost perspective — to stay competitive with outside cloud resources, making the case for sending computing to the cloud weak.
  10. Bureaucracy will cause the transition to take longer than building replacement housing in New Orleans. Big companies are conservative, and transitions in computing can take years to implement. A good example is the challenge HP faced when trying to consolidate its data center operations. Employees were using over 6,000 applications and many resisted streamlining of any sort. Plus, internal IT managers may fight the outsourcing of their livelihoods to the cloud, using the reasons listed above.

Cloud computing will be big, both in and outside of the enterprise, but being aware of the challenges will help technology providers think of ways around the problems, and let cloud providers know what they’re up against.

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  1. I still think a lot of the SaaS apps will migrate back to user servers. SaaS is booming right now because it’s cheap it’s cheap to get started, costs are predictable and apps are decent. However I think that virtually all companies should develop a sufficient competence in LAMP-based serving to be able to run many of these services themselves. For example, I’d much rather run my own installation of SugarCRM than continue with Salesforce for many of the reasons cited above.

  2. Bill Roberts Tuesday, July 1, 2008

    Enterprises may well not be ready to trust the cloud, but I don’t think most of your reasons are significant disadvantages of cloud computing. Of course there are a variety of types of SaaS or cloud computing and the detailed issues vary from one to another. But most of the reasons above also apply to the internal servers of any reasonable sized company and by outsourcing to specialists, then in most cases you will get a better service more cheaply. Probably the main issue remaining to be tackled for many companies is the security issue, though again, because it is their core business and essential for their success, cloud computing companies in many cases will take this more seriously than in-house IT departments.

  3. Satish Sharma Tuesday, July 1, 2008

    Stacy,

    Some of your arguments are insane.
    #1. By your arguments small cars are more environment friendly than railroad, that’s the what a small data center to a large data center is — power consumption wise, not to mention the other costs.
    #2. Almost all data centers go down — even one run by companies themselves and it’s probably far more than S3 or google going down for a few hours in 2/3 years.

    #3. Others are mostly bougs.. or for idiots to worry about, except your first item, secure is what most C-levels worry about. Rest you have just filled up with junk .. platform agnostic .. come on .. since the history of computing nothing has been platform agnostic.

    Come to think of it; even god isn’t platform agnostic .. that’s why we have religious wars all the time.

  4. My guess is that cloud computing is only the future right now for Web 2.0 type companies – which, despite what many bloggers believe, is only a small portion of the computing world.

    One reason I’m not interested in SaaS and “cloud apps”: who owns the data? At least with the MS monopoly, you can reverse-engineer the file formats (e.g. Open Office & such can read Word & Excel files pretty well – excepting macros). But with all your critical data “in the cloud”, you don’t even know how it’s stored. So what happens when the SaaS vendor goes belly-up? (Likely to happen to most startups) Or gets bought by a bigger fish with a different agenda? Or decides its profits aren’t increasing fast enough, and has to increase revenue from existing customers to get its stock price up? (Likely to happen to salesforce.com customers — like it’s already happened to MS customers, eBay sellers, etc).

    pwb’s comment makes sense to me – run open source apps on commodity hardware, on site, hosted, or both.

  5. Don Jones – VentureDeal Tuesday, July 1, 2008

    My belief and experience says that small businesses will adopt the cloud at a much faster rate than medium and larger enterprises, who are much slower moving, have greater security and IT issues and sensitivity, and at much larger switching costs.

  6. Thanks for the really good dose on cloud computing. With cloud computing being touted as the next ‘big thing’, it ‘s nice to have a piece like this one. But as one reader already commented, smaller businesses will definitely be the ones to easily and quickly adopt cloud computing due to cost. I think cloud computing fits them perfectly. But as one expert pointed out, cloud computing can also be use to larger businesses: Where Cloud Computing Makes Sense (http://www.internetevolution.com/author.asp?section_id=630&doc_id=155107&F_src=flftwo)

  7. Michael Sheehan Tuesday, July 1, 2008

    Interesting post and I’m sure you will get a lot of response to it. Some quick comments:

    #1 – Security – I would say Cloud Computing is as secure as with any data center or hosting provider. What the Enterprise is not sure of is the concept of cloud security and determining the parameters that define it.
    #2 – Logging – Technology is driving this movement. Generally stating that it can’t be logged is a bit of a mis-statement. This depends on the provider of the cloud, the engineers administering and developing on it and the 3rd parties developing around it. It will be there sooner than you think.
    #3 – Platform Agnostic – Clarification: GoGrid offers Windows AND Linux so you have a choice. The Cloud Infrastructure providers will offer all flavors. I would say opting for an Infrastructure provider (like GoGrid) ensures that you as the Enterprise or Smaller Company Developer can worry about your development items and not the supporting infrastructure.
    #4 – Reliability – with ANY hosted service (whether your bank, a small website, a SaaS or larger providers), you will experience issues/downtime. Computers will break, infrastructures will not perform correctly, architecture can be bad (e.g., Twitter). Look beyond that to what bolsters that service (e.g., Support, SLAs, etc.). It’s not only the Technology but what support it as well.
    #5 – Portability – Cloud computing is still in its infancy. Telephone number portability took YEARS to come to fruition. Portability will come to the cloud as well over time.
    #6 – Environmentally sustainable – I could be wrong but virtualization and the cloud can help with this. 1 dedicated server is very different than 1 virtualized or cloud server running on a grid or node of servers. It’s better efficiency.
    #7 – Cloud Computing on physical servers – I agree with you here. Don’t really see how it could be done otherwise.
    #8 – Need for speed – to add to this idea, putting things into the cloud is actually faster than going with a traditional dedicated path. Faster setup and deployment. Faster scalability. But yes, if you corporation is on the Right Coast and your cloud infrastructure is on the Left Coast, you will have some (minimal?) latency. But this will changes as more POPs (points of presence) come into existence. There need to be studies benchmarking the difference.
    #9 – Internal Clouds – Yep. There will always be internal clouds, especially for the Enterprise or Gov’t. But there will be (and are) providers of internal clouds. Just depends on the needs.
    #10 – Longer due to Bureaucracy – Agree. But this is true with other technology evolutions (like cloud computing). Enterprises are like cruise ships that take hours/days to make a turn. Right now, early adopters (e.g., startups, web 2.0, etc.) are helping to form the industry. Enterprise will come in a few years (probably starts now with internal projects or skunkwork departments that test the technology and then recommend a further rollout).

