Blog Post

Cloud Computing Poised for Post-Recession Boom

[qi:gigaom_icon_cloud-computing] As 2009 kicked off, pundits were adamant that the dismal state of the economy would drive suddenly cost-conscious enterprise IT departments to the cloud. Anecdotal evidence from vendors pointed to more customer engagements, and general interest in cloud computing (which continues to increase) had never been greater. I questioned this conventional wisdom, wondering instead if the economy wouldn’t drive CIOs away from the cloud, fearful that any near-term misstep could be disastrous. A GigaOM Pro report (sub. required) by analyst firm TechAlpha suggests that, at least in the storage area, I may have been right.

In the report, which analyzes the forces commoditizing enterprise storage, authors George Gilbert and Juergen Urbanski write that leading storage vendors are planning their innovation around a 3-year time frame, expecting adoption of new storage technologies to coincide with emergence from the current recession. An accompanying survey supports this analysis, as a majority of respondents said they do not plan to incorporate new options, like cloud storage, before 2011. In the meantime, they’re sticking with what they know.

This stance makes sense for the overall cloud computing market, too. The short-sighted banking practices that contributed to the economic collapse retaught companies the age-old lesson about things that sound too good to be true. Smart CIOs are investigating the cloud, planning for a transition, running proof-of-concept projects, and even moving testing operations and batch workloads to it. But there’s little suggesting that any but the most cutting-edge companies are moving mission-critical production applications into cloud environments (public or private) any time soon. For many, moving to the cloud at this juncture simply entails too much risk, no matter how great the potential reward.

Like the storage business, though, the cloud computing industry is poised to capitalize when the economy rebounds. To that end, security concerns need to be sufficiently addressed, and enterprise-friendly cloud platforms –- some of which, like the Sun Cloud or Microsoft Azure, are not yet even functional -– need to be readied. (Just look at the way Amazon keeps marching forward with new capabilities.) When both the time and the technology are right, on-the-ball IT departments will be ready to reap the rewards.

The recession might not have catapulted cloud computing into ubiquity, but it has significantly increased the likelihood of mass cloud adoption when prudence dictates.

14 Responses to “Cloud Computing Poised for Post-Recession Boom”

  1. Derrick, Dead on. Our Fortune 500 customers and prospects are “experimenting” with the cloud by doing dev projects or application testing scenarios. NOT running full scale production apps. At least, not yet. Therefore, companies need to dig in and investigate how to migrate applications from dev/test in the cloud to behind the firewall servers. Scripts aren’t the answer. Which brings me to a bigger point. The tools for “data center automation” for the cloud are still immature. We have been blogging about that.

  2. Derrick,

    Dead on. Our Fortune 500 customers and prospects seem to be “experimenting” in the cloud with dev projects and testing scenarios, NOT with production applications yet. Maybe some day. Therefore, companies planning for the cloud, need to look at how to migrate apps from cloud dev/test to behind the firewall physical production servers. That is the deployment process that should be investigated right away. Full disclosure – our software does that.

  3. Esteban Trabajos

    My company is standardizing on VMware vSphere as its internal cloud platform. It does not require re-writing code to new APIs like Microsoft Azure or Google AppEngine or whatever. It works as advertised today straight out of the box.

  4. Smart CIOs are investigating the cloud, planning for a transition, running proof-of-concept projects, and even moving testing operations and batch workloads to it.

  5. Until there are third party ratings and certifications of cloud providers, SAAS, PAAS, etc., there will be no mass move for the large mid market users of server based capital line of business applications to the cloud.

    Until there are trusted ratings and the private, VC funded cloud / utility hosts are willing to let a confidential party have access to their books, one will never know how illiquid the venture is. Until these things happen, no underwriter will touch the client’s need for professional lines of business continuity coverage.

    Would you transition your 100 person company’s workgroup ERP solution to a cloud? With what assurances? It is one thing for a startup making a web app to go cloud, it makes sense. However, critical infrastructure moves will never happen until the cloud vendors open to ratings and the professional lines insurance underwriters rate and price the risk.

    To see how benighted the industry is and how they think, see