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BLOG: The great cloud computing pricing debate

Bernard Golden | Nov. 29, 2011
A continuing controversy in cloud computing is its putative cost benefits; specifically, whether public cloud computing can provide cost advantages over computing carried out within a company's own data center.

A third inference—and one absolutely critical to end users drawing up cloud plans—is that one should not assume a future cost advantage in one's private cloud based on currently available public cloud provider pricing. The key question is whether any current private cloud cost advantage is sustainable over the long run.

My own view, stated several weeks ago, is that it's hard for me to understand how a private cloud can achieve a cost advantage compared to a public provider, since it is hard to identify any cost input in which a private cloud has an advantage.

IT Organizations Miss the Cloud Computing Boat

Turning to the analyst blog posts, frankly, they are dismaying. It's clear that cloud computing represents a fundamental shift in the way organizations are performing computing services, but both analysts (in different ways) illustrate how IT organizations are failing to confront this shift.

Leong's quote (noted above) carries the unmistakable mark of an organization not fully grappling with a fundamental issue, but rather trying to paper over organizational reluctance with some window dressing. Put another way, these organizations are constructing a cloud Potemkin Village in hopes of convincing higher-ups that they are really doing something about cloud computing. One cannot know what percentage of clients with which Leong is having these kinds of conversations (she writes that they're not infrequent)"," but it seems likely that it is somewhere in the range of 20 to 35 percent. That means that as much as a third of the organizations she speaks with are dissembling with regard to their real cloud efforts.

Staten's post, by contrast, contains a quote that describes the opposite of Leong's situation. The context of the quote is Staten's discussion of the third of his 2011 predictions. The prediction was that hosted private clouds will outnumber internal clouds three to one. In his discussion, Staten describes the common motivation that his clients demonstrate when attempting to build their own cloud before trying an external provider. '"If we can't get this built in our own environment, we'll explore that option but I want to give my team a chance first," he quoted an I&O leader from a large manufacturing client as saying.'

Really, this is astonishing. When addressing the most significant development in enterprise IT for the past decade, one large manufacturer is leaving the outcome up to chance and, one guesses, hope that an internal group is up to the task. Unsaid is how long the internal group's effort will be pursued, and what criteria will be applied to evaluate the success of the effort.

In my experience, such efforts are never found unsuccessful; the criteria are merely adjusted to ensure that the initiative, no matter how poorly it actually accomplishes its task, is judged sufficiently successful so that no one ends up looking bad. Unfortunately, while poorly executed initiatives limp along, seeking criteria by which they can appear successful, other organizations pursue initiatives with higher probability of success—with the end result that they will outperform the first organization in the marketplace.


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