Comments on: Why McKinsey's Cloud Report Missed the Mark

By: Businesses Bucking Cloud Computing « Fiducial Marks – Paul Bissett, WeoGeo CEO

Wed, 09 Sep 2009 15:38:08 +0000

[...] What about the other Infrastructure-, Platform-, and Software-as-a-Service products? My own thoughts are that outside of the tech industry, these other services do not appear to be as easily compartmentalized within an organization. Most business applications seem to run on workstations or internal services quite fine, and the downtime of those processing units just don’t seem to resonant with the IT and business leaders of an organization. In addition, the “simple math” of extreme costs savings (a la Google Mail) of moving more complicated operations to cloud services has yet to be definitely proven. [...]

By: What Happened in Cloud Computing in Q2? | Tech Daily

What Happened in Cloud Computing in Q2? | Tech Daily — Tue, 21 Jul 2009 01:12:49 +0000

[...] not all cloud news was good news. The quarter started with an April report by McKinsey & Co. that questioned the true cost savings of cloud computing, putting cloud providers and pundits on [...]

By: Rich

Rich — Mon, 20 Jul 2009 22:47:48 +0000

I’d love to see the report before I comment but I’d have to believe that Enterprise customers MUST have tons of data that hasn’t been touched in years, will never be touched for the next 10 years, but needs to be stored anyway…

I bet that Enterprises would like to control the ‘here and now’ while archiving the rest… I gotta fiigure the ‘here and now’ is about 20% of their total data and the rest is the 80%. At some point, some Enterprise CIO will realize that yesterday’s stuff isn’t worth today’s talent and investment

By: What Happened in Cloud Computing in Q2?

What Happened in Cloud Computing in Q2? — Mon, 20 Jul 2009 16:01:21 +0000

By: Peaking Through the Clouds | Design Website

Peaking Through the Clouds | Design Website — Thu, 25 Jun 2009 19:19:21 +0000

[...] consistent demand, a hybrid data center/cloud solution may reduce total cost. However, given that a recent report showed that cloud services might cost twice as much as an enterprise do-it-yourself approach, a [...]

By: Peaking Through the Clouds

Peaking Through the Clouds — Thu, 25 Jun 2009 07:16:36 +0000

By: How Clouds Can Complement Consolidation

How Clouds Can Complement Consolidation — Thu, 18 Jun 2009 04:02:05 +0000

[...] power needs. McKinsey & Co. has argued the opposite, complaining that cloud services are too expensive. However, for most businesses, the truth is somewhere in between; whenever demand is variable or [...]

By: Fearless Bytes V « Fearless Bit

Fearless Bytes V « Fearless Bit — Thu, 14 May 2009 01:36:13 +0000

[...] Why McKinsey’s Cloud Report Missed the Mark On my April 19th post, I referred to a McKinsey study regarding the real cost of moving your business to the “cloud.” Joe Weinman at GigaOM points out that this isn’t such a black-and-white issue. Much like there’s a valid, proven business model for renting cars at 5 times what it costs to own, there are reasons why someone might want to use “the cloud” even if it’s actually more expensive because it’s more flexible (e.g. you can instantly fire up 1,000 servers — try doing that at your own datacenter) which can translate into cheaper overall [...]

By: Is the"Cloud only a question of money? - Manufacturing and Distribution Industries

Wed, 29 Apr 2009 07:12:04 +0000

[...] is intense and that arguments diverge. TechCrunch finds the report partly cloudy, Gigaom feels it missed the mark, while Gartner feels it lacks analytical rigor. And I could go on like that. But my question is [...]

By: McKinsey FUD Revisited | CloudAve

McKinsey FUD Revisited | CloudAve — Mon, 27 Apr 2009 18:49:48 +0000

[...] make a career talking about traditional software world. Of all the analysis, I was impressed by the model put forward by Joe Weinman. He correctly pointed out to the role of Cloud Computing in the [...]

