Why cloud has not taken off in the enterprises?
January 25, 2010 Leave a comment
Given all the hypes around cloud computing, it is surprising that there is only scant evidence that cloud has taken off in the enterprise. Sure, there is salesforce.com, but I am more referring to the infrastructure cloud, such as Amazon, or even Microsoft Azure and Google App Engine. Why have not it taken off? I have heard various theories, and I also have some of my own. I list them in the following. Please feel free to chime in if I miss anything.
- I am using it but I do not want you to know. Cloud is different from previous technologies that it is not a top-down adoption (e.g., mandated by the CIO), but rather a bottom-up adoption where engineers are fed up with the CIO and want a way around. I have heard various companies using Amazon extensively, particularly in life sciences and financial sector, where there is a greater demand for more computation power. In one case, I have heard a hedge fund company who rents 3,000 EC2 servers every night to crunch through the numbers. Even though they use cloud, they do not want to generate unnecessary attention to invite questions from upper management and CIOs, because cloud is still not an approved technology and putting any data outside of the firewall is still questionable.
- Security. Even if the CIO wants to use the cloud, security is always a major hurdle to get around. I have been involved in such a situation. Before using cloud, it has to be officially approved by the cyber security team; however, the cyber security team has every incentive to disapprove it because moving data outside the firewall exposes them to additional risks that they have to be responsible for. In the case I was involved in, the cyber security team came up with a long list of requirements that, in the end, we found that some of their internal applications do not even meet. Needlessly to say that the project I was involved in was not a go, even with a strong push from the project team.
- Redemptification. CIOs have to cover themselves too. Most cloud vendors’, including Amazon’s, license term disclaims all liabilities should lose or failure happens. This is very different from the traditional hosting model, where the hosting provider claims responsibility in writing. CIOs have to be able to balance the risk. A redemptification clause in the contract is like an insurance policy, and few CIOs want to take the responsibility for something they do not control.
- Small portion of cost. Infrastructure cost is only a small portion of the IT cost, especially for capital rich companies. I heard from one company that their infrastructure cost is < 20% of the budget, and the bulk of the budget is spent on application development and maintenance. For them, finding a way to reduce application cost is the key. For startups, cloud makes a lot of sense. However, for enterprises, cloud may not be the top priority. To make matters worse, porting applications to the cloud tends to require the application to be re-architected and re-written, causing the application development cost to go even higher.
- Management. CIOs need to be in control. Having every employee pulling out their credit card to provision for compute resources is not ok. Who is going to control the budget? Who will ensure data is secured properly? Who can reclaim the data when the employee leaves the company? Existing cloud management tools simply do not meet enterprises’ governance requirements.
Knowing the reasons is only half of the battle. At Accenture Labs, we are working on solutions, often in partnership with cloud vendors, to address cloud shortcomings. I am confident that, in a few years, the barrier to adoption in enterprises would be much lower.