Forrester: Surprise! The Enterprise is Ready for Cloud Computing

Many Cloud Computing pundits have predicted that the early adopters will be largely comprised of small and mid-sized businesses.

Some new data from Forrester suggests that won’t be the case.

According to Forrester’s Frank E. Gillett in Conventional Wisdom Is Wrong About Cloud IaaS, one out of four large companies plan to use an external provider soon, or have already employed one. Furthermore, we learn that 33 per cent of large companies plan to use a service provider for Infrastructure-as-a-Service, while just 24 per cent want to run their own “private” clouds.

Industry commentators are surprised by Forrester’s findings.

Naysayer Bernard Golden writes that what he found most surprising was that more than one-third of both large and medium enterprise companies are ready to put enterprise applications into production in external cloud providers. He also notes “interest in production app placement in external clouds is nearly as high as for test/dev.”

Mary Hayes Weier joins the chorus as well, and says that the Forrester report proves that “conventional wisdom is wrong.”

The question is why. Why are large companies challenging convention and turning to external service providers?

It’s the economics. We see that cloud computing brings a disruptive and liberating pricing model to infrastructure. Why sink capital costs into infrastructure when you don’t have to?

The cloud brings game-changing pricing and service capabilities to disaster recovery, fault tolerance, geographic redundancy, and other solutions that until now have been prohibitively expensive to everyone except for the largest organizations in the world. And now even these large organizations are not about to look the other way. They are looking at ways to optimize their IT and improve their cash flow. Why spend money up front when you can pay as you play?

Steve and I have been saying this all along, and now we’re glad to see the evidence has reached the mainstream.

On this blog, we’ve talked about GE and Bechtel – and their enterprise level cloud computing plans. We’ve emphasized that it is the IT service providers who have the core competencies – the people and the ITIL processes to deliver the promise of cloud computing to the enterprise. Enterprise hosting companies are already positioned to deliver cloud computing services to the enterprise market, and before long we think dedicated hosters who succeed in fully automating the purchase, provisioning and support of the physical/hardware layer (some would say, the commodity layer) will move up market in a Christensensian assault on the enterprise market.

As described by Nick Carr in The Big Switch, IT hosting is in the process of transforming to electric-utility-like status. We will think of IT hosters as providing IT infrastructure as a service, and we will want to “plug in” to these providers as we plug in to the power grid today.

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