By: Nick Wright

Nick Wright — Fri, 24 Apr 2009 17:22:00 +0000

It may be a jaundiced view, but I can see the Cloud as providing a number of exceptional benefits that must have a value, though it is true that these will depend on this existence of weak, slow IT departments and CIOs who aren’t paying attention.

As an example, the keen-to-get-on end-users may be thwarted by dullards in the IT department. Amazon Services, plus a contract or two, and end-users can get their application whatever the blue meanies say. Very bad for the corporate IT policy of course, but if the users have the political clout they will get their way and the CIO will lose face.

But the view is not clear for other reasons. In the UK at least, government splits its money between Capex and Opex (Resource) in an utterly divided way. There’s always plenty of Capital (I exaggerate) but never enough Resource money in the annual budget. Resource will now have to stretch to paying for the Cloud – you certainly can’t pay-as-you-go out of Capital. It might be easier for the government people to buy a few more servers rather than wipe out the staff bonus.

By: Ian Bell

Ian Bell — Thu, 23 Apr 2009 22:52:25 +0000

The economics of scale that benefit cloud computing emerge from the sharing of unused compute cycles, storage, RAM, etc. and to a lesser extent from shared OAM&P costs — but mostly from elasticity. I agree that this is really a TCO debate but the car rental analogy, while pretty cool, only helps the argument stretch so far.

McKinsey, rather typically, has it all wrong… but I doubt there are many of us in the technology industry who are surprised by that. I find it ironic that the author works for AT&T: a company once advised by McKinsey that the mobile phone market would be no greater than 100,000 users nationwide. AT&T later had to buy their way into the wireless business, creating billionaires in the McCaw family.

Next time you bump into one of McKinsey’s freshly-minted MBA’s in the hallway, Joe, maybe throw in a little elbow. :)

By: dunsany

dunsany — Thu, 23 Apr 2009 22:09:41 +0000

Cool, but what about Zipcar?

By: Kiran

Kiran — Thu, 23 Apr 2009 06:41:20 +0000

I am in all support of cloud computing in general and its potential for enterprises. However, I got to say this article is very weak. I see that Roman Geyzer has done better job of trying to break down the several costs involved, the article should have been more in that lines.

By: 12Sided, The Blog » Why McKinsey’s Cloud Report Missed the Mark

12Sided, The Blog » Why McKinsey’s Cloud Report Missed the Mark — Wed, 22 Apr 2009 23:15:15 +0000

[...] Why McKinsey’s Cloud Report Missed the Mark by Joe Weinman at GigaOM is another good read on the now infamous McKinsey Cloud Report. [...]

By: Roman Geyzer

Roman Geyzer — Wed, 22 Apr 2009 17:29:00 +0000

It’s easy to knock cloud computing as being more expensive than outright ownership when you’re comparing a clear-cut cost for c-computing vs a hard-to-quantify in-house TCO.

What is the cost of:
1) In-house servers’ inability to scale with demand or meet an unexpected service level? (SLA not met)
2) In-house server’ inability to be quickly re appropriated due to reduction in demand? (Idle equipment)
3) Downtime associated with in-house servers’ lack of redundancy? (Downtime)
4) Retention/development of skilled in-house resources to manage the platform? (OAM)
5) In-house servers’ procurement time on project scheduled? (Project Cost)
6) Additional development overhead performance tuning applications due to hardware restrictions? (Dev Cost)
7) Provisioning remote access to in-house server applications (Infrastructure Costs)

Clouds these days do not simply represent on-demand hardware. They are as much a software platform as they are a hardware resource. Companies don’t just roll-out Linux and Windows Servers and tell their users to just “do their jobs”. They actually run applications on these servers. To forget about the considerable value gained from the software-side of the cloud computing analysis does not fairly account for the true cost.

This is not to say that c-computing is appropriate in all cases. Many times, there are good reasons to stay away or where it is not feasible (disconnected environments), but the analysis must look at it more holistically than just a bean-counter review of the hardware economics.