Cloud computing is heralded as the next big thing in enterprise IT. While corporate data centers and on-premise software are not going away anytime soon, "the clouds" will likely have a growing impact on enterprise IT and business activities in many large organizations. CIOs and other business leaders must look beyond the hype to see what opportunities and challenges lie in the cloud—and how this approach can be used to further the organization's strategy to achieve high performance.
Cloud computing is a classic disruptive technology. As such, it has its origin in the fringe of the IT market, i.e., the small and medium-sized enterprise (SME) and consumers, whose need for simpler and lower-cost or even free solutions is underserved by traditional packaged software. As cloud-based services matured, they started to win broader acceptance from mainstream enterprise customers. Now, they compete directly with on-premise and packaged software. The significance of the cloud, however, lies far beyond cheap computing. The Web-enabled, variable cost model represents a huge departure from existing practice, and carries far-reaching implications for IT providers and users alike. A new wave of venture-funded startups are likely to appear, offering an array of innovative solutions ranging from niche applications to cloud middleware and infrastructure services. The emergence of cloud platforms will significantly ease the entry barrier for such small players to develop, deploy, scale and integrate their services. The battle between pure Internet players like Google, Amazon and Salesforce and traditional enterprise vendors has just begun. Incumbents such as SAP, Oracle, and Microsoft have been investing aggressively to extend their on-premise capabilities into the cloud. For example, Microsoft has launched online services to offer its software in the cloud. It is also investing billions in datacenters to help confirm quality and availability. Microsoft has developed a Software + Services hybrid model to offer its customers a choice between on-premise, partner-managed or Microsoft hosted solutions.
One of the key challenges of cloud computing, which is defining successful business models and architectures for value creation in the enterprise. At this nascent stage both SMEs and large enterprises are just beginning to adopt cloud technologies, as CIOs and IT managers learn about how they can deploy the cloud in their organizations it will create business opportunities for startups and entrenched players to develop business models that are successful in serving their customers as well leading to the success of their own companies. .
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