Is Cloud Computing Really Ready for Prime Time?

Neal Leavitt
Even though the technology faces several significant challenges, many vendors and industry observers predict a bright future for cloud computing.

Cloud computing has become a significant technology trend, and many experts expect it to reshape information-technology processes and the IT marketplace during the next five years.

With the technology, users on various types of devices—including PCs, laptops, smart phones, and PDAs— access programs, storage, processing, and even application-development platforms over the Internet, via services offered by cloud-computing providers. Resources are kept on providers’ servers, rather than on users’ systems.

Proponents tout the technology’s advantages, including cost savings, high availability, and easy scalability.

Industry observers say the technology’s growth potential is enormous. Market-research firm IDC expects IT cloud services spending to grow from about $16 billion in 2008 to about $42 billion by 2012, as Figure 1 shows. IDC also predicts cloud-computing spending will account for 25 percent of annual IT expenditure growth by 2012 and nearly a third of the growth the following year.

Working via large platforms owned by providers and shared by numerous users makes cloud computing less expensive, according to proponents.

“The shift to cloud computing will dramatically reduce the cost of information technology,” said Russ Daniels, Hewlett-Packard’s vice president and chief technology officer for cloud-services strategy. “But it goes beyond cost savings. It frees customers from the expense and hassle of having to install and maintain applications locally.”

Cloud computing also lowers the cost of application development and makes the process more scalable, noted analyst Simon Heron of Network Box, an Internet security firm.

Nonetheless, the approach is still relatively new and has not yet been widely adopted. IT departments are still wary of it because they don’t control the cloud-computing platform.

So far, venture capitalists have not invested a lot of money in cloud-computing providers.

In addition, the approach has several important weaknesses that vendors must address before it can become more popular.

Carl Howe, director of the Anywhere Consumer Research Group for the Yankee Group, a market research firm, said key risks include reliability, security, the additional cost of the necessary network bandwidth, and getting locked into specific cloudcomputing vendors.

While proponents say it’s only a matter of time before the technology overcomes these problems, others say the process might not be easy and could continue to hold back adoption.

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