Cloud Services After the Economic Storm Passes

Cloud services--including Exchange Online and Hosted Notes email--would seem well positioned in light of the current economy. Customers are looking for areas to cut operating expenses; and what enterprise service is better suited for commoditization than email? Hosting providers that demonstrate high availability and reliability stand ready to reap the benefits of a down economy, replacing unpredictable insourcing costs with a predictable, fixed monthly cost.

While the ROI seems attractive, we believe customers need to look beyond the economic downturn and consider what their infrastructures will look like in five to 10 years. Without a systematic and well-planned approach, it is conceivable to envision customers with a dog's breakfast of solutions; for example, hosted email provided by Microsoft, client-side applications hosted by Google Apps, storage provided by Amazon, server-side applications hosted by IBM, and email archiving provided by LiveOffice. This poses at least two major problems.

First, operational efficiency necessitates that customers maintain a central view into end-to-end operations of all their IT systems. What does this "single pane of glass" look like in a Web 2.0 world? Most hosting providers we have spoken with are solely focused on the race to market dominance, and provide only a black box when it comes to remote manageability. Fear of financial penalties for any breached SLAs only further adds to hoster paranoia of letting the customers access data center performance and availability metrics. We believe customers need to drive hosters to both standardize on manageability metrics and expose those to customers who want to "keep them honest."

Second, compliance regimes necessitate that certain customers need to have a clear handle on their data, be that for retention, legal discovery, search, or other purposes. Customers, then, need clarity on both data location and data access. Hosters need to be worked into customer policies and procedures around compliance. Sole sourcing, or minimizing the number of hosters a customer deals with, will also help keep things manageable. SLAs need to be defined in a manner that addresses what will happen should compliance-related inquiries require the hoster to act in any way. Hidden costs will quickly come to the forefront when faced with legal discovery scenarios, for example.

We believe SaaS and cloud services have a lot to offer, especially in this economy. But we think customers should be proactive in their implementations, holding hosters to task to provide the services needed for customers to ensure compliance, and have a clear picture of what is going on in their ever-expanding IT realm.

... David Sengupta

One Comment

  1. Posted February 9, 2009 at 11:53 AM | Permalink

    Great post, David. One other driver for cloud computing that I’m seeing is this. Customers seem to be interested in the flexibility of cloud computing because of the uncertainty of the business world. Their company might grow or it might shrink. They could acquire or they could divest. They like the idea of scaling up and scaling down without delays or fixed/sunk costs.

Post a comment

You must be logged in to post a comment. To comment, first join our community.