For all the excitement and buzz created by cloud computing, the very idea of customers being able to access information in big data centers remotely over the Internet from anywhere has also spawned a fair share of questions, concerns and myths.
But that skepticism, about its security, compliance and visibility, has been widely overblown, says Michael Hugos, a former CIO and a principal of the Center for Systems Innovation, whose newest book is "Business in the Cloud: What Every Business Needs to Know About Cloud Computing" (John Wiley & Sons, Inc., 2010).
The evolutionary shift toward cloud technology will span several years, even a decade or more, some analysts say. Hugos believes people set the pace of technology adoption, and corporate data centers are filled with people whose skills and livelihood are fundamentally based on older technologies and mindsets.
Here are five myths about doing business on the cloud and why they shouldn't be believed:
Risk 1: Data security issues make cloud applications riskier than in-house applications. According to Hugos, the continuous harping on data security has more to do with threatening IT jobs than it does to any real security issue.
This might not comfort companies that see high-profile attacks on companies such as Citigroup and Sony. But that misses a more important point, says Hugos.
"When private companies get hacked, it's rare they even discuss it," he says. "If they're not publicly traded, they don't even have to divulge that information. The notion that a Google or an Amazon isn't as good at data security as some small company is nonsensical. Their systems are being attacked hundreds or thousands of times every day, and they have a highly trained and continuously engaged security force who are learning the latest tricks that hackers are using.
"Security is part of how these companies make money," he adds. "When was the last time that a private company enthusiastically invested a whole bunch of money in something like data center security? Quite the opposite."
Risk 2: Cloud applications are less reliable than running systems in-house because you can't fix them in the event of a crash. This is another myth created by the idea that having a data center on premises gives a company more sense of control. Not true, says Hugos.
"Most companies are continuously trying to reduce data center expenses because they are a cost center, not a profit center," he says. "When you're a cloud vendor, your data center and your IT infrastructure is how you generate money, so you are always investing more money in it. For most other companies, it's the opposite. Its overhead and data center budgets are being relentlessly cutback."
Risk 3: The main reason for companies to move to cloud computing is to save money. Reducing IT costs certainly sounds great, but the most compelling incentive to move to the Cloud is to switch from a fixed cost capital intensive business model to a variable cost pay-as-you-go operating expense model, says Hugos.
"When you invest in a lot of new IT infrastructure and software, that's typically a big upfront capital expense," he says. "You might put down several millions of dollars in a new ERP system and then just hope that that system will actually still be relevant to your business and not become technically obsolete before you've even finished depreciating it."
A harsh reality of IT investment today is that technology with a supposed shelf life of five years can be obsolete in less than half that time. That element of risk is removed with the Cloud. If a company wants to pull the plug on a vendor after two years, there's minimal penalty, which counts for a lot in an unpredictable, volatile economy.
Risk 4: It is cheaper for big companies to run their own application systems in-house than in the cloud. Large corporations often compare the cost of provisioning a server in the cloud for three years and assume the spend is practically equal to just buying and owning their own data center. In truth, that's only the most surface form of comparison.
"What they forget to do is add in all of the indirect costs," explains Hugos. "You need more people to run those additional in-house servers. What is the additional cost of insuring those additional servers? What is the additional cost of the energy to run them and the air conditioning to cool them?"
Risk 5: It requires a whole new set of skills for companies to make good use of cloud computing technologies. This is arguably the most hot-button topic regarding the Cloud because entire departments within companies are now fearing for their jobs. According to Hugos, certain skills that have been traditionally dominant in most in-house IT groups will be threatened, such as system administrators, those who patch servers and install new operating systems and install new software.
"Those traditional skills have made up about 70 percent of any in-house IT group," says Hugos. "Those people will be much less in demand, but there are a lot of other skills that have been around for a long time such as business analysts, enterprise architects who know how to integrate different systems together."
What gets lost is that companies will not move their entire infrastructure to the cloud—only pieces. Because of that, there will still be the need to integrate cloud based systems with in-house systems.
No one in IT stands to gain from this more than business analysts and those who specialize in enterprise architecture.
"They will become more prominent," says Hugos. "Their skill sets will evolve, but it won't be entirely new. Business analysts have had a checkered career over the last 30 years. In many companies, business analysts have been reduced to being a glorified note taker. That person is suddenly going to become much more important because they're the ones who translate business needs into technical solutions. When I no longer have to worry about systems administration stuff, then all of a sudden the business analyst and solving the business problem becomes much more important than solving a technical problem."