Which Cloud Should Firms Use, Inside or Outside?

As companies begin moving to the cloud to hold down costs in this recession, they are grappling with the question of whether to opt for internal or external clouds.

Often, enterprise users plunk down a credit card and use an external cloud service like Amazon’s S2 because that circumvents the need to wait for IT to approve of and fill their request and they can get up and running more quickly.

While that has been touted as improving business agility, it has its pitfalls. The users must be very technical because many external cloud service providers do not provide enough services to make using the cloud easy, Dave Malcolm, self-service virtualization automation vendor Surgient’s chief technology officer, said in a conference call today.

That could lead to more trouble than the users bargained for. “If business customers start making these decisions in the cloud, the failures will be rampant since they don’t often understand their service-level requirements,” warned Gartner analyst Tom Bittman in a keynote speech at the Gartner Data Center Conference, which is being held in Las Vegas through Friday.

Also, service and support may be an issue because external service providers would seek to shift the blame when their clouds crash, Malcolm said. They might do worse – Amazon did not inform users for up to two weeks its S3 cloud storage service crashed in February.

Internal clouds would resolve those problems because they would be managed by the IT department, Surgient’s Malcolm said.

There is no clear-cut answer to the question of which type of cloud service to use, however, and enterprises should evaluate several factors before deciding whether to opt for internal or external clouds, Malcolm said.

Know what you want

Before settling on a solution, companies must understand what they want to use the cloud for, whether the project is temporary or ongoing, what operating systems and applications are required, what tasks users want to perform, and the level of expertise of users, among other things, Malcolm said.

External clouds do not require a large upfront investment in technology and infrastructure, and businesses pay only for the resources they consume, Malcolm said. Internal clouds, on the other hand, require that companies shell out money upfront for the technology and infrastructure. However, they can be customized to suit users’ requirements, and they offer guaranteed security and availability.

Gartner’s Bittman said large enterprises will create dynamic sourcing teams that will orchestrate services in the cloud to meet business needs. Members of such teams must be knowledgeable about both business and technology, a mix of skills Bittman described as rare.

Meanwhile, vendors are preparing to handle both approaches to the cloud.
At its annual user conference VMworld 2008, VMware (NASDAQ: VMW) unveiled the vCloud initiative, which will let enterprises federate internal datacenters with clouds offsite.

IBM (NYSE: IBM) is capitalizing on the scarcity of people knowledgeable about business and technology. It will extend its consulting and technology services to the cloud.

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