    Thanks for your post! It really got me thinking!

    -Michael Sheehan
    Technology Evangelist for GoGrid

  8. Greg Glockner Tuesday, July 1, 2008

    Stacey: I enjoyed the article, but disagree with you on two points:

    4: I agree that cloud computing is not 100% reliable, but I would expect Amazon EC2 and similar cloud services to be much more reliable than the average IT department. That is the core expertise of the cloud host.

    6: I agree with your point here, but I think you go a bit far. No one should be claiming that cloud computing has zero ecological footprint. Rather, one should claim that, thanks to the cloud, you can locate the server where it will make the least impact. Why host a server in NYC, the Bay Area or LA when you can put it in middle of nowhere where it will make less of an impact.

  9. GigaOm loves the Cloud « It’s in the Cloud Tuesday, July 1, 2008

    [...] latest post – 10 Reasons Enterprises Aren’t Ready to Trust the Cloud – is a perfect [...]

  10. OnSaaS » Blog Archive » Response to “10 Reasons Enterprises Aren’t Ready to Trust the Cloud” Tuesday, July 1, 2008

    [...] Higginbotham over at GigaOM wrote an interesting piece on 10 Reasons Enterprises Aren’t Ready to Trust the Cloud. Even though I agree that some of these points are valid reasons on why enterprises are hesitant in [...]

  11. Stacey, good list of concerns. However, I have to disagree with you that these are show stoppers. They are concerns, yes, but not show stoppers. I wrote a long response here.

  12. Researcher » links for 2008-07-01 Tuesday, July 1, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud – GigaOM (tags: security internet so) Bookmark to: [...]

  13. I think the biggest danger is use of these services as paid botnets to do attacks or scrape for emails… already we get tons of unidentified bot accesses from AmazonAWS (*.amazonaws.com), and no easy way to block without hand blocking ip ranges or slower rdns lookup.

  14. Ernest Nova Tuesday, July 1, 2008

    This article is easily titled Top Ten Myths Why Enterprises Are Not Ready to Trust Cloud Computing

    The cloud service provider is aggregating demand and is likely to be able to hire better security talent. Similarly, a large part of their operating cost will be energy related so it will be in there best interest to lower that cost over time to improve their margins. The scale of an hosted provider will reduce other costs beyond what a typical enterprise could do on their own.

    The latency argument is a fumble too – any large enterprise has many locations and whether their apps are in the cloud or in the corporate HQ does not make much difference to latency for distributed users. Neither environment can fix the speed of light in fiber. In fact, there is a flip argument for cloud computing in the financial services where the traders are clamoring to get their applications as close to the stock exchange computers as possible for latency reasons.

    Not every application should or could be put on the cloud – if the application is proprietary and highly platform dependent then by all means keep it in house. There is no scale benefit there by putting it on the cloud.

    The legal jurisdiction issue on stored data is about the only real unknown – and that too is of importance to certain kind of customers. That does not make cloud computing less relevant to the majority of applications and customers.

    p.s Canada’s concerns are a bit ironic given that many governments in the world are demanding that RIM, a Canadian company, host wireless NOC that process Blackberry emails, inside the respective countries for jurisdiction and law enforcement reasons. (I just note this without commenting on the merits of the argument)

  15. HyperLINKS July 1, 2008 | Blogging Hyperic Tuesday, July 1, 2008

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  16. Stacey Higginbotham Tuesday, July 1, 2008

    Keep the comments coming guys. I wrote this hoping to spur conversation about cloud computing and figure out what issues the technology world needs to think about as it moves toward this model.

    Like many of you I agree that certain apps will remain in house and others will be farmed out. None of these reasons are show stoppers and some, like reliability are bureaucracy, are largely psychological. The economics of large-scale computing are too compelling to keep enterprises from embracing the concept. To say enterprises aren’t ready today doesn’t mean they won’t ever be, which is why these conversations are important.

  17. Partners in Grime Tuesday, July 1, 2008

    While I agree that the immediate forecast is a bit cloudy I don’t see any show stoppers.

  18. Links of the day (food poisoning edition) « IT Spot Tuesday, July 1, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud [...]

  19. Rod Boothby Tuesday, July 1, 2008

    Hi Stacy,

    Interesting article. At Joyent, we are seeing enterprise users starting to adopt the cloud. Major League Baseball runs it’s chat infrastructure on Joyent. LinkedIn runs mobile.linkedin.com on Joyent.

    In both cases, these are large companies running important pieces of their infrastructure on using a cloud computing provider.

    Please let me go through your list point by point. Some of your conclusions are based on assumptions about how clouds work that are not necessarily true for all vendors.

    1 – It is possible to deploy securely onto a cloud, and effectively remain behind your firewall. For example, Joyent Accelerators give you root access to a Solaris Zone. You can use this access to lock down all ports and then run VPN server software such as openvpn.net to create a tunnel between your data center and your Joyent Accelerator. At that point, the cloud is behind your firewall.

