Why Cloud Computing Won’t Work For Every IT Project

by drjim on September 23, 2010

Caption: Not All Clouds Are There To Help Your Project…

Caption: Not All Clouds Are There To Help Your Project…

If IT was a game show and you were a contestant on it, right now it sure seems as though you could correctly any question that you were asked by replying “cloud computing”. That’s because cloud computing, basically outsourcing parts of your next IT project’s IT infrastructure and applications, sure seems like a great idea. However, early reports back from the front lines by other IT Leaders are starting to paint a different picture…

…And Why Are We Talking About Clouds?

The reason that we’re talking about cloud computing is because it’s ushered in an era of “software as a service”, or SaaS if you want to be cool. The reason that IT Leaders like to talk about SaaS based applications that run in the cloud is because they offer an opportunity to save the company a lot of money.

A single user’s subscription to a SaaS application generally costs an IT Leader about $10 – $50 per month. The beauty of this approach is that that cost includes maintenance, support, and even the hardware that the application runs on. Oh, and all of a sudden your users can log into the application from anywhere – they don’t have to be in the office to do work.

Just How Big Of A Deal Is This?

SaaS (and Cloud Computing) is growing like a weed right now. The folks over at Gartner are telling us that in the business software market, SaaS offerings make up about 9% of what’s out there right now and it’s expected to hit 16% by 2013 because it’s growing at about 20% per year.

This is where IT Leaders are starting to see problems pop up. Since the whole SaaS market is growing so fast, even the people who work in it are finding themselves unable to keep up. This means that IT Leaders who are trying to get information on what products are available are starting to run into sales people who really don’t know what their company’s product can and cannot do. This is where problems with SaaS offerings start…

What’s Wrong With SaaS?

Unlike the glowing brochures that you’ll get from SaaS providers and the industry rag articles that are falling over themselves saying that Cloud Computing is the “next big thing”, IT Leaders who are on the front lines are reporting that SaaS is not a silver bullet and has its own set of problems.

In fact, some companies that went down the SaaS route are now pulling back. Gartner reports that the top reasons that IT Leaders have been deciding to discontinue their SaaS deployments are:

  • Difficulty in integration with existing applications
  • High cost of services
  • Lack of agility provided to the business
  • Level of investment required
  • Lack of robustness
  • Poor track record of provider
  • Poor client references
  • Inadequate security, privacy, or confidentiality
  • Didn’t meet technical requirements

Bottom Line Issues

In the end, it all comes down to money. One of the biggest attractions of SaaS is that it offers hard-pressed IT Leaders a way to stretch their IT project budgets farther. However, IT Leaders that have implemented SaaS solutions are reporting that the benefits may not be so clear after all.

In the initial years, yes – your IT project will save on having to make the big CapEx spends that they would normally have to make in order to create the infrastructure to support another enterprise application. However, what seems to be missing is the ultimate reduction in people to support that solution and infrastructure costs over time.

What All Of This Means For You

The world of IT keeps changing all the time and as an IT Leader you’re going to have to move fast in order to keep up. SaaS offers many benefits; however, there the drawbacks are also starting to show up.

IT Leaders on the frontlines of SaaS deployments are reporting that they are running into issues with integrating the SaaS applications with their existing enterprise applications. Additionally, many of the economic benefits appear to be only in the first few years with the long term benefits not being nearly as clear.

Right now Cloud Computing and SaaS are hot topics that every IT Leader should be looking into. However, look before you leap as the saying goes…

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Management Skills™

Question For You: Do you think that having to hire fewer staff to mange one of these projects should be a benefit of a SaaS deployment?

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What We’ll Be Talking About Next Time

As an IT Leader, one of your main jobs is to lead your team though changes. However, here is where you may run into a problem. Considering how many layoffs, cut backs, and canceled projects most IT teams have had to work though, the last thing that your team really wants is more change. What’s an IT Leader to do?

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{ 2 comments… read them below or add one }

Denise September 29, 2010 at 7:08 pm

As a municipality we are looking into this type of mangement system. I’m glad that I read this article and now have some insight to what we are looking at and what we might need to do.

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Dr. Jim Anderson September 30, 2010 at 3:59 pm

Denise: the whole world will probably eventually move to a cloud based solution; however, the key to your success is understanding when is the right time to make the jump for your situation! Good luck!

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