Hype and Reality of Cloud Computing – “Mind the Gap!”

9 Mar 2010
by Yugal Joshi



Cloud computing is entering the enterprise IT agenda with several promises including flexible IT demand management and cost reduction. Suppliers are adopting multiple strategies to attract enterprise buyers; however, there are many issues that organizations need to consider before betting big on the cloud.

This report evaluates cloud computing with respect to traditional and virtualized enterprise setups and analyzes the risks and challenges associated with the cloud. Companies will benefit from understanding how to exploit opportunities in “Operations as a Service” which is an under-penetrated part of the IT stack, and also by understanding the current cloud offerings of major suppliers. The report also provides three possible scenarios of cloud adoption and what needs to be done to achieve these scenarios.

Hardware unit cost for the buyer 


  • Definition of the Cloud Computing IT stack and services landscape
  • Assessment of the buyer challenges to Cloud Computing adoption and Cloud Computing business case
  • Analysis of suppliers’ cloud strategies and service offerings
  • Alternate scenarios for evolution of Cloud Computing in ITO


This research focuses on understanding the value proposition offered by cloud computing vis-à-vis a traditional and virtualized enterprise setups. It analyzes the “Operations as a service” stack in cloud computing and the associated opportunity. Key insights are presented in five sections: cloud computing overview, cloud computing business case, cloud strategy feasibility for buyers and challenges, supplier cloud strategies and a scenario for cloud computing adoption. For instance the second section of the report discusses various value levers and role of suppliers in leveraging those.

  • Suppliers can leverage multiple value levers e.g., utilization, scale, standardization and labor flexibility to provide cloud services to buyers and drive down costs
  • Cloud computing indeed makes significant sense over a traditional enterprise setup; however, the value proposition over an already virtualized setup is not certain
  • Buyers should evaluate cloud computing based on the associated risks especially if they are considering public cloud offerings
  • Buyer size is also important with respect to cloud adoption. Mid sized buyers would gain more if they allow suppliers to develop and manage the cloud environment for them

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