    2 – Because Joyent Accelerators give you root access, you can log anything you like.

    3 – You are correct that many clouds are not platform agnostic, at least not from an OS level. However, this is not always an issue. A PHP, Rails or Python developer cares about deploying on their preferred development stack, and generally, does not care about what runs beneath them.

    4 – Reliability is possible on the cloud if the cloud vendor is completely transparent about the infrastructure they are providing. It is possible to highly available deployment architectures that leverage hardware loadbalancing and 2N+1 redundancy at both the app and state layers. High availability takes planning and forethought, regardless of whether you deploy within a traditional data center or on a cloud. however, it is achievable in both situations.

    5 – You are right that data portability is an issue with some cloud vendors. Our CTO, Jason Hoffman has an interesting exchange with a representative from Google App Engine about just this issue: http://www.youtube.com/watch?v=VY83H4ZQRmU

    6 – Yes clouds take power to run. However, the fair thing to do is to compare cloud computing with traditional IT data centers. Joyent’s cloud computing data centers have utilization rates that are over 8 times higher than traditional data centers. For the same amount of computing and cooling resources, we help our customers do more. Happy “Loving Clouds” are green.

    7 – You are right that physical locations are important to clients for security reasons, for disaster recovery and for reasons related to legal jurisdiction. However, it is not correct to assume that all cloud hide the physical locations of their data centers from their clients. At Joyent, we will tell you which data centers are running your infrastructure, and we give you the option to select or move to a new physical location if you prefer.

    8 – You are right that speed is critical for many applications. Even when your cloud infrastructure is plugged directly into the Internet backbone, there are issues related to the speed of light and the number of switches between, say Boston and Sydney. One solution is to pick a cloud vendor that is transparent and gives you the option to pick a data center that is near by.

    9 – We are seeming the opposite trend. We are seeing large companies out sourcing some of their infrastructure to cloud vendors. They are doing so because the TOC of running something on the cloud is significantly less that running it in house.

    10 – Sometimes, legacy bureaucracy actually pushes cloud computing. When someone in the marketing department wants to deploy a new “unknown” Ruby on Rails app on the same infrastructure that is used to run the General Ledger and the Email system, traditional IT managers tend to become concerned. Rather than stifling innovation, we have seen situations where these IT managers actually recommend cloud computing as a lower risk alternative.

    Rod Boothby,
    VP, Platform Evangelism
    Joyent Inc.

  20. Karthik Reddy Wednesday, July 2, 2008

    “Most clouds force participants to rely on a single platform or host only one type of product. Amazon Web Services is built on the LAMP stack ….”

    Amazon web services push the limits when it comes to keeping their platform open. The above statement of yours gives an impression that Amazon EC2 service somehow restricts their platform to just the LAMP stack. Not true. For eg., you can use Java/J2EE instead of PHP, lighty webserver instead of Apache , Postgres instead of MySql , so on and so forth.

    But i totally agree with you on the Google App Engine. Their platform is pretty restrictive to the developers.

  21. Nice post for developers…!
    Web cloud is most popular platform for web 2 trend.

  22. XRDSi Stockholm-Brussels » Blog Archive » nytt buzzword i webbvärlden? Wednesday, July 2, 2008

    [...] runt på Jaiku och hittade ett lästips. Fattade inte så mycket av grejen förrän jag började utforska begreppet cloud computing. [...]

  23. Richard Nicholson Wednesday, July 2, 2008

    Stacey,

    A well thought out/reasoned piece.

    Indeed, there is no “Cloud Magic”. So it nice to see some sane journalism on the subject.

    Truth is that same physical constraints & architectural compromises limited third party “Clouds” as Enterprise Environments. By focusing on a small set of simple applications – “Cloud” providers simply avoid some of the difficult design & management issues that Enterprises face.

    The vendor “bandwagon” marketing is sure to damage the credibility of Cloud computing – long before it gets a chance to be useful. Same thing as with the Grid hysteria a couple of years back.

    Richard Nicholson

    Paremus CEO.

  24. Looks like I am late to the party… Great Article Stacy :)

    Here are my thoughts…

    It’s not secure.

    Cloud computing is not an all or nothing game. Enterprises have been sharing data outside the firewall for many years. The “Big Switch” concept is not how enterprises will migrate to the cloud. They will choose parts of their IT to run behind the firewall and others to run outside the firewall. I have talked to quite a few vendors and enterprise customers who are already using the cloud for non sensitive data. The biggest issue with the “Enterprise” and the cloud is that most global 5000 companies don’t want to disclose that they are using a public cloud. As far as compliance and regulation goes, I have talked to at least one huge financial institution that told me (off the record) that they do a cost analysis on the fine vs. the cost of the regulatory implementation. In some cases they opt for the potential fine instead of implementation costs associated with the regulation. Cloud computing costs will have some impact on those type of decisions. In the early 1990’s the Gartner’s of the world were convinced Linux would never play in the enterprise due to security concerns. Also not all cloud computing is public. Vendors such as 3Tera, Cassatt, and IBM provide public cloud infrastructures.

    It’s not platform agnostic.

    Neither is AIX, HP, or Sun. Also, AWS is not strictly built on the LAMP stack it just happens to be one of the most wildly used stacks. There are successful businesses using Java stacks on Amazon. I am not really buying into the “Lock-in” argument on Amazon. There are plenty of vendors today proving Ruby-on-rails EC2 clouds and is an application running on one of those engines considered a lock-in? At the core of EC2 it is just Linux images. Also, how is managing clouds for an enterprise any more difficult than managing AIX vs. Dell server farms. However, I agree, today, Google App Engine is a lock in.

    Reliability is still an issue.

