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Summary:

Both sides of cloud computing’s “enterprise readiness” debate are likely to have merit for years to come, as security, data portability and data accessibility represent just some of the issues that still need to be ironed out. But no matter which side you favor, I see […]

Both sides of cloud computing’s “enterprise readiness” debate are likely to have merit for years to come, as security, data portability and data accessibility represent just some of the issues that still need to be ironed out. But no matter which side you favor, I see two areas of cloud computing, at least in terms of the enterprise, as a fait accompli. These are undeniable truths about the state of information technology, from the cloud to the enterprise, that will impact how businesses and individuals make decisions.

Pricing Transparency — Prepare Your Pencils

Whether businesses jump into cloud computing right away or later on, the pricing transparency from cloud providers completely changes enterprise practices for benchmarking IT costs. Companies routinely spend big bucks to understand IT expenses and effectiveness. Top-line ratios based on R&D dollars to revenue are easy to find in SEC filings, but more detailed metrics were part art, part science, shrouded in a murky haze of corporate intelligence.

Cloud computing has changed all of that. Now you can understand exactly how much it costs to rent an x86 server, a terabyte of storage, or a content delivery service with just a few clicks to Amazon Web Services or a host of other providers. Transparency can be granular, too. Amazon S3 now differentiates between storage capacity, data transfer in and out, and number of individual requests.

Whether you use these services today, tomorrow, or far off in the future, measuring the costs and rewards of technology investments will never be the same.

Departmental Decisions — “The Outerprise”

It used to be that deploying a new application meant days or weeks of research, approvals, budgeting, planning and setup. Now it means that individuals outside the enterprise IT domain can pick a service offering of their choice, select a plan, and pay for it themselves. The barriers to start are low, the benefits of scale are high, and the decision gets boiled down to the simplicity of a free trial or impulse purchase.

Granted, this is not the likely sequence of events for major enterprise systems, but for those swirling around outside of the enterprise, in the “outerprise.” Think departmental tools like project management, tailored campaign tools for marketing, an extra reporting service for finance, or an outsourced compute job by a creative developer — the possibilities are limitless.

With corporate IT no longer the sole control point for new application deployments, we’ve only begun to scratch the surface of what an individual worker can accomplish. Perhaps the ecosystem of applications that emerge from “outside the enterprise” will provide the most compelling opportunities, and make application choices more friction-free.

It’s a Choice, Not a Mandate — Let the Markets Prevail

Depending on who you ask, cloud computing may or may not be “enterprise ready.” But everyone agrees the enterprise has already been impacted by cloud computing. Its very existence has marked a turning point in the way companies evaluate and buy new technology.

The emergence of near-universal pricing transparency is an industry first, as far as I can tell. And the opportunity for individual contributors to scope and deploy applications that suit unique needs completely changes the potential growth path of commercially available applications.

These forces will shape the enterprise like never before, breaking down pricing obscurity and bypassing controlled application deployments. With both constraints removed, we have a lot of decision-making ahead of us.

  1. [...] The Enterprise Impact of Cloud Computing – GigaOM [...]

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  2. Gary, I think your comments are spot on. The only other aspect of cloud computing I’d add is cost variability. When you put cost transparency, scalability and cost variability, we have a new challenge and opportunity for IT organizations.

    Implicit to cloud computing is the notion of the IT “service catalog” – the system that presents the offers, the costs, units of measure, and allows for self-service configuration, ordering and account management.

    With cloud computing, IT organizations still need to define standards, workflow for authorizations, manage lifecycles, and chargebacks. IT will need to provide self-service portals for our user to request and get provisioned; portfolio and financial management to our business customers to make visible service levels, costs, and usage drivers. We will need to have system of record to define our service bundles, underpinning technical and professional services, automated provisioning, subscription life cycle management and billing.

    If IT doesn’t respond, the customers will go off the reservation. After all, use a credit card, and you are 16-digits away from freedom. This would be unfortunate because IT does a lot more than just operate hardware.

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  3. [...] sound like positive developments to me.  Gary Orenstein at GigaOM has a new post titled Enterprise Impact of Cloud Computing, in which he mentions the pricing and user control [...]

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  4. [...] The Enterprise Impact of Cloud Computing (GigaOM) [...]

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  5. Krishna Bhuyan Tuesday, April 14, 2009

    Here is an interesting article that provides an telco prespective for cloud computing and why an traditional telco would be in a advantage position as a cloud service vendor. http://www.on-demandenterprise.com/features/10_Reasons_Why_Telcos_Will_Dominate_Enterprise_Cloud_Computing_33745549.html

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  6. [...] The Enterprise Impact of Cloud Computing It used to be that deploying a new application meant days or weeks of research, approvals, budgeting, planning and setup. Now it means that individuals outside the enterprise IT domain can pick a service offering of their choice, select a plan, and pay for it themselves. The barriers to start are low, the benefits of scale are high … [...]

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  7. [...] Reducing these costs by creating options for deploying applications is the spirit motivating the move toward cloud computing. Contrary to some descriptions, however, cloud computing isn’t cheap computing; it is the [...]

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  8. [...] cloud computing, no one has entirely sorted out what’s hype and what isn’t, nor exactly how it will be used by the enterprise, what is becoming increasingly clear is that Big Data is the future of IT. To that end, tackling [...]

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  9. [...] to cloud computing, no one has entirely sorted outwhat’s hype and what isn’t, nor exactly how it will be used by the enterprise, what is becoming increasingly clear is that Big Data is the future of IT. To that end, tackling [...]

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  10. [...] sound like positive developments to me.  Gary Orenstein at GigaOM has a new post titled Enterprise Impact of Cloud Computing, in which he mentions the pricing and user control [...]

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