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Summary:

We saw intense debate last year about the benefits and risks of cloud computing in the enterprise. As customers look at how they can stay competitive in a turbulent economy, I predict we’ll see a welcome shift from software providers romanticizing cloud-based releases and feature sets […]

We saw intense debate last year about the benefits and risks of cloud computing in the enterprise. As customers look at how they can stay competitive in a turbulent economy, I predict we’ll see a welcome shift from software providers romanticizing cloud-based releases and feature sets to an industry dialogue that focuses squarely on what customers care about most: how to get most value out of their software investments — whether they live in the cloud or on premise — so they deliver the best experience for end-users across PC, phone and browser.

This shift is already underway. A recent Forrester Survey found that 56 percent of IT professionals intend to migrate to a blend of on-premise and externally-hosted email. Gartner has predicted that up to 15 percent of cloud computing deployments will be hybrid mixes of software and services by 2012. Clearly, businesses are examining how, when and what to migrate to the cloud and seeking best practices in running hybrid environments that will save IT dollars and resources — without compromising security, regulatory requirements, rich functionality and other critical enterprise considerations.

Here are five issues I believe will be front and center for business customers as they prepare for this evolution:

Value. What exactly am I getting for my money with my on-premise investments and cloud-based options? Lowering costs is a huge driver of IT decision-making, this year more than ever. But businesses should ensure that solutions that promise to save them money up front don’t end up leaving them shortchanged in the long run with reduced functionality, security vulnerabilities, limited support options, compatibility issues and lost productivity. In 2009, I believe that enterprises will get even smarter about due diligence that goes beyond the “low cost” headline.

Due Diligence. Where are the limitations and the opportunities for businesses looking to embrace the cloud for collaboration functionality? Industry analysts have been consistent in their guidance to enterprises here — look before you leap. Know what you gain and what trade-offs you might have to make — irrespective of whether your decision is to stick with on-premise, migrate completely to the cloud or adopt a hybrid model. In 2009, pragmatism will be the order of the day as enterprises strip away the hype, roll up their sleeves and get into the nitty-gritty of service-level agreements and uptime guarantees, data retention and privacy practices, support and maintenance, and customization options in order to make informed decisions about where the cloud represents the best option and where on-premise software fits the bill.

Timing. When does it make sense for a business to squeeze the trigger and shift portions of their productivity software and collaboration capabilities to the cloud? And when is it the right decision to keep some assets behind their corporate firewall? There is no one-approach-fits-all answer. Timing will be dictated by business priorities, and those are unique to each business. Companies that have lighter requirements around application feature sets or integration with other line-of-business applications may be on a faster migration path to cloud-based services. For others, the decision will be to migrate more selectively, based on their current software investments, requirements around service level agreements and Quality of Service, and in some instances, simply a desire to wait until the cloud “matures.”

The Right Tools. What do my employees really need? Who can get by with a “light” web-based email solution and whose work requires rich, full-featured functionality that is best delivered on the client? The needs of the “road warrior” sales manager, the millennial-generation student intern, the IT manager overseeing compliance, and the paralegal handling confidential corporate documents are all going to vary. Businesses will need to carefully consider these vastly different scenarios and get serious about how to segment their users.

Trust. Why am I choosing a particular vendor? What are that vendor’s unique enterprise strengths and weaknesses? Does the vendor have a long-term road map so you know you’re betting on the right long-term strategy for your business? Do they have a history of delivering world-class enterprise solutions? Trust, by its very definition, remains an elusive thing to define, and yet, anecdotal evidence suggests that the issue of trust around the cloud has been one of the toughest barriers to broad adoption by businesses. All vendors with a stake in the cloud can (and should) help the industry cross this barrier by demonstrating a higher level of transparency in their interactions with customers — whether those discussions are around security of the vendor’s cloud infrastructure, privacy policies, SLAs or data retention practices.

The year ahead promises to be a great year of discovery in which businesses large and small will compile their collective learnings on all of the above and look for ways to connect software and services in powerful ways for end-users.

Chris Capossela is a Senior Vice President in Microsoft’s Information Worker Product Management Group.

  1. How refreshing ! Finally a prospective commentary with it’s feet “on the ground” (if you will) regarding a correct Best Practice approach to the utilization of the rapidly evolving universe known as The Cloud. There is no reason for me to comment further on the content of this article , as , in my humble opinion , Mr. Capossela has clearly laid before us a common sense approach to this subject.Thank you.

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  2. I agree that the article addresses some of the considerations for companies looking at cloud solutions. The author’s bias when he opines that “… rich, full-featured functionality that is best delivered on the client.”

    First, a hosted or cloud-based email service is not mutually exclusive from any particular email client. We have many customers blending Outlook and other robust clients with Google Apps for email services.

    Second, the better cloud-based solutions offer features and capabilities that don’t exist or perform poorly in today’s clients. I think of a customer that can search over 700,000 historical emails for the few he needs in under a second.

    Finally, Mr. Capossela does discuss value beyond acquistion cost. Absolutely, the low cost headline is not enough. At the same time, businesses must learn to accurately assess the indirect and soft costs for solutions. Backups, high-availility, mobile access, integration, management, and administration all should be costs included in an assessment of any solution.

    As always, businesses should define their business requirements, that can then drive the technical requirements, design, and implementation of the most appropriate solution.

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  3. Chris has laid out a pragmatic approach to evaluating Cloud Vs On Premise computing choices. I do believe that all approaches (MSFT, CRM, Netsuite, SAP…) will have a blend of both but the center of gravity is moving towards the Cloud (With people using multiple devices, higher mobility, multiple work locations – the cloud becomes a more natural place to store “State” & “Data” ).

    But this goes against Microsoft’s DNA & approach which is more client based – hence its offerings & solutions will tend to be client centric with cloud options and that may not be the right long term solution desired by customers.

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