    If you are implying that enterprises that do geographic fail over are more reliable than public clouds than I agree wit you. However, IMO, at the application level it is a wash and entirely based on the design of the application.

    Portability isn’t seamless.

    Here again if the argument is that moving an application from one cloud to another isn’t seamless than I agree. However, I don’t see that being more complicated than moving an application from AIX to Sun or even worse AIX to Windows. If your argument is that getting data from one cloud to another then I say ditto on the aforementioned application design comment.

    It’s not environmentally sustainable.

    That is absolutely not true with private clouds. Take at look at IBM iDataPlex and Cassatt for great examples of managing power requirements. Also, I suspect the cost of running the famous NY Times TIFF2PDF migration would have yielded a much higher electric bill than $240 dollars.

    Cloud computing still has to exist on physical servers.

    I totally agree with you on this one. However, this should just create a larger ecosystem of regionally based cloud vendors. .

    The need for speed still reigns at some firms.
    Versus the need for cost savings? Here again not all applications will be a good fit for enterprise cloud solutions.

    Large companies already have an internal cloud.

    I believe you are stretching the term “cloud” on this one. Very few large IT shops that I have worked with (around 100 a year for the last 10 years) do not have “cloud” in the way of IBM Blue Cloud, 3Tera, or Cassatt. A lot have huge virtualized pools and some autonomic provisioning however, those are the exception and not the rule. Many of the large financial institutions have been running Grids for many years but here again I am not sure I would consider them the same as what are today calling a “cloud”.

    Bureaucracy will cause the transition to take longer than building replacement housing in New Orleans.

    Agreed most large organizations are riddled with bureaucracy, however, there are bleeding edger’s out there. Enterprise IT leaders that see IT infrastructure as a completive advantage will, IMHO, force the use of clouds. I always say, that when the Mad Money guy on MSNBC starts pointing out IT costs line items for his stock picks the clouds will start rolling in.

    johnmwillis.com

  25. Another Cloudy Day in the Cloud-o-Sphere | IT Management and Cloud Blog Wednesday, July 2, 2008

    [...] over at GigaOM wrote a great though provoking article about the Enterprise and Clouds called “10 Reasons Enterprises Aren’t Ready to Trust the Cloud“.  However, some of her arguments, IMO, were a bit cloudy,  As with most thought [...]

  26. links for 2008-07-02 « Brent Sordyl’s Blog Wednesday, July 2, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud Cloud computing still has to exist on physical servers. As nebulous as cloud computing seems, the data still resides on servers around the world, and the physical location of those servers is important under many nation’s laws. (tags: cloudcomputing) [...]

  27. Box.net Blog – File Sharing and Online Storage News from Box.net » Blog Archive » Enterprises Are Already in the Cloud Wednesday, July 2, 2008

    [...] at GigaOM just wrote an interesting piece on 10 reasons why Enterprises aren’t ready for the Cloud.  Of course we couldn’t let this opportunity pass without adding a little perspective from [...]

  28. Well I know I certainly wouldnt trust them.

    JT
    http://www.FireMe.to/udi

  29. Derrick Johnson Wednesday, July 2, 2008

    I completely disagree with everything except #10. Your article seems to be written to put FUD (fear, uncertainty, and doubt) into people’s minds. Do you perhaps work in the IT industry? Perhaps you are trying to justify your existence?

    I’m not trying to be harsh, but please… Cloud computing is here to stay and will only get more prevalent. I would argue that internal email goes down a lot more than, say, gmail. Every time my company’s email goes down, I sit and wonder why we bother paying thousands of dollars per year in salaries to people (and thousands of dollars in hardware, electricity, real estate, etc) when we could just plop it on a web-based solution (not gmail, since they read your emails, but there are others out there). Maybe the new mobileme from Apple?

    All companies, regardless of size, should be looking at renting cloud space and downsizing their own IT departments. It’s not going to solve the problem for all applications, but for email and the like, cloud computing is the hands-down winner in terms of cost, performance, and reliability.

  30. Sekhar Ravinutala Wednesday, July 2, 2008

    Stacey, your concerns are technically valid I suppose, but then like Ben Franklin asked, “What’s the use of a newborn baby?” It’s not fair to look at an evolving technology and criticize it for not being there yet.

    Specifically:

    (a) Your security point is more to do with external hosting in general than with cloud computing specifically
    (b) Logging, platform, reliability, portability, and speed issues are technical hiccups that clouds should overcome pretty easily/quickly
    (c) I don’t get your points on environment friendliness and physical servers – power consumed in all local servers < power consumed in clouds with same capacity, right?

    I do think you have something on resistance by affected folks (e.g., IT) though – I’m sure they’d come up with all kinds of naysayer arguments (including articles like this one! :)), though the huge economic benefits/business case of clouds should overcome those pretty quickly.

  31. Sekhar Ravinutala Wednesday, July 2, 2008

    What I meant to say was: power consumed in all local servers > power consumed in clouds with same capacity. I.e., the Economist article’s argument doesn’t really apply here because for each server node you bring online in the cloud to add capacity, you’re taking off a bunch of local servers, so there is a net power saving. In fact, that is a business case for cloud (or utility/on-demand) computing that IBM e.g., has been making for years.

  32. Bookmarks am 02.07.2008 | TQUWiki Wednesday, July 2, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud Cloud computing could become as ubiquitous as personal computing, networked campuses or other big innovations in the way we work, but it’s not there yet. Because as important as cloud computing is for startups and random one-off projects at big companie (Stichworte: enterprise_2.0 enterprise cloud_computing) [...]

