"Cloud computing isn't for all applications. For highly commoditized applications like communications and infrastructure services, it's perfect," said Jo Hoppe, CIO for Parexel International Corp. "There it's a very good value proposition. It allows you to avoid big capital expense. I like it particularly for things like disaster recovery where you have servers that just sit there until if and when you experience a major disaster. Why not do that in the cloud?"
Database intensive applications are harder to deliver in this manner, said Emil Sayegh, general manager of Rackspace's Mosso Cloud. Sayegh and Hoppe spoke at the MIT CIO Symposium 2009.
Hoppe said the fact that Oracle made some—but not all-- of its financial applications available as Oracle-hosted subscription services is instructive. "Why? Because [Oracle] realized they couldn't do it cost effectively if it's a highly customized application," Hoppe said.
Indeed, for those applications, Oracle's subscription covers very standard, plain-vanilla implementations that can be efficiently hosted and supported.
Meanwhile, Microsoft has promised to make almost all of its applications available as cloud-based services. All, that is, except for ERP, on which it's wavered. ERP implementations tend to be highly customized and tweaked
Key to cloud computing success: Planning and more planning
Attendees agreed that applications must be evaluated carefully before deployment models change. And, institutional resistance to offloading data and processing beyond the firewall remains tough to overcome.
Google's big, well-publicized outage last week probably doesn't help matters since Google is the poster child for the cloud-based delivery model—albeit in the free-apps consumer arena.
Ron Markezich, group vice president of online services for Microsoft, said that while that snafu could hurt might hurt Google's image, Microsoft's efforts won't be tarred by that brush.
"Google's trying to build enterprise credibility so there might be some impact there but it doesn't hurt us. First it was not our outage and second we have more enterprise credibility," Markezich said.
Microsoft is playing in both arenas with its "Live" consumer-oriented efforts and its business-facing efforts like CRM Online and Microsoft Business Productivity Online Suite (BPOS). But no one appears to be completely immune to these events as Microsoft has had its outages too.
Rules around data privacy and other issues also restrict how cloud vendors can implement certain application types.
For example, HIPAA regulations prohibit the co-location of a pharmaceutical company's data on a shared server with other company's data. For that reason, Microsoft offers a "dedicated" cloud option that ensures that there is no co-mingling of data. GlaxoSmithKline uses that implementation for its big BPOS rollout, Markezich said. Companies pay a premium to use that implementation, he said.
Rackspace's Sayegh said companies obviously must do their due diligence on regulations before making cloud decisions.
Still, some of the CIOs said the recession is pushing companies that would not otherwise have considered cloud implementations to actively weigh the option. The benefit is there is no huge, upfront capital expenditure that needs a high level sign off, there's no need to worry about hardware server upgrades, and software upgrades are handled off site and are included in a predictable subscription price.
"The biggest obstacle is fear of trying," said Sayegh. "I would encourage CIOs to dabble first. They should experiment. Look at Razorfish, one of the largest online ad companies They started testing and playing with it and saw the power of scaling."