“are there compelling reasons for LARGE enterprises to even be interested in cloud services? And if so, under what conditions?”

A large enterprise has almost certainly adopted virtualization technologies: as an example, VMware reports that they have 100% of the Fortune 100 as customers, and 95% of the Fortune 1000 (The remaining 5% are probably also leveraging virtualization, they just may not be VMware customers). Consequently, a cloud service provider does not generate economic value for such a customer merely by enabling virtualization.

Large enterprises also typically have extensive technical capabilities; the ability to exploit volume purchasing agreements; the ability to leverage economies of scale and operations automation; and standardized development frameworks, environments, and tools. Consequently, I don’t believe that those attributes in and of themselves are compelling for most large enterprises to pursue a cloud-based strategy.

The executive summary of my original article is: smaller companies, including startups, clearly benefit from clouds for the reasons that you and I mention; AND, large enterprises — even with substantial deployments of virtualization, deep technical capabilities, volume purchasing, standardized environments, data center automation, and everything else — can ALSO benefit, primarily by leveraging the cloud’s scalability coupled with a usage-sensitive pricing model for bursty, unpredictable, and/or uncontrollable demand, and by leveraging a cloud’s geographic dispersion, especially for highly interactive applications accessed by a global user base. There are a number of such demand types: seasonal spikes, quarterly book closes, special promotions and events, and ones that you mentioned, such as QA. Lastly, the vast majority of the largest enterprises are already primarily global, or are increasing their global presence, implying globally dispersed users, such as employees, supply chain partners, customers, or other stakeholders.

First, I think experimentation is a big factor in cloud computing. IT is in a constant struggle between efficient use of capacity (have a few machines and maximize them) and ability to respond to new service requests (have spare machines ready to go at the risk of being idle.)

The comparison you’re making is really one of a truly virtualized private data center (with CPUs running at 80% or so) versus a cloud environment (pay as you go.) Prior to virtualization, it didn’t make sense to run your own data center. So I would offer that full virtualization is a precursor to your arguments, and many smaller companies aren’t virtualizing their compute infrastructure. For them, moving to a cloud environment gives the economic benefits of virtualization.

Second, we need to consider operational effectiveness. If a company is big enough to hire specialists, fine. a huge investment bank may have several full-time developers building custom operational software, or the leverage to beat up suppliers. But for most firms, they can’t compete with the buying power or economies of scale of a cloud’s operations.

It’s not just about computing utilization; it’s about overall efficiency. If something is a commodity — as computing is today — then it needs to go where it’s most efficient. If that happens to be a damn in Les Dalles, that’s the right place for it.

Third, we have to look at the ability to develop quickly. Clouds aren’t just virtual machines. They’re other services, such as storage (Bigtable) and message queueing (SimpleDB.) If that accelerates development and reduces the need for internal employees to run things (such as doing database administration) it will often be a better choice.

And fourth, there are parts of an IT organization — specifically, QA, testing, and training — that will never have constant demand. They are by nature bursty. It’s one of the reasons Skytap is getting so much traction: They focus on the bursty QA department. QA is a gateway drug for cloud computing.

Your comparison model is a good one, but only for really big companies that have already bought into virtualization and that have a staff as comprehensive as those of a cloud operator.

Although I see a trend to more and more applications and services needing to be moved, because of their increasing demand.

If they need to respond to some relatively new requirement on IT or/and each will require a different sort of control over corporate data that was previously necessary. Some concrete application the author mentions is e-Discovery, as this one is taking some time for the IT & Legal departments alike.

Best. alain http://www.mor.ph