  33. interactivechatsystems Wednesday, July 2, 2008

    Amazon/AWS is not ‘LAMP-Stack’-centric as asserted in this article. You may run any stack you want to on Amazon and there are plenty of public images out there to support anything from a bare Linux server all the way up to full applications and frameworks in between. This article appears to be mis-guided on many levels, better to do better research in the future lest the entire article’s veracity be undermined.

  34. it’s about time» Blog Archive » links for 2008-07-03 Wednesday, July 2, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud – GigaOM Cloud computing could become as ubiquitous as personal computing, networked campuses or other big innovations in the way we work, but it’s not there yet. (tags: analysis business computing cloud cloudcomputing enterprise internet infrastructure security) [...]

  35. 10 Reasons Enterprises Aren’t Ready to Trust the Cloud | Stacey Higginbotham | Voices | AllThingsD Wednesday, July 2, 2008

    [...] Read the rest of this post Print all_things_di220:http://voices.allthingsd.com/20080702/higginbotham-3/ Sphere Comment Tagged: GigaOm, Stacey Higginbotham, Voices, cloud computing | permalink [...]

  36. The problem of monoculture | Bitcurrent Wednesday, July 2, 2008

    [...] of cloud computing: At Structure, we debated the fear of lock-in; Stacey has a great piece on enterprise obstacles to adoption; and here, we’re seeing the downside of on-demand, easy-access [...]

  37. Alistair Croll Wednesday, July 2, 2008

    Great list, Stacey. I spend a lot of time talking to the enterprise set at events like Interop, and it’s a whole different world from the Web 2.0 startups. It’s easy to forget what “the enterprise” means (and like many of the commenters here, I think these are problems that will eventually be overcome.)

    But these are exactly the kinds of things that prevent, say, a Connecticut-based insurance company, or an HMO in Philadelphia, or a bank in the Southwest (to name three I spoke with recently) from embracing on-demand technology.

    To be sure, cloud providers will offer up portability, or the ability to run a “hybrid” cloud that’s partly in their data centers and partly in someone else’s. But each time the cloud provider caters to “traditional” enterprise needs, they’ll do so at the expense of operating efficiency.

    For example, if a cloud provider agrees to let a customer dictate where their bits are stored, that provider loses the ability to move data around for efficiency and disaster recovery purposes. Every compromise is an inhibitor to a truly on-demand world.

    Imagine that customers got to say which dam their electricity came from, or what kind of coal was burned to make it. Consider how much more complex everything — from sourcing to billing to auditing — would be. That’s analogous to the challenge true clouds face.

    Great, thought-provoking, piece.

  38. Timothy M. Kunau » Monkchips: 15 Ways to Tell It’s Not Cloud Computing Wednesday, July 2, 2008

    [...] (See also: Gigaom: 10 Reasons Enterprises aren’t ready to trust the Cloud) [...]

  39. Ten Reasons Enterprises Aren’t Ready to Trust the Cloud | Stacey Higginbotham | Voices | AllThingsD Thursday, July 3, 2008

    [...] Read the rest of this post Print all_things_di220:http://voices.allthingsd.com/20080703/higginbotham-3/ Sphere Comment Tagged: Amazon, GigaOm, Stacey Higginbotham, Voices, cloud computing | permalink [...]

  40. People Over Process » links for 2008-07-03 Thursday, July 3, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud – GigaOM (tags: cloud top10 fud via:EnterpriseIrregulars) [...]

  41. Anna Liu’s Weblog : From Impedences to Enterprise Adoption of Cloud Services to Doing Things differently in the Brave New World Thursday, July 3, 2008

    [...] blogged about the 10 Reasons Enterprise Aren’t Ready to Trust the Cloud. Immediately, the conservative enterprise architect in me couldn’t have agreed [...]

  42. ElasticHosts Friday, July 4, 2008

    Interesting article – let me offer another vendor perspective from ElasticHosts (we provide UK-based virtual servers on our cloud computing infrastructure):

    #1 – Security: Cloud Computing is as secure as any 3rd party data center or hosting provider – and IT outsourcing is very well established and in use by most companies and industries.

    #2 – Logging: Since our customers have full root access to their virtual servers, they can log anything that they wish.

    #3 – Platform Agnostic: A good cloud vendor will provide the ability to run images of any operating system – for instance, the ElasticHosts platform is based on Linux KVM virtualization, and so will run images of any PC operating system and software: Windows, Linux, etc.

    #4 – Reliability: Any hosting service, internal/external, cloud/not, can experience downtime. Cloud providers at least have the option to migrate customers services elsewhere in their infrastructure cloud – for instance, ElasticHosts stores clusters physical servers, using RAID 6 to keep customer data secure, and can bring up customer virtual servers on different physical hardware in case of failure.

    #5 – Portability: See #3 – with platform agnostic clouds, there will be few or no platform portability issues.

    #6 – Environmentally Sustainable: The McKinsey/Uptime report “Revolutionizing Data Center Efficiency” clearly identified virtualization as a key to maintain good levels of utilization and energy efficiency. Cloud vendors are in a unique position to optimize their allocation of virtual to physical servers and hence attain better energy efficiency than traditional hosting.

    #7 – Physical servers: Location of physical servers is indeed important for legal jurisdication (e.g. US Patriot Act National Security Letters and the EU Personal Data Protection directive). Cloud vendors will have to provide clouds physically located in multiple jurisdictions, near our customers – for example, ElasticHosts is one of few cloud vendors with a UK location (or indeed a European location!).

    #8 – Speed: Network speed is indeed critical, but a cloud vendor physically located near the customer (see #7) will be able to provide good latency and bandwidth (e.g. as a UK-based cloud vendor, ElasticHosts can provide 1 Gbps bandwidth and <5ms latency to customers on the UK internet backbone).

