This week I spent several days at the Uptime Institute's Symposium 2009, a conference where facilities management meets IT. The focus for this year's conference was on Green. I spoke several times, moderatig a panel on outsourcing versus cloud computing, and giving a mini-keynote on SaaS and Cloud Computing.
At that conference, McKinsey announced a report on Cloud computing, claiming that the economics only made sense for small and medium sized companies but not for enterprises with their own data centers. The analysis then compared the cost of using Amazon's service with the cost of a typical data center. McKinsey also assunmed that the firm would move all of its computing to the cloud -- we don't know of any organizations that plan to do that.
As you might guess lots of conversation and controvery ensued.
I guess I'd say they don't understand. Cloud computing may not be cheaper if all you're looking at is a comparison of hardware and an assumption of people costs. The value of cloud computing lies elsewhere:
Many large companies are already taking advantage of SaaS -- Workday, for example, has clients for its HR and Financials with more than 20,000 employees. Public clouds can be ideal places for large companies to use specific applications or obtain additional capacity. Private clouds (which may not be clouds at all, in the sense that the organization may own the hardware and software rather than temporarily rent its use) are intended primarily for large enterprises. I am certain that schemes which will make these private clouds into capital-free propositions (if not available on a month-to-month basis) is available to any customer who requires it.
I expect clouds to be popular under any circumstances. Given our current financial probems, I expect them to appeal to a broader audience, especially to large enterprises.
It's good that there are companies going for the cloud computing option. But there still has to be an offline backup of everything that has been done on the cloud to ensure data synchronicity.
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Posted by: Keycomm Online | June 24, 2010 at 07:45 AM
SaaS / Cloud computing enable companies to focus on what's most important to them. Enterprises that don't have core competencies in technology or data center management get huge benefits by finding vendors that specialize in solutions that fit the needs of the enterprise and enable the business.
Large enterprises may require more time to make the transition, but many business units and divisions are already realizing the gains of SaaS / cloud computing today and are often recognized as pioneers for these initiatives.
I think there will be two interesting patterns to observe: 1) how the technology platform evolves and how various types of "clouds" integrate with each other; 2) how it affects the landscape for the development and procurement of new business solutions.
Posted by: Ming Wu | August 14, 2009 at 06:43 PM
I think that we see here a fundamental architectural shift, which is more visible perhaps in the SaaS application market but is nevertheless gaining significant foothold as “private cloud”.
It might be useful to segment the SaaS phenomenon between the Usability aspect and the Business Model. Private Clouds and RIA go after the Usability, which I start to think is a stronger driver than the Business Model.
Posted by: Avigdor Luttinger | May 27, 2009 at 07:21 AM
most large companies take advantate of saas accounting software nowadays.
Posted by: Jan | April 24, 2009 at 02:02 AM