Cloud computing plans slowed by bad economy

Most large enterprises are ready to begin a slow and cautious migration to cloud computing services – starting with internal clouds and non-mission-critical applications – but the harsh economy is putting a drag on those efforts in most cases, despite the fact that anticipated savings on infrastructure spending is one of the reasons enterprises are moving toward the cloud to begin with. These are some of the findings in a new report issued by the Yankee Group that includes the results of a recent survey of enterprises.

Among enterprises with 500 or more employees, 60% said they had plans to shift more than a third of their internal IT infrastructure (like servers and applications) to cloud computing in the next two years, Yankee said. The majority (57%) are looking to use private (or internal) clouds, while 31% are considering hybrid (internal/external) clouds. Over time, as companies grow more comfortable with cloud computing and the security aspects related to it, they may become more open to completely external clouds.

Most commonly, they will start with non-mission-critical applications (indicated by 43% of survey respondents), though more than a third (35%) will use the cloud for mission-critical apps and another third will use internal clouds to get extra computing power on demand.

“Although these findings are not necessarily an indictment of cloud providers, they underscore the need for a common methodology and procedure through which to define, manage and enforce the security aspects of cloud computing, regardless of deployment model used,” Agatha Poon, Yankee’s Group senior analyst, said in a recent report. “The bottom line is that vendors need to ensure enterprises are absolutely clear on the steps necessary to secure the cloud, from the physical infrastructure all the way up to the application layer.”

Respondents’ top concerns about private clouds were the challenging IT governance entailed and the reliability and availability of cloud platforms, each of which were cited by more than a third of respondents.

However, the tough economy is slowing enterprise cloud plans, Yankee Group found. Just over half of respondents said the economy had forced them to at least moderately scale back their cloud plans, and more than 10% said their plans were severely curtailed. That’s despite the fact that cloud computing offers the promise of lowering infrastructure spending by allowing resources to be shared and used more efficiently and allowing businesses to pay only for the amount of service they consume.

“The idea of sharing compute resources across all business units and optimizing utilization of resources in the data center is appealing to CTOs,” Poon wrote. “But getting to the point where all business stakeholders fully understand the benefits of the cloud computing model and make strategic investments is still a bit down the road.”

Poon also pointed out that while virtualization may allow networks to be more flexible, networks can also become bottlenecks in a cloud environment, threatening the performance of the entire system. She urged service providers to design even internal clouds “with the network in mind.”

“In a virtualized environment, for example, gigabit Ethernet has become the de facto network standard for connecting to servers,” she wrote. “But running multiple virtual machines on a single server and accessing them via gigabit Ethernet could overwhelm the network, leading to degraded performance. The situation is exacerbated as enterprise users expect to access business applications anywhere, anytime, resulting in applications being dynamically rerouted on the fly to meet specific requests. There is and will continue to be debate about which functions are the domain of a dynamic computing infrastructure. But there is no question that the network has an increasing role in affecting application and service performance, rather than just providing enough bandwidth for them.”

When asked to name their preferred provider of platform services, respondents cited Microsoft’s Windows Azure (53%), IBM (46%) and Google’s App Engine (33%).