    #9 – Internal Clouds: Whilst big firms may have large in-house data centers and IT shops, it would be extremely unusual for these to offer the advanced feature set that today’s 3rd party cloud vendors can provide – e.g. the speed of provisioning, scaling and web-based management.

    #10 – Bureaucracy: I would place big firm bureaucracy as a reason that big firms will use 3rd party cloud vendors – the internal IT shops will not react quickly enough to provide an alternative.

    Richard Davies
    ElasticHosts

  43. Architects Rule! : 10 Reasons Enterprises Aren’t Ready to Trust the Cloud Friday, July 4, 2008
  44. tony greenberg Sunday, July 6, 2008

    Cloud utility is like mass transport. At certain points in history and specific regions / situations, resource constraints made trains / buses ascendant. But the personal car has not gone away, and neither will the standalone PC or server. When gas is expensive, more people take the bus. When storage & processing power (and for that matter, the space and electrical power behind it) is expensive, more people use utility. When storage, processing, and data center space / power are dirt cheap, more people are ok with spending a bit extra on standalone machines.

    But besides cost, there are many reasons why people buy and drive cars – it’s a form of self-expression, a hobby, and a thrill of being in control. The hobby / thrill aspects are relevant to what we call the “server-hugger” – someone who won’t even outsource the data center or won’t put it more than 10 minutes’ drive away without a good reason. And that’s something that has little place in well-run IT. But the parallel to self-expression through cars is competitive advantage through IT – like the customers we have that are paying a premium to put their servers within a few milliseconds of electronic exchanges they’re trading on. Mass-produced utility compute grids won’t be good enough for them any more than a bus will be good enough for a Porsche owner.

  45. racetalkblog.com » Q&A: Deciphering the Anomaly that is Cloud Computing Monday, July 7, 2008

    [...] Are large enterprises ready and willing to move into the cloud? Do they have a [...]

  46. racetalkblog.com » Q&A: Deciphering the Anomaly that is Cloud Computing Monday, July 7, 2008

    [...] Are large enterprises ready and willing to move into the cloud? Do they have a [...]

  47. sandip gupta Monday, July 7, 2008

    Stacey..great way to bring this discussion forward.

    People often forget that the compute infrastructure is dependent on the complexity of the apps. If the apps are going to be simple and can be boxed into predefined compute templates, then cloud surely has a lot of room to play. Which is/may be the case for early stage companies and why they are adopting the cloud…or in many cases standard applications from enterprises may land on the cloud as well. This scenario is no different than why simple/template based sites are hosted at large shared hosting environments at godaddy or web.com vs. complex/transaction based hosting infrastructure is hosted at rackspace and/or savvis.

    Very few enterprises have an implementation of the cloud internall because there are not too many tools/technologies that allows them to do it painlessly. Addionally the enterprise IT is focussed on providing technology platforms (a lot more flexibility and custom approach) based on internal customer needs vs. a “cloud”-like managed service (standardized and templatized). The first one is like building a computer in a workshop by assembling various components vs. the second is where you buy a computer itself.

    The adoption of the cloud within an enterprise will happen over time..initially for simple/standard application and eventually running powerful internal clouds with a lot of flexibility and reliability..

  48. On the move to the clouds, an awesome post… at diversity.net.nz Thursday, July 10, 2008

    [...] Higginbotham wrote a provocative post that fired up a lot of people detailing 10 reasons why cloud computing won’t take of within [...]

  49. Cloud computing – will enterprises trust? « About Myself Monday, July 14, 2008
  50. Network Managment Links for 2008-07-15 « Network Observations Tuesday, July 15, 2008

    [...] 10 Reasons Not to Trust the Clouds – It’s a trendy buzzword among the IT pubs, but enterprise IT folks aren’t bitting. GigaOm offers thoughts on why there isn’t a quicker move to cloud computing by larger companies. Possibly related posts: (automatically generated)Securing VoIP CallsGigaOM Interview: Citrix CTO Simon Crosby on Xen, Microsoft & VMware [...]

  51. John Connell » Blog Archive » Cloud Computing: some way to go? Friday, July 18, 2008

    [...] Stacey has listed 10 Reasons Enterprises Aren’t Ready to Trust the Cloud. She mentions security, reliability, platform agnosticism, environmental sustainability, amongst [...]

  52. AppNexus solves many of the “Enterprise” problems of the cloud – Security, VLANs, dedicated hardware, and multiple data centers (reliability and geo-diversity). We enable customers to build complex, load balanced, distributed applications across multiple data centers in just a few hours. We have the scalability and ease of use that Amazon EC2 has, but the finished product, a virtual data center, looks and operates like a multi-location enterprise data center operation. We support both LAMP apps and Windows apps.

  53. Links List 7.18.08 | ScienceLogic Friday, July 18, 2008

    [...] Higginbotham adds a “dose of reality” to the cloud computing craze in her post on “10 Reasons Enterprises Aren’t Ready to Trust [...]

  54. S3 Outage Highlights Fragility of Web Services – GigaOM Sunday, July 20, 2008

    [...] said, the outage shows that cloud computing still has a long road ahead when it comes to reliability. NASDAQ, Activision, Business Objects and Hasbro are some of the large [...]

  55. Scale Fail : Beyond Search Monday, July 21, 2008

    [...] can read his full post here. For me, the key point in his analysis was: That said, the outage shows that cloud computing still has a long road ahead when it comes to reliability. NASDAQ, Activision, Business Objects and Hasbro are some of the large [...]

  56. andy.edmonds.be › links for 2008-07-22 Monday, July 21, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud – GigaOM Some valid reasons for “enterprise” hesistance on adopting cloud techs. (tags: cloud cloudcomputing infrastructure sla@soi) [...]

