Cloud Computing Brings Challenges, Opportunities

IBM gave the cloud-computing industry a big boost last week when it validated the technology by partnering with Amazon's Elastic Compute Cloud (EC2) environment. And despite -- or even because of -- the current economic recession, research firm IDC expects spending on IT cloud services to grow almost threefold, reaching $42 billion by 2012 and accounting for nine percent of revenues in five key market segments.

"For organizations eager to delay, reduce or eliminate capital spending, the pay-as-you go cloud computing model is proving to be attractive," says Joseph Tobolski, the director of cloud computing at Accenture. But as is the case with other earlier technological advances, "Cloud computing brings major challenges as well as big opportunities," noted Tobolski, who delivered the opening address at Thursday's IDC Cloud Computing Forum in San Francisco.

Still Immature

Despite being a hot technology topic, cloud computing can be downright nebulous when it comes to precisely defining itself. "As with many popular new technology trends, there are probably as many definitions out there as there are different analysts and vendors," said Marie Wieck, vice president of middleware services at IBM. "In IBM's view it's really a fundamental extension of the Internet computing model, and it is a platform that provides the ability for companies to access services and resources much more quickly."

Another industry problem is that cloud computing is still in a relatively early stage of development. Gartner believes that it will require several years and many changes in the market before cloud computing becomes a mainstream IT effort. "As cloud computing matures during the next several years, Gartner foresees three distinct, but slightly overlapping, phases of evolution," said Mark Driver, a vice president at the research firm.

Gartner expects the market phase currently underway -- which is being led by the industry's "pioneers and trailblazers" -- to run through 2011. Following a period of market consolidation, "by 2015, cloud computing will have been commoditized and will be the preferred solution for many application development projects," Driver said.

Tactical Opportunities

Five years from now, Gartner expects that the dominant cloud-computing vendors will primarily be leveraging the proprietary technologies that they currently have under development, which will give some IT enterprise managers reason to hesitate. By 2014, however, concern over lock-in will lead to critical-mass support for one or more open-source cloud-computing software stacks, which "will begin to compete with proprietary solutions," Driver noted.

Given the current immaturity of cloud-computing solutions, which is compounded by their proprietary nature, Gartner is advising early adopters to focus their efforts on quick-hit, tactical opportunities. "Although some rare exceptions will exist, mainstream IT developers should focus primarily on investments where return on investment can be acquired within 18 to 24 months," Driver advised.

Industry analysts also caution that cloud computing presents new challenges in data security, privacy, control, compliance, application integration, and service quality. For this reason, Gartner advises enterprises to initially approach the technology by taking small, incremental steps that target cost savings and agility -- the two great benefits that cloud computing currently has to offer.

Still, IDC sees a number of opportunities for cloud computing to catch on in the government, health care and manufacturing industries, which typically invest heavily in IT systems and infrastructure and are currently looking for ways to achieve cost savings. "The nature of cloud computing also makes it suitable for the budget- and resource-constrained SMEs, where not requiring in-house teams to deploy and manage the solutions is a huge advantage," the firm's analysts said.