The whole blogosphere and Twitterverse seem to be buzzing about the McKinsey slide deck “Clearing the air on cloud computing” with little positive feedback. Will Forrest tries to address the following in the report:
While it has great potential, many of the claims being made about cloud computing have lead some to the point of “irrational exuberance” and unrealistic expectations. The purpose of this report is to focus the nascent cloud industry and its consumers on setting realistic expectations by taking a “hype free” approach starting with the most basic question of what a “cloud” actually is.
Joe Weinman’s post on Gigaom tries to pinpoint the reasons why the McKinsey report missed the mark where he drills down on the wrong focus by McKinsey on the unit cost instead of the total cost. I’m not going to jump on the “question the McKinsey report” wagon since there are plenty of posts already out there doing so. No, I’m going to question the overrated focus on costs.
Joe has a very valid point to question the unit cost vs. total cost in his post. McKinsey is right to say that renting cloud infrastructure is pretty expensive but that is something that Chris Fleck from Citrix already pointed out in his blog last September. If you have the scenario that you have a steady 100 % usage of your resources without irregular usage patterns or spikes, then it is too costly to move away from your data center to a cloud. To be fair, that is what the McKinsey report also shows. Morale of the story is that cloud is good for certain scenarios, so McKinsey would have done a hell of a job (and probably received more kudoz) by taking it a step further and doing the same for calculating scenarios where cloud is very cost effective for large enterprises.
My biggest complaint so far when I see posts on cloud cost calculations is that the majority of the people focus too much on the costs and less on the other benefits. The McKinsey report started good on slide 4 with the mentioning of the faster time to market, but doesn’t seem to focus on this. I think that for several companies the fact that you can have a very fast time to market thanks to cloud technology, outweighs the potential higher cost of adopting cloud. (Note that I use “potential higher cost”).
Imagine that your national soccer team passed the semi-finals of the world championship, while nobody even had a clue that they would even qualify. Imagine that you are a large retailer that wants to jump on this wagon and quickly want to launch a huge campaign. The marketing and social media strategy guys cook up something in two days and want to launch it in another two days with the expectation that it will attract hundred thousands of visitors in a very short period. In a company with a traditional IT department with own data center, you can forget about this. In many companies it is next to impossible to deliver a large amount of server capacity in just two days. I know companies where it take weeks. Just figure.
Is going cloud in this case expensive? Yes, but you pay for your business agility. The fact that your IT department can move almost as fast as the business is for many companies a wet dream coming true. Even more, in this case the retailer might save a lot of money since most likely the soccer team will be beaten in the finals, meaning that in another couple of days they won’t need all those servers anymore…
Lee Provoost is a Cloud Computing Strategist and ERP+ lead at Capgemini. You can follow his ongoing stream of thoughts on Twitter http://twitter.com/leeprovoost.