There is ample evidence to suggest that many common and well defined activities in I.T. are shifting from a product to a service based economy. Naturally this change creates a broad range of risks including :-
- the risk of doing nothing as competitors gain advantage from economies of scale through volume operations, utility charging, ability to focus on core activities and a faster speed to market through componentisation .
- transitional risks including confusion, security of supply, trust in new providers, transparency and governance.
- outsourcing risks including suitability, vendor lock-in, pricing competition, second sourcing options and loss of strategic control.
For any organisation, it is a case of balancing the risk of not using the cloud against the risks of using it. There appears to be two general schools of thought on this subject.
The first school states that whilst the outsourcing risks will be solved by the formation of competitive utility computing markets (with easy switching between providers) these markets do not exist today. Hence, whilst the movement to public clouds is considered inevitable (bar for the largest companies and governments), we're still in a time of transition. Private clouds can help solve many of these transitional risks whilst preparing for a future movement towards public cloud services.
The first school accepts that private clouds have a role, it emphasises the importance of standards, of reducing barriers to education and promotes a hybrid model of both public and private clouds. It encourages a compromise between economies of scale and transitional risks during this time of change.
I've been an advocate of this first school of thought for many years (since before 2006).
The second school of thought states that private clouds aren't cloud computing and advocates adoption of public clouds. It dismisses the transitional phase and talks of continuous innovation in the provision of what is fundamentally a commodity (commonplace, well defined and hence suitable for service provision). It is almost purist by nature, sometimes describing public clouds as true cloud computing and finding little distinction between private clouds and virtualisation platforms.
I don't subscribe to this second school of thought. Basic economic sense and risk management would suggest that in this time of transition, organisations will attempt to gain some of the benefits whilst mitigating the dangers of this phase. Hence, for the next few years I'd expect the cloud industry to be dominated by hybrid models.
After which I'd expect it to become more slanted towards public provision (as competitive markets form) but nevertheless hybrid models will continue to have a role.