So, no matter the answer to the question at hand (and I think the answer is yes), I believe that 99 percent of large enterprises will be slow to adopt cloud services across the board. Some large enterprises are already asking why move to cloud services when they believe that they already have the economies of scale within their own data centers. The very large enterprises don’t see the financial benefit of moving from their large server farms to even larger external server farms.
The top 100 enterprises may be able to add some cloud based tools and processes to become more efficient with their internal data centers, but the skeptic in me asks: “Why didn’t you do that three to five years ago?” My suspicion is that if organizations couldn’t (or didn’t want to) make this shift and run their data centers more efficiently over the past five years or so then what makes them think they can do it now?
Some will probably make the transition and use this paradigm shift to run their data centers much more efficiently, but it remains to be seen if they can also modify their business processes to really deliver faster turn-around time, elasticity of bandwidth, etc. However, these internal cloud designs still don’t leverage the shift from capital to more expense-based spending, nor will they see much improvement in labor optimization or global labor arbitrage.
So, back to the question at hand: Can I run my business using cloud services? For the sake of argument, I will define several fundamental service categories that most businesses require as follows:
- File storage
- Web hosting
With these services in mind the simple answer is: “Yes, I can run my business using cloud services.” There are numerous choices for email, including Google; Skype for telephone services; Box.Net and other providers for file storage and a multitude of Web hosting vendors.
But, just like you would have for any other IT service, think about your backup, Plan B and DR and business continuity plans. For instance, the usually reliable VoIP service, Skype, recently experienced an all-day outage for many of their customers. This caught many small and medium businesses off-guard without a formal backup plan other than cell phones (which didn’t work very well for clients trying to call the main company number).
So, in a nutshell, we’ve seen a tremendous amount of progress and innovation around outsourced cloud services — and a few hiccups lately a la Amazon Web Services, Microsoft’s BPOS and, most recently, Dropbox’s privacy issues. But many organizations can realistically run the entire operational side of their business using nothing but cloud services. But, with everything, there is a price. Weigh the pros and cons of any cloud initiative, as you would of any IT project, to ensure it provides the right value at the right cost to your organization.
There will likely be pressure from the c-suite to implement a cloud initiative based on all the exposure cloud is receiving, but resist the temptation to implement a program simply because the CEO wants it. Especially, if it doesn’t fit within the overall business strategy.
Scott Archibald is a managing director at Bender Consulting, a management consulting firm based in San Francisco.