Counting the Costs

By Tony Kontzer Print this article Print

What started with the migrations of early adopters toward software-as-a-service applications has become a fast-maturing strategy that has business and it leaders considering any potential cloud service offerings when evaluating new technologies.

Counting the Costs

Environmental causes aside, Burton Group’s Manes cautions companies to be certain of the financial benefits of cloud services before leaping into them. She says companies often fail to consider long-term lease commitments on data center hardware that cloud services will replace. Also, they may not be sure of the ongoing costs of the applications that run on those servers.

“Very few organizations know how much they’re spending per year on an application,” says Manes. “So how do you justify shipping something into the cloud? If you don’t know what it costs now, how do you know what you’re going to save?”

Most of the latest hype around cloud-based services has focused on meeting spikes in computing demand and establishing or extending an infrastructure at a moment’s notice without investing in hardware. One of the most compelling use cases for the cloud is in ensuring that businesses can stay up and running during crises. Yet, such infrastructure services are part of a submarket that’s expected to account for just $3.2 billion, or 6 percent, of the cloud market in 2009, Gartner predicts. Still, it’s a market that large IT vendors appear to be counting on to grow.

No one has to sell Jessica Carroll on the virtue of cloud-based infrastructure. Carroll, director of IT for the United States Golf Association, which hosts the U.S. Open, was already looking into upgrading the USGA’s antiquated tape-backup system when the phone infrastructure went down for a couple of days last summer. The outage barely registered as a blip, with employees switching seamlessly to cell phones, but she realized that if an outage hit the e-mail system, the outcry would be immediate.

Carroll decided it was time to add e-mail continuity to the USGA’s disaster recovery mix. But investing in a new data center, or purchasing the 70 servers needed for the existing data center, was prohibitively expensive. Instead, last fall, the USGA contracted with IBM to subscribe to a disaster recovery service, which allows it to back up 500GB of data at any given moment, and to an e-mail continuity service that essentially mirrors the USGA’s e-mail system in an IBM data center.

The recovery system was fully in place in March. The redundant e-mail environment was waiting for staff training—followed by live tests that replicate system outages—before going live.

USGA had been using Microsoft’s Live Meeting environment for three years and also used ePath Learning to host online training sessions. So it’s not surprising that Carroll joined the growing ranks of IT folks who are increasingly asking themselves, “Can’t we do this in the cloud?”

“I feel strongly that looking at cloud computing is a must,” says Carroll. “There’s a right time and a wrong time—not everything fits. But when you start talking about projects, you have to ask the question” about whether to use cloud computing. More often than you probably think, the answer will be “yes.”

This article was originally published on 2009-06-01
Tony Kontzer is a freelance writer for Baseline magazine.
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