Cloud Computing More Than Just Economic Benefits

April 23, 2009 by Brian Wolff

In a controversial presentation last week titled “Clearing the Air on Cloud Computing,” an analyst from McKinsey delivered his findings on the costs and benefits of cloud computing. His preliminary finding, based on one client, is that cloud computing would actually be more expensive.   The response to this report has varied dramatically. 

Personally, I felt the study was too narrow, and failed to consider the implications of a gradual transition, or the benefits of improved access to data and process. In fact, I might suggest that McKinsey is playing catch up in the cloud and showed us that they’re a little behind on content and vision.  There is a tremendous amount of energy being spent by many companies, especially VMware on creating cloud “inter-operability”, which will allow large and small companies to be very thoughtful about where they place certain applications. 

Thus, as John Foley suggests in his post, it will not be an either or proposition – it will likely be both.  I met a company last week at VMware by the name of IT Structures and their main value proposition was the ability to turn up and turn off quickly demo sites and test sites.  They can do in days what it would take internal IT departments weeks to do.  Now why wouldn’t a large enterprise “bless” that sort of behavior? It makes them more flexible and it keeps the business happy and moving forward.  This, of course is just one idea for how “specialty” clouds will add value to enterprise companies.
Here is what a few others had to say:

Amy Wohl, In a post entitled McKinsey Got it Wrong She says:

The value of cloud computing lies elsewhere: 

  • In the flexibility of being able to gain immediate access to additional computing (or to shrink your system when you don’t need it).
  • In the difference in Time to Market for new business opportunities.
  • In the additional value (not included in the McKinsey study) provided in clouds that offer to manage the hardware (via systems software and other offerings) or to provide applications (SaaS). 

Writing for Information Week, John Foley is less critical of the report overall, but he does say:

McKinsey paints cloud computing too much an either/or decision, and that’s the wrong way to look at it. IT pros need to do both–virtualize internal systems like crazy and investigate cloud services as a fast, flexible, and cost effective (if not always cheaper) option to capital investment in on-premises software and hardware.

As the responses continue, what do you think or the McKinsey report?