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5 Rules to Make Sense of Using Cloud Computing in Your Business

In today's (more or less) post-recession market, CIOs and other senior IT decision makers are under pressure to do more with less. The demands on IT solutions are escalating, but execs are unable, or unwilling, to let technology budgets expand at the same speed.

And as sustainability advances up corporate agendas, additional attention is being paid to IT: The U.S. Department of Energy calculates that data centers now consume up to 3 percent of total U.S. electricity, and it's technology that's been given the challenge of reducing this figure.

One means by which IT leaders are addressing sustainability's multi-pronged challenge is through cloud computing, a model that permits users access to a shared pool of computing resources including servers, storage and applications.

As recent Verdantix research highlighted, traditional IT is inefficient -- the non-cloud model involves vast numbers of servers, maintained at very low utilization rates. Should an urgent business need occur, any delay in the deployment of a new physical server represents a missed revenue opportunity, unacceptable in today's fast-moving marketplace.

Verdantix, in collaboration with the Carbon Disclosure Project, analyzed the existing state of the U.S. cloud computing market through interviews with 11 multi-billion dollar revenue firms as well as with three leading cloud service providers. The report, Cloud Computing: The IT Solution for the 21st Century, was sponsored by AT&T. It identifies the key problem faced by senior execs: how to accurately balance the business and sustainability benefits of moving to cloud computing against the associated risks.

In terms of future sustainability, Verdantix also modelled the uptake of cloud computing in the U.S. (for billion-plus-dollar firms) and forecast what impact this will have on energy spend and carbon emissions.

Our calculations show that as firms spend 69 percent of infrastructure, platform and software budgets on cloud services, these businesses will save $12.3 billion in electricity costs annually by 2020 and 85.7 million tonnes of CO2.

As executives try to make sense of cloud computing in terms of their own businesses, our research offers five key recommendations for IT leaders considering shifting to a cloud-based model:

1) Define an overall strategy. Firms need a corporate-wide strategy to ¬develop an integrated approach, this way, targeted technology investments increase the overall efficiency of the business.
2) Understand existing costs. How much does IT cost your firm today? Cloud computing will never get past the board if the numbers -- not just licence fees but staff, energy and infrastructure too -- don't reveal the benefits.
3) Analyze business cycles. Cloud computing can scale up or scale down computing resources according to demand, so if your business has periodic spikes in activity, it's wiser to turn to the cloud for capacity, rather than maintaining proprietary infrastructure inactive for long periods of time.
4) Pinpoint what's critical. Maintain direct control of your most important business operations; it's wiser to turn to third-party cloud providers for less critical IT functions.
5) Align the workforce. IT developers frequently like to work using their own tools and techniques. Encouraging use of one consistent set of tools facilitates the introduction of cloud-based development platforms.

In researching cloud computing clients, Verdantix heard how firms considered time to market, cost savings, flexibility and automation as key drivers of their shift towards a cloud based model. At the same time, they cited security, service reliability, vendor lock-in and a lack of clarity around the business as barriers to wider adoption of cloud computing.

Only innovative solutions can help IT leaders provide broader, and more efficient, IT services. Cloud computing is one way to achieve these goals, and by following these recommendations, execs will be better able to identify the right mix of cloud services, one that provides the best fit for their business model.

The full CDP report, Cloud Computing: The IT Solution for the 21st Century, is available for download from

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