  57. Derek Cheng Monday, July 21, 2008

    Is the issue with cloud computing really around trust? I think that’s the fundamental issue I have with this article.

    All new technologies incur some risk, but so do traditional on-premise technologies. The risk enterprises face by not having a cloud strategy include:
    – Can they innovate fast enough if they build their own architectures?
    – Are they spending unnecessarily on architectures when they should be trying to solve business problems?
    – Are they putting their data at risk within a series of aging legacy systems?

    Cloud computing is another weapon that IT can leverage to serve a growing list of demands by their constituents (who incidentally are more distributed and more web-oriented). It’s not like everything has to be on the cloud, but everything definitely needs to be cloud friendly.

    Derek Cheng
    LongJump

  58. Cloud Computing Pros and Cons « Network Observations Tuesday, July 22, 2008

    [...] Cons [...]

  59. 451 CAOS Theory » Who will build the open source cloud? Wednesday, July 30, 2008

    [...] of a number of reasons holding them back from more rapid adoption of cloud computing are the ability to migrate [...]

  60. Cloud Computing is not all about outsourcing and moving your computing to other vendors. A more likely scenario is that Enterprises like Morgan Scenario will build Cloud Computing Grids in their Enterprise.

    http://www.gandalf-lab.com/blog/2008/07/discussion-of-adoption-of-cloud.html

  61. 10 Reasons Enterprises Aren’t Ready to Trust the Cloud | Whatsup Thursday, July 31, 2008

    [...] gigaom…. To [...]

  62. AT&T’s Cloud Offering is Foggy – GigaOM Tuesday, August 5, 2008

    [...] So it does seem that despite the continued use of the word hosting and utility computing peppered throughout the announcement, that somewhere there is a cloud. My guess is there are a whole range of services being offered here, all with an AT&T’s service level agreement. That could interest cloud-leery enterprise customers. [...]

  63. AT&T’s Cloud Offering is Foggy – GigaOM Tuesday, August 5, 2008

    [...] So it does seem that despite the continued use of the word hosting and utility computing peppered throughout the announcement, that somewhere there is a cloud. My guess is there are a whole range of services being offered here, all with an AT&T’s service level agreement. That could interest cloud-leery enterprise customers. [...]

  64. Satisfy Me : Apple, Microsoft, Imagine Cup winners and lots of other news in the reading pile last week Friday, August 8, 2008

    [...] 10 Reasons Enterprises Aren’t Ready to Trust the Cloud – GigaOM —  “Because as important as cloud computing is for startups and random one-off projects at big companies, it still has a long way to go before it can prove its chops. So let’s turn down the noise level and add a dose of reality.” [...]

  65. Clinical Research and the Cloud…two great things that don’t go together (yet). « The OpenClinica Blog Wednesday, August 13, 2008

    [...] this month, I read a post over at GigaOM entitled “10 Reasons Enterprises Aren’t Ready to Trust the Cloud“. The article busts through a lot of the gee-whiz aspects of cloud computing and brings us [...]

  66. Is the Cloud Right for You? Ask Yourself These 5 Questions – GigaOM Wednesday, August 13, 2008

    [...] have an in-house technical staff to do their bidding, but existing data centers and deep pockets? Stacey has already identified issues with some cloud providers, such as security, reliability and portability. However, assuming they are all resolved, are there [...]

  67. » Why use an internal compute cloud? Wednesday, August 20, 2008

    [...] IT investments and some ways in which such an architecture would be used. Ken references some misgivings industry folks have about moving to a cloud computing infrastructure, and I honestly [...]

  68. In the Clouds « Charnell Pugsley Thursday, August 28, 2008

    [...] Clouds. Stacy Higginbotham over at GigaOM posted an interesting article back in July titled, “10 Reasons Enterprises Aren’t Ready To Trust The Cloud.” In this article she gives some pretty valid reasons such as security or not being platform [...]

  69. Cloud Computing – BurningBoats.com Wednesday, September 10, 2008

    [...] Ten Reasons Enterprises Aren’t Ready to Trust the Cloud – GIGAOM [...]

  70. Citrix Aims to Make Enterprise-Friendly Clouds – GigaOM Tuesday, September 16, 2008

    [...] this year, I wrote that enterprises aren’t ready to trust the cloud. It was nice to hear Crosby agree. “It’s very early for enterprise consumption of cloud [...]

  71. Amazon announces Windows based EC2 Instances | CloudAve Wednesday, October 1, 2008

    [...] articles by Zemanta 10 Reasons Enterprises Aren't Ready to Trust the Cloud Windows Server 2008 to challenge adopters Microsoft VC Conference – Steve Ballmer's View On [...]

  72. Will Microsoft Tempt Enterprises To Try the Cloud? – GigaOM Tuesday, October 28, 2008

    [...] Brigid Gaffikin, Tuesday, October 28, 2008 at 12:44 AM PT Comments (0) A quick and very unscientific poll of developers at the Microsoft Professional Developers conference in Los Angeles this week suggests that even the Microsoft brand might not bring enterprises rushing headlong into the cloud. [...]

  73. Glum Economy Brings On Good Times for Joyent – GigaOM Friday, October 31, 2008

    [...] at Microsoft’s Professional Developers Conference earlier this week suggested there’s still broad anxiety around the security and reliability of cloud storage. But companies feeling the pinch of the credit [...]

  74. Enterprise SaaS is Mainstream. Today. « SmoothSpan Blog Monday, November 3, 2008

    [...] all heard the list of objections about the cloud or SaaS many times.  Chief among those arguments are security, reliability, and [...]

  75. IBM Gives Cloud Computing a Seal of Approval – GigaOM Sunday, November 23, 2008

    [...] Cloud Validation program. Big Blue hopes to work with cloud providers to offer a program that reassures businesses that a cloud doesn’t go down often as well as helping answer other questions that keep [...]

