Structure 2010: The Value of the Cloud — It’s Not Just About Cost

Cloud computing is often seen as beneficial primarily because it lowers IT costs, but several of the panelists at GigaOM’s Structure conference this morning said this is a misconception, and enterprises that focus solely on costs will miss the point. John Hagel, director of Deloitte Consulting’s Center for the Edge, said that when he talks to executives about cloud computing, they often see it as “just another form of low-cost IT outsourcing” and hand it off to the CIO.

Hagel said that doing this “misses the boat,” and that cloud computing affects all of a company’s business, not just IT. Cloud computing “fundamentally redefines the options for companies” across a number of different elements of the business, said Hagel. “This is going to disrupt the technology industry profoundly,” he said, as a result “it’s a CEO issue, not just a CIO issue.”

Hagel and several other members of the panel also said that one of the issues with handing off cloud computing to the IT department is that — like many other developments in corporate technology, such as the use of micro-computers and then PCs — the IT department is often overly cautious about using new tools, for security and other reasons.

Forrester Research analyst James Staten said that “if you want to know what is going on with cloud computing in an organization, don’t go to IT.” When IT departments are asked who uses cloud computing, they say 5 percent, Staten said, but when you ask application developers within a company they say 25 percent. “It’s a huge disconnect,” he said. Greg Kaplan of Bluewolf Consulting, however, said that in order to make cloud computing a success within a company “IT must be included,” and doing an end run around the CIO won’t work in the long run.

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