The cloud computing business model is a threat to traditional information technology, but for end users, it carries a risk of "lock-in".
While cloud computing is useful for short term, scalable projects or batch processing, it is still not widely adopted by enterprises yet, James Staten, principal analyst at Forrester told delegates at the analyst group's annual European IT Forum, hosted in Berlin.
In a session on cloud computing, Staten referenced a number of case study examples of cloud computing in the enterprise.
The New York Times is the "poster child" for how enterprises are engaging cloud computing, said Staten. The newspaper kept its archived article, pre-1922, on microfiche and as a jpeg file, but the articles were not available online and could not be searched. The paper wanted to make them available, but the project was not one that would create any revenues for the paper.
The paper's IT department said reverting all these articles, some 4TBs of data, into PDF files would use up server and storage resources and take more than a week.
The newspaper group turned to Amazon Elastic Compute Cloud (EC2), which was able to batch process the 4TBs of data in less than 24 hours.
Other high-profile companies investing in cloud computing include: Starbucks, BT, CapGemini, the Indy500, Eli Lilly and Harvard Medical School. "Why invest in a super computer that you don't need all the time, or run servers at 90 percent utilisation," said Staten.
Despite the New York Times' success story, and the fact that more enterprises are testing cloud computing for some smaller projects, Staten said that cloud has not quite reached the status of wide-spread enterprise adoption yet. Rather, start-ups, smaller businesses and the gaming and entertainment industry are becoming big users of cloud computing.
For gaming companies, cloud is ideal because they can launch a multi-player game, even if they don't know how popular it will become or how long it will last.
"If the application scales to a million users, then the gaming company is getting paid at the user base grows. Cloud aligns revenue with investment, so you can invest just in time, rather than upfront to match forecasts," said Staten.
Staten said the Amazon EC2 service costs around 10 cents per CPU hour, but offers more flexibility for peak loads than traditional hosting.
Clouds are ideal for short-term, high-demand applications. The critical value in cloud computing is "elasticity to supply peak demand without long-term commitment" said Staten.
But clouds may not suit long-term projects, because there is a danger that the application will be locked to the cloud, Staten warned.
"You can be locked onto the cloud. It is also hard to move an in-house application onto the cloud, and once you've moved them on to the cloud, you can't move them back," he said.
However, Staten warned CIOs to endorse one or two cloud computing projects, because if enterprises outlaw cloud investment, "developers will go under the covers and use clouds anyway".
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