  76. Kaizen Bits :: Partly Cloudy Again Tuesday, November 25, 2008

    [...] Cloud Validation program. Big Blue hopes to work with cloud providers to offer a program that reassures businesses that a cloud doesn’t go down often as well as helping answer other questions that keep businesses [...]

  77. For Sun, Q-Layer is a Smart Buy Thursday, January 8, 2009

    [...] Q-Layer, Sun is making a strong push into the emergent private cloud market. Many enterprises are still sitting on the fence and are hesitant to use public clouds like Amazon’s, although I think that opinion is going [...]

  78. IBM Beefs Up Tivoli for the Cloud Monday, January 26, 2009

    [...] managers that buy its software are looking for help controlling their work flow in the cloud, maybe enterprises are willing to embrace the idea of using clouds inside the corporate firewalls or for mission-critical jobs. Enterprises may be ready to use [...]

  79. IBM Beefs Up Tivoli for the Cloud « TheStructureBlog Thursday, January 29, 2009

    [...] managers that buy its software are looking for help controlling their work flow in the cloud, maybe enterprises are willing to embrace the idea of using clouds inside the corporate firewalls or for mission-critical jobs. Enterprises may be ready to use [...]

  80. Amazon Motivates Savvis Into Offering a Compute Cloud Thursday, February 12, 2009

    [...] Posts: * 10 reasons why enterprises aren’t ready to trust the cloud * How cloud & utility computing are different * Five computer clouds are all we need * [...]

  81. Amazon Motivates Savvis Into Offering a Compute Cloud | The Click Thursday, February 12, 2009

    [...] Posts: * 10 reasons why enterprises aren’t ready to trust the cloud * How cloud & utility computing are different * Five computer clouds are all we need * [...]

  82. Cloud Computing Is a Tool, Not a Strategy Thursday, February 19, 2009

    [...] It was kind of like an enterprise IT pep talk. Which was nice, especially since the rest of the webinar was a bit of a downer for anyone hoping that the availability of on-demand computer resources was going to make their jobs easier. Instead, HP thinks IT’s role becomes one of evaluating the best cloud for a specific job. Things to consider include service-level agreements in various clouds, where a cloud may be located, and several other factors we’ve previously mentioned as well. [...]

  83. Amazon EC2 Inches Closer To Corporate Customers Thursday, March 12, 2009

    [...] 10 Reasons enterprises aren’t ready to trust the cloud. [...]

  84. Rackspace Offers Cloud Computing for Cautious Customers Thursday, March 12, 2009

    [...] as customers move to the cloud. For many businesses who are worried about issues associated with throwing their data in the cloud, this could be a way to get them familiar with the [...]

  85. Clouds Can Be Secured, So Let’s Talk About the Real Issues Monday, April 6, 2009

    [...] security concerns. I came away from it thinking what a shame it is that the government, and likely many average citizens, has such a bad perception of cloud security when in fact their own internal networks are not likely to be nearly as well [...]

  86. iGATE Blog » Now Internal Clouds Tuesday, April 28, 2009

    [...] issues or because of the comfort factor. Now you have to find some newer excuse not to get (link: http://gigaom.com/2008/07/01/10-reasons-enterprises-arent-ready-to-trust-the-cloud/)  in the [...]

  87. Zen 2.0 » Blog Archive » Response to “10 Reasons Enterprises Aren’t Ready to Trust the Cloud” Saturday, May 2, 2009

    [...] Higginbotham over at GigaOM wrote an interesting piece on 10 Reasons Enterprises Aren’t Ready to Trust the Cloud. Even though I agree that some of these points are valid reasons on why enterprises are hesitant in [...]

  88. CSC Cloud Strategy Revolves Around Security for the Enterprise Monday, June 1, 2009

    [...] from folks who are considering Rackspace’s CloudServer product. Those folks may need a better service level agreement or exact knowledge about where their data is being stored than what Amazon currently offers. The announcement also leaves me wondering when IBM and HP are [...]

  89. Everything You Need to Know About Microsoft Azure Tuesday, July 14, 2009

    [...] an impressive first step, at least on paper, complete with competitive pricing and lots of concessions designed to get enterprise customers to shift over their IT operations. It also has the potential to become a platform as a service, [...]

  90. Everything You Need to Know About Microsoft Azure Tuesday, July 14, 2009

    [...] it’s an impressive first step, at least on paper, complete with competitive pricing and lots of concessions designed to get enterprise customers to shift over their IT operations. It also has the potential to become a platform as a service, [...]

  91. hosting, small and large « Netcultures Wednesday, October 21, 2009

    [...] Sundry other issues [...]

  92. 2 Years of Chips, Broadband and You! – GigaOM Thursday, January 7, 2010

    [...] the semiconductor industry, the expansion of super-fast broadband to many areas of the country, the emergence of cloud computing and a newly active Federal Communications Commission.  I’ve tried to share my struggles with [...]

  93. the biggest danger is use of these services as paid botnets to do attacks or scrape for emails

  94. Walter Adamson Thursday, July 15, 2010

    I like your posts and I understand that you need to keep them coming and this one I just put in the category of your own keeping up the “noise” about cloud. Conservatism wins early, sales people make the most of it, and then it’s all history.

    When Sharp Corporation took a phone with a camera to NTT DoCoMo in 2001 DoCoMo said “who the hell would want a camera in a phone?”. That gave birth to the biggest spurt in J-Phone’s growth when they jumped at the idea and launched the camera phone and sent shock waves through the competition.

    95% of internal IT can’t compete with where cloud is headed, but I’m sure lots of FUD column space will be filled in the meantime.

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