CIOs Are Learning That Clouds Aren’t Free

It Turns Out That Both Public And Private Clouds Have A Cost
It Turns Out That Both Public And Private Clouds Have A Cost

CIOs are currently being faced with making a decision that will impact their IT departments for years to come: should they move their IT operations into the cloud and if so, should it be a public cloud or a private cloud? There are a number of technical issues that can help drive this decision; however, the one factor that too many CIOs overlook is cost…

The Difference Between Public & Private Clouds

I thought that the whole “cloud” thing was supposed to make IT simpler – why are CIOs now being faced with a decision? It turns out that all clouds are not created the same – there are two very different types of clouds.

Public clouds are what is getting all of the press right now. Cloud providers such as Amazon, IBM,, etc. are offering IT shops a new way of doing business. Companies that move their applications off of their internal IT infrastructure and onto a 3ed party’s boxes will see significant cost savings. No longer will they have to worry about paying for (or supporting) hardware, software or IT staff.

It turns out that there is another way to go about using clouds: private clouds. If the company invests in building out its internal server farm then it can take advantage of all that cloud computing offers: fast application setup, the ability to scale both up an down as conditions require, and an internal pay-as-you-go way of tracking costs.

The concept of private clouds is still relatively new. However, it is catching on fast. The folks over at Gartner are forecasting that through 2012 the top 1,000 global companies will end up spending more on developing their own private clouds than they will spend on buying public cloud services.

What’s Cost Got To Do With It?

You might think that CIOs are going to have to knuckle down and so some serious technical investigations in order to determine if public or private clouds are the right solution for their company. You’d be half-right.

Certainly there is a technical side to this important decision. However, there is a much bigger question that needs to be answered first: how much is all of this going to cost?

All things being equal, it turns out that using a private cloud to serve as your IT infrastructure will provide you with about 60%-80% of the savings that your company can get if you went with using a public cloud. This should make making your decision easier, right?

As with all things in life, nothing is ever that easy. It turns out which type of cloud your company should go with may depend on how far along you are with your internal server virtualization program. A company that has already virtualized most of their servers won’t see very much of a savings by moving their IT operations into a public cloud. However, a company that has barely started to virtualize their servers could see a significant savings and would avoid the cost and effort of building their own private cloud.

In the end, it comes down to doing a careful ROI analysis for the company. CIOs need to understand that the decision to change over to using a cloud based IT infrastructure involves more than just technical decision making.

What All Of This Means For You

It’s all too easy for CIOs to get caught up in what everyone is talking about when it comes to cloud-based computing. However, it turns out that there is another decision that needs to be made regarding clouds: should I go public or should I go private? It turns out that on top of all of the technical issues that need to be considered, there is a very big financial one that may be even more important.

The choice between using a public cloud or building your own private cloud comes down to a question of costs. Companies that have already heavily invested in virtualizing their servers won’t see much of a benefit to moving into a public cloud. Likewise, companies that have not yet made the move to virtualized servers may want to bypass building their own private cloud and instead use public cloud resources.

CIOs are responsible for making the best decisions for their IT departments. What makes the job of being a CIO so challenging is clearly shown in the current era of moving to cloud computing. Technical IT knowledge is required in order to decide what type of cloud a company should choose to use, but business savvy is also required. Now that you know what to look for, go out there and choose the right cloud for your company.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think a company should complete a server virtualization project or just start to use a public cloud instead?

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What We’ll Be Talking About Next Time

Companies are all asking themselves one question: what’s it going to take to be successful? It turns out that a lot of the techniques that worked in the past won’t work anymore – lowering prices, etc. Going forward, the only thing that a modern company can complete on is their business processes. It turns out that the CIO plays a very big role in making a company’s processes the best that they can be…

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