Comment on Enterprise Transition to Cloud

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Comment on Enterprise Transition to Cloud

I just wanted to share a comment that I recently posted to Vijay Gill’s blog, regarding cloud economics:

Enterprises are tricky. They are full of legacy apps that won’t magically transition to PaaS. And their internal IT isn’t very visible to the outside world. In other words, the enterprise cloud transition will take a long time and most people won’t know that it’s happening.

That being said, one should be careful about underestimating cloud service providers focused on the enterprise market. (And the dark horse impact of enterprises on the PaaS landscape.)

Obviously, I left a lot unsaid… Perhaps I can elaborate in future posts.

Regardless, I’m interested in your feedback — what do you think about the enterprise transition to cloud?

This entry was posted on Saturday, November 28th, 2009 at 14:57 and is filed under Cloud, Finance. You can follow any responses to this entry through the RSS 2.0 feed.

Benson Schliesser

Since these blog posts get auto-imported to Facebook as "notes", I often have commentary there which doesn't get reflected on this blog. However I wanted to share a brief exchange related to this post, which is interesting.

Nic Thomas: Do you see the financial industry moving over to clouds in the future as well? I think the biggest drawback to enterprises moving over is that they have already invested huge amounts of funds into data centers they own and control. Waiting for their ROI suggests they couldn't even move to a cloud anytime in the near future....like decades future. ... See MoreLegacy systems is one hurdle, but I think breaking out of the endless upgrade cycle datacenters have to go through is another that simply will not be broken.

And I responded:

Benson Schliesser: It's a complicated topic, I'm sorry to say...

Many firms in the financial industry are pretty good about recognizing the "sunk cost fallacy", and are able to abandon an investment if the net benefit is greater. Enterprises as a general class are not as good at this, but the great thing about cloud is the lack of a capex requirement. So, while I ... See Moreagree that there are plenty of folks that won't move to cloud because of ROI on existing projects, I think we will see this migration happen earlier than e.g. in-house IT refreshes would otherwise.

Having said that, it's still important to recognize the limits of cloud's usefulness. There are plenty of apps that will do better and/or cost less in a cloud. And access to cloud resources will allow IT folks to experiment more than before. But some apps will still do better on dedicated hardware, and some data will still reside in the enterprise data center. I think cloud architecture will become dominant over the next decade, but the enterprise environment will be hybrid.