What’s up with cloud computing? It’s been more than a year since major service providers — Amazon, Microsoft and Google — joined dozens of software companies to offer hosted services for business applications, infrastructure and development platforms. The buzz has been continuous and loud.

Many pundits told us that large, risk-averse businesses were leaning toward private clouds — where they hosted apps themselves for internal customers — versus public clouds. In his recent blog, for instance, Ted Ritter wrote that the Nemertes Research 2011/12 enterprise IT benchmark study found “very high interest in private clouds. In fact, 35 percent of the 240 organizations participating in the benchmark will have a private cloud within the next two years.”

And as far back as last year, blogger Robin Bloor wrote: “It’s difficult for a CIO today not to be considering a cloud-related strategy. Over the past three years, these hosted services have acquired marketing sparkle, and every IT vendor worth its socks has developed offerings.”

Ravi Rajagopal, Vice President, Cloud Strategy, CA Technologies, also wrote that “74 percent of enterprises have deployed a cloud service and have allocated up to 30 percent in cloud spending, and about 70 percent of enterprises are investing in building private clouds,” based on an Avanade 2011 Cloud Global Survey.

The verdict on cloud adoption sounds pretty clear, right? Well, maybe not. Just last month at the Interop New York conference, Lauren Nelson, Researcher at Forrester Research, said that very few organizations have actually implemented internal private cloud environments.

Nelson said that just 6 percent of those surveyed had internal private clouds in place in early 2011. And at another session I attended, Great Debate: We Will Always Have Private Clouds, industry analysts avidly debated the merits and the future of private clouds. One team's job was to persuade you that we'll always have on-premises private clouds, and the other's job was to argue that we'll eventually move to a utility model where you never touch your servers.[More on this session to follow].

Even this far along the adoption curve, then, it seems as if we’re running into definitional differences over what constitutes a private cloud. Forrester says it should have characteristics such as automated deployment and management, self-service access, shared architecture between business units, and pay-per-use billing.

Ritter noted that “When analysts talk about private clouds, we assume everyone is on the same page: A cloud is a metered, multitenant, accessible, elastic and self-provisioned service offering.” While most enterprise IT professionals agree with these characteristics, he says they also resist automated self-provisioning.

Perhaps, that’s why Timothy Chou, an early cloud advocate, chooses to describe cloud services as data center, compute and store, application and platform services rather than public versus private cloud in his primer here. And Andrew McAfee, author and digital business professor at MIT, in the current issue of Harvard Business Review offers an insightful blog about what CEOs need to know about the cloud here, with lots of perceptive comments noted by readers. Perhaps the fine-tuning is a sign that the market is maturing.

How is your business approaching cloud services? Our current poll on Smart Enterprise Exchange so far indicates more enterprises using cloud than not—but many are still in the early stages. Perhaps CA Technology VP George Watt’s assessment is most accurate when he says: “Cloud computing is like a band that took 20 years to become an overnight success.”

We will be offering additional insights and thought leadership regarding private, public and hybrid clouds in the next few months. Meanwhile, please take the poll and add your vote as well as your comments to this ongoing discussion.

Paula Klein

Editor and Community Manager

Smart Enterprise Exchange

When we decided to host a videocast on the topic of the Public Cloud: A CIO Perspective, a few people thought we had made a mistake in the title. "Don't you mean private cloud?" they asked. After all, that's the area where most of the current service hosting activity is right now. Are CIOs really thinking about hosting critical apps on the Internet?

That’s one of the questions we posed to our panel of experts — Timothy Chou, Dan Greller and Dave Hansen, during our webcast on November 11 — and I think the responses were very candid, surprising and thoughtful.

I knew that Tim — who headed up Oracle’s On-Demand business for many years and then became a book author, Stanford University lecturer and board member of several startup companies — was an avid cloud proponent. But I was more surprised when Dan, Managing Director at financial services firm, Legg Mason Technology Services, was on board with public hosting as well. Add to that, Dave Hansen’s perspective as former CIO and now General Manager, Management Products & Solutions and Security Customer Solutions, CA Technologies,  and there was a broad spectrum of backgrounds represented, all supporting the idea and citing lots of specifics. See what you think as they state their case in the video and in their answers to audience questions here.

The panelists agreed that we are in the very early stages in terms of hosted service adoption and it’s clearly being led by SaaS applications. Dan said Legg Mason is moving ahead with CRM and ITIL tools in the cloud and is investigating e-mail hosting as well. He says infrastructure-as-a-service (IaaS) is limited to nonproduction environments at the company so far, and platform-as-a-service (PaaS) is not yet an active area for the company. Read Dan's responses to audience questions here.

Tim noted that cloud hosting — what he calls "compute and storage services" — began with business applications only about three years ago. In terms of PaaS, “We are in year one,” he says.

Despite the early stage of the market, however, the benefits of agility, innovation, lower support and maintenance costs and fewer resources were cited by all three panelists. And even the bugaboo, security, was described as “an issue but not a showstopper” by Dan Greller, who noted, “We’ve been using ADP [for payroll processing] for decades.”

The call to action for CIOs was to learn all you can about your current computing costs as well as your business needs and start hosting some apps. I can’t recap a one-hour discussion in full, but here’s a quick summary of key quotes and action items:

• Dan Greller: Consider the case for cloud hosting in terms of outsourcing and distributed computing of the past. Use the same practices of due diligence to vet service providers and to negotiate contracts as you have in the past.

• Dave Hansen: You can also automate your portfolio of SLAs electronically to monitor and measure in real time. That will allow you to implement SaaS faster.

• Tim Chou: “Customers and IT for too long abdicated software to their vendors. The tech guys had no idea about the specific industry sector you are in.” Now it’s time to get back into the picture, he says. Ask your vendors — and your in-house developers — to provide apps as a service; customers can now build software in new ways that are not detached from the domain expertise of a business. Moreover, he says, too many companies have no idea how much they pay for computing and software ... as a result, "equipment is often unused, underused and out-of-date," he added. 
  

Still not convinced about the need for public cloud computing? Register and watch the full video and see if your concerns — regarding multi-tenancy, hybrid clouds or change management — have been addressed by these industry experts. If not, start a discussion of your own or send a question to me at editor@smartenterpriseexchange.com, and I will have the panel address your concerns.