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the provider and clients. At the opposite end of the spectrum, SaaS providers run complete software applications designed for multitenancy -- adding a client to Google Apps does not require Google to roll out new servers, databases, and software specifically for that client. The economies of scale for such multitenant SaaS solutions can be enormous, often in excess of ten-fold savings. As the spectrum of these economic benefits is large, it is important that CIOs considering cloud solutions realise that those economic benefits will be less (and perhaps non-existent) for IaaS. That is, whereas there are compelling non-economic arguments for IaaS, economies of scale are best realised via SaaS. As economies of scale improve, vendor lock-in issues are increasingly cumbersome. In IaaS environments, since the client maintains complete control of the software layers deployed on the provider’s servers, it should be a straightforward exercise to migrate those virtual environments. However, the migration of an enterprise's financial systems running in a SaaS environment presents a substantial challenge. Nevertheless, it is important to note that this disadvantage of SaaS stickiness is no more onerous that the stickiness of equivalent on-premise solutions. Therefore, the vendor-lockin spectrum should not be considered either an advantage for IaaS or disadvantage for SaaS based on their cloud nature.

Cloud Computing's Systems-Integration Challenges Systems integration has always been a challenge for IT organisations. A proper implementation of a cloud solution should neither ease nor exacerbate this challenge. For IaaS, the burden on IT is to implement a hybrid cloud. That is, by implementing virtual environments on premise similar to the cloud provider’s, the integration of systems should be handled similarly to traditional integration tasks. For enterprises prepared to commit to a single development platform, PaaS solutions offer streamlined integration within the offered platform; however, integrating those systems with others involves not only traditional integration challenges, but also new ones involving the transformations between the on-premise and cloud environments. With SaaS solutions, the cloud provider wholly controls each system. In some cases, they cannot be integrated with others at all. But, increasingly, SaaS providers are offering application programmer interfaces to enable integration. At a minimum, CIOs should insist on identity integration capability so that SaaS and on-premise systems can share single-sign-on features. Overall, cloud-to-premise integration presents a growing challenge for hybrid environments and an emerging requirement for mature tools. There are some existing vendor offerings available, but the costs of these tools must be factored into the decisions. An enterprise's size and maturity, or enterprise inertia, has a profound effect on its ability to exploit cloud computing. As enterprise inertia increases from infancy (start up) to mature (large enterprise with well developed IT exploiting virtualisation), the ability to leverage the benefits of cloud computing starts high, then decreases, and then increases again. 


Infant companies with no IT investment are ideally suited to forgo on-premise IT, immediately implementing cloud solutions. SaaS solutions can be selected for well-defined applications with PaaS or IaaS leveraged for custom systems. On the other end of the inertia spectrum, mature enterprises having implemented a private cloud can easily extend into the public cloud for managing load requirements, data center expansion, or specific SaaS offerings. The most difficult situation is encountered with adolescent enterprises invested in on-premise non-virtualised data centers with custom enterprise systems. These CIOs face the challenges with cloud solutions due to systems integration issues.

Cloud Computing's Security Questions Finally, no conversation about the pitfalls of cloud computing is complete without discussing security. "How can you expect me to house my precious data in the cloud? It can't be as secure as in my data center under my control!" The argument is powerful, despite its core flaw: an effective cloud provider, whose business is managing a multitenant data center, invests far more in security that an enterprise whose business is not data center management. Indeed, it is akin to your money being safer in a bank than in your mattress. But, the psychological barrier still exists in the illusion of security within an enterprise’s walls. Perhaps that fear can be mitigated with cloud insurance in which insurance against security breaches is available at discounted rates over similar insurance for on-premise data security. Such discounted rates should be available based on the level of investment in security technologies that the cloud provider maintains. However, even if these barriers are overcome, satisfying security concerns, a remaining issue is the lag between reality and law. Specifically, even if it becomes obvious that data are more secure with a cloud provider than within an enterprise, archaic laws may demand on-premise data. Eventually, laws should reflect reality, but it will take time.


Cloud Computing's Future

Darwin's theory of natural selection works in technology markets. Although there are fluctuations in adoptions that lead to temporal suboptimality, eventually the market will select solutions that best fit the requirements of society. The economic benefits of cloud computing will overwhelm the obstacles, demanding solutions that overcome them. There are pitfalls and caveats that CIOs and CEOs alike must beware of in adopting cloud computing, but the biggest mistake of all is to be left behind as competitors take advantage of this inevitable future of the IT industry.

servers in Asia Pacific are virtualised: Survey

—Alexander Pasik, PhD is CIO of the IEEE and Adjunct Associate Professor of Computer Science at Columbia University in New York City. You can reach him —This opinion was first published in CIO Insight. For more stories please visit

The Chief Technology Officer Forum

cto forum 21 November 2011


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