McKinsey’s Premature Cloud Report

The last few days have seen a lot of discussion over the McKinsey & Company report: Clearing the Air on Cloud Computing. McKinsey said the cost of the Cloud is high when compared to a large enterprises ability to implement similar services in house. They may, currently, be correct, but over time, this will likely be a differentiation that will erode. Enterprises will need the Cloud, as new applications become Cloud dependent. We have seen, for the first time, services move down the infrastructure stack. For example, tagging, sharing and collaboration will become requirements for Cloud Storage.

McKinsey rightly stated that Public Cloud is the domain of the small and medium business. What I have observed is that every year, larger companies join this view. We now say it this way: SMB and mid tier enterprise will turn to the Cloud. Mid tier will continue to include larger and larger companies.

Also, each Enterprise is different, and in different financial circumstances. Their existing IT infrastructure may be out of date, and require a very capital intensive retrofit to achieve the same economies as public cloud. To the extent an Enterprise does not want to put it’s capital to work in IT, in house computing will be a less popular option, regardless of opex costs. The McKinsey view seemed very cost focused, and cost is driving Cloud consideration in the enterprise.

The key issue was raised, but did not receive in depth consideration!

Public Cloud providers must, I repeat, must build out mission critical service delivery capability, with security, management and SLAs that deliver the credibility and service level an enterprise will require to move their in house applications to the Cloud. Its that simple, and that is the issue. IT service providers get this, and will deliver it within their clouds. Simple to say, a bit harder to do. But, it will happen.

UPDATE

Tim Bray lets McKinsey have it >>

– Amazon’s James Hamilton has an insightful post here >>

Leave a Comment