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The Myths of Cloud Adoption – An article by L.S.Subramanian, Cloud Evangelist

by tapangarg on May 19, 2011

Early adopters of Cloud have reaped the benefits of business agility and efficiency. However, businesses have been slow to leverage the Cloud advantage. Common myths that have been the cause of this slow adoption include:

Security

The fear of losing control of computing facilities translates into doubts about the security of the Cloud. Cloud Service Providers need to work on building trust in using Cloud computing. The CSA Governance Model is exhaustive: https://cloudsecurityalliance.org/guidance.html

The ENISA also has excellent guidance on Cloud security:
http://www.enisa.europa.eu/act/rm/files/deliverables/cloudcomputing-risk-assessment

Data interoperability

Data migration is one of the biggest show-stoppers. Many believe that once they upload their data, they will never be able to get it back again, or will get it in a format that will be useless, off the Cloud. This is an unfounded belief, except for cases in which the data is createdin a SaaS system since it is not interoperable with other systems.

Data loss in the Cloud

The Information Lifecycle Management is most robust in the Cloud, and yet the fear of few kilobytes of data being lost is louder instead of the terabytes of data being managed byCloud service providers. If westatistically compute the ILM inthe Cloud, it will pass the Six Sigma Test.

Cost of the Cloud

While it is true that most companies cannot have long term cost contracts for the Cloud, they must remember that, thanks to competition, the cost of Cloud services will only reduce, as more people adopt the Cloud.

The Cloud is all hype

Many believe that the Cloud is a marketing invention. On the contrary, the Cloud is, an amalgamation of some of the best computing technologies and processes for reliable, resilient, and secure operations.

IT leaders’ insecurity

Businesses will sooner or later understand the benefits of Cloud Computing and choose toe mbrace the Cloud. CIOs who feel threatened must realize that putting off Cloud adoption is not going to help.

Traditional technology marketing

Cloud computing is a utility and has to be marketed like other utilities – electricity, broadband or water. As against the traditional technologycycle, a fresh approach is needed to evangelize the user; once the user logs onto a service provider, payments and deployment of services, are digitally deployed.

A reliable financial measure

If one applies the measure of Economic Value Addition (EVA) to Cloud computing, the financial benefits of the Cloud are evident. Other traditional models will not suffice to monetize Cloud benefits. A selective approach is the key, but one needs to define outcomes and milestones for total transition, while keeping the strategic and financial benefits as the final measure of success.

What Does Economic Value Added – EVA Mean?

A measure of a company’s financial performance based on the residual wealth is calculated by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis). (Also referred to as “economic profit”.)

EVA = Net Operating Profit after Taxes (NOPAT) -(Capital * Cost of Capital)

Investopedia explains Economic Value Added – EVA. This measure was devised by Stern Stewart & Co.

Economic value added attempts to capture the true economic profit of a company.

Credit: http://www.investopedia.com/terms/e/eva.asp©

Cloud is a disruptive technology

Most people resist ‘change’. The adoption of Cloud is easier in the boardrooms. SMEs are clearly the early adopters. Cloud service providers need to position theCloud as a strategic enabler in business boardrooms and educate board members.

 

L S Subramanian
NISE – Celebrating 10 Years of
Nurturing Innovation and Sustaining
Excellence
subramanianls@niseindia.com

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  • Raghavan Madabhushi

    Very well documented. World will eventually move to cloud where large data centers render apps to businesses and they start using the same. Its going to happen in next 10 years. Enterprises cannot spend such huge budgets on premise apps and still grapple with issues. Adoption also has got societal phenomenon. The entire IT services and box selling mode will resist this change as its going to eat their bread and butter. But customers on the other hand are shrinking budgets for such IT spending due to global economic woes. A point will come where IT Services business will have diminishing value of returns as customers migrate to cloud.

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