Cloud Computing—What is its
Potential Value for Your
Company?

Sponsored by Google, Inc.

Executive Summary:
In essence, cloud computing means running software and accessing data that reside somewhere else. ZDNet explains (Hinchcliffe, 2008) cloud computing in business-trend terms: “Software platforms are moving from their traditional centricity around individually owned and managed computing resources and up into the ‘cloud’ of the Internet.”
Google explores the cloud computing trend at length in another whitepaper, “Cloud Computing—
Latest Buzzword, or a Glimpse of the Future?”
This paper picks up where the other paper ended: Examining whether cloud computing makes good business sense for your company.
Let’s start with some predictions:
• In the next 12 months, someone in your company will push for at least one ondemand application.
• Your company’s first encounter with cloud computing will be driven by needs to save money—but within a few months of the first deployment, your horizons will expand. You’ll see opportunities where you once saw problems. You’ll see corporate silos tumble as people from different departments and locations collaborate on projects.
• Ultimately, you may find that moving your data to the cloud actually improves security, scalability, access, and disaster recovery.
Overly optimistic? Perhaps. But as many companies are discovering, cloud computing offers rapid and significant results.
Unquestionably, the primary reason why most companies are giving cloud computing a trial run are to save money by avoiding inherent IT and support costs, and to address the business demand for speed. A recent article (The Economist, 2008) in The Economist contends that Amazon and Google are proving that cloud computing “is a far more efficient way of running IT systems. … The current economic malaise will increase the pressure on companies to become more efficient. More has to be done with less, which is cloud computing’s main promise.”

Cloud Computing’s Value Proposition: Back to Innovation
At its core, cloud computing’s value proposition centers on solving a dilemma almost every CIO faces:
Lack of budget dollars to truly improve a business’s competitive position in the marketplace.
Information Week’s Thomas Claborn reported (Claburn, 2008) on a presentation by Thomas E. Hogan, senior vice president at Hewlett-Packard, at the 2008 Cloud Summit Executive conference:
“Some 87 billion e-mails are drafted per day around the globe, the digital universe doubles every 18 months, and the number of network-attached storage devices double every two years”, he said. “Yet, some 80 percent to 85 percent of IT budgets goes to operational maintenance. ... Cloud computing promises to help IT organizations dial back maintenance costs so they can spend on creating business value.” 2

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Behind that promise are the technology’s widely acclaimed benefits for small and mid-size businesses:

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Low start-up costs
Low cost for sporadic use
Ease of management
Scalability
Device and location independence
Rapid innovation

Bringing the Clouds Down-to-Earth
The concept of cloud computing may be new, but one thing hasn’t changed: top management’s insistence on justifying new IT investments in terms of return on investment and total cost of ownership. So you still have to weigh a proposed solution’s advantages and disadvantages and convert them, where possible, into quantifiable benefits and costs.
Your analysis will cover most of the same factors you consider when evaluating on-premises applications.
You’ll need to look at software licensing, change management, security considerations, data protection and backup, risks of downtime, provider stability and