Cloud Computing - the Winners and the Challenged Posted By Daniel Kaiser, Esq. on February 2, 2010
Do you hear that noise? No? That noise you may or may not hear is the sound of a quiet revolution well underway. The cloud computing revolution is bringing along with it a gradual but dramatic wave of change to the world of network infrastructure, IT servicing, and business models. This transformation speaks to different parties in different ways with the promise of efficiencies and cost containment on the one hand weighing in against security and hidden cost worries on the other hand.
By way of a definition, Gartner Inc., the Connecticut-based IT research and advisory company offers the following five attributes of cloud computing: 1) Service-based, 2) Scalable and Elastic, 3) Shared, 4) Metered by Use, and 5) Uses Internet Technologies.
How does cloud computing affect you? Now is the time to find out and to plan your next move. Some factors to consider:
Automatic Winners:
- Data centers and cloud vendors. With the bulk of the migration to the cloud yet to come, it’s little wonder that Amazon, Microsoft, Apple, IBM and a host of others want to be in the game now. Houston, we are prepared for lift off.
- Merger & acquisition attorneys. Sure, there are plenty of small-to-medium sized cloud vendors to choose from. Yet the expected industry trajectory says get ready for a whole lot of M&A consolidation leading to cloud Goliaths.
- Early adopters of cloud technology. If you’re a start-up or a company anticipating significant IT infrastructure investments, an early migration to the cloud will allow you to bypass costly up-front hardware and IT fees.
- Efficiency hawks. An IBM white paper reports an approximate 5% utilization rate of commodity servers on average. Yes, IBM is ramping up its efforts to capture the cloud computing market, but when you consider the money lost in operational costs, server maintenance and management, you have to admit that this makes a compelling argument.
- Fans of Mobility. Do you like the idea of being able to access your software, applications and data remotely? No need to travel with your data or license multiple copies of software for home computing. Do you have a web browser? Just log in.. From the moon!
- Data security consultants. Just because your data is “out there” doesn’t mean you’re willing to share it with greedy, prying eyes. Are you confused by all the options? Data security consultants certainly hope so.
- Encrypted networks are bound for growth.
- Compliance officers and attorneys. We’re back to the issue of data security. Getting it right and making sure that it stays that way just got more complicated. This will require a professional’s attention. Due diligence should be performed down the chain of providers, and contractual arrangements touching on data handling need to be in place between multiple parties.
The Challenged:
- Security (and Certainty). Where once you could sign a client’s contracts assuring a certain measure of data security and confidentiality with ease, now you are at the mercy of an outsourced support structure. Not only will you have to contend with your cloud provider’s handling of your client’s data, but you’ll also have to contend with your cloud provider’s outsourced support. Issues related to where data is located, how data is managed, and who could potentially access your data remain some of the greatest challenges to a wholesale migration to the cloud. How many borders is your data being transferred across? What are the legal implications?
- Data centers and cloud vendors. In the face of all of the cloud’s shiny promises, the key players have their work cut out for them to assuage the public’s concerns regarding data security and platform integrity.
- Infrastructure vendors will need to increasingly target the cloud vendors.
- Software vendors will need to contend with, or become, SaaS companies.
- Large corporations? An oft-cited McKinsey & Company report, “Clearing the Air on Cloud Computing” claims that large corporations could actually lose by adopting cloud computing. McKinsey claims that the efficiencies so attractive to small and medium-sized clients will pale when applied to a large corporation. The report points out that a combination of in-house virtual computing together with tax write-offs involving equipment depreciation offer greater savings. Read it yourself, but bear in mind that service offerings continue to change dynamically. Costs and savings are not static.
- In-house IT support staff. Exactly how many of these lost jobs will be replaced by new opportunities at remote datacenters? With efficiencies of scale, not enough. Especially when a significant number of those datacenters will be located off-shore.
Illustration by The Economist
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