Is Cloud computing too good to be true for enterprises?

Just how valuable will Cloud computing be to organizations? The ease of deployment and pay-as-you-go pricing model offered through Amazon Web Services, and now Google with its Google App Engine (with no pricing model) could be a honey trap, as some of my esteemed colleagues here at ZDNet warn.

Is Cloud computing a sweet escape or honey trap?

ZDNet blogging colleague Garett Rogers, for one, wonders if using Google App Engine will create too much dependence on the Big G, making it a wretching, messy process to cut the cord to move to another platform. Another blogmate, Phil Wainewright, also has questions about the business-readiness of Google App Engine, reporting that Google is apparently playing down the notion that its online infrastructure-as-a-service is intended for serious business use.

Dependence on any outside party is one of the quandaries of Cloud Computing, whether its on the Big G, AWS, or other providers.

Dion Hinchliffe asks whether either Google or Amazon -- while offering fantastic value propositions for startups or small companies -- are even suitable for more established enterprises that already have their own infrastructure:

"The decision for many startups will be an easy one; the benefits of using these platforms for their new products are compelling across the board despite minor concerns about platform lock-in even though the models used by both companies are actually surprisingly lock-in free.... But the decision for enterprises on how far to leverage computing platforms in the cloud will be much more complicated. ...issues around governance, security, privacy, and control will be hard to overcome."

The value propositions of low-entry costs and flexibility offered by Cloud computing are huge, enticing advantages. Why sink thousands, hundreds of thousands, or even millions of dollars/euros/pounds/rupees into hardware and software and then constantly worry about maintaining, upgrading and patching said systems?

However, I have also asked similar questions to what Dion is asking about Cloud computing in previous posts. For example, surveys I have worked with consistently have found that larger companies are not inclined at this point to tap into Cloud solutions for mission-critical applications, since the systems they have built up over the years still offer competitive advantage.

In many cases, even 20-year-old mainframe programs contain custom processes and logic that provide market advantages. Thus, we also have to see how beyond the initial rush of cost savings Cloud computing offers, whether it poses the risk of homogenizing enterprises and therefore washing away competitive advantage. Not to mention that for many large organizations which well-established enterprise data management infrastructures, any transition will still require a great deal of integration work for established companies. (Costing plenty more dollars/euros/pounds/rupees)

Vendor reliability is also always a major risk factor that lurks behind any such arrangement. What happens if a provider suddenly goes out of business? Or changes business models? Or decides to contract with yet another company for IT services it decides it no longer wants to provide?

And, of course, there are always worries about security, especially when files are in someone else’s hands. Will Sarbanes-Oxley auditors look kindly on off-premise arrangements?

Nevertheless, Google's forceful entry into the Cloud computing space means a game-changing battle royale is emerging. Dion says the move is turning the Internet cloud computing space "into a fully-fledged industry virtually overnight." As he observes:

"What makes these offerings so interesting is their promise to turn enormous amounts of operational competency and accumulated economies of scale (which are enormous in Amazon’s and Google’s cases) into a highly competitive new software platform, akin to Windows or Linux, except entirely hosted off-premises and on the Internet."

With Google and Amazon going head to head, there is quite a battle in the Cloud brewing. My colleague Dan Gardner even coined name for this new level of aerial combat, as "gangsta cloud wars."

Amazon, which has been offering infrastructure-as-a-service Web services for several years now, is not sitting still, having recently announced new offerings such as its "Elastic IP" addresses offering, which enable Amazon EC2 (Elastic Compute Cloud) developers to build more robust and fault-resilient applications in the Cloud.

[UPDATE April 14: Amazon just added another new feature, in which persistent storage "volumes" can be added to EC2 implementations. Thanks to reader Thorsten von Eicken for the pointer.]

Dion reviewed the strengths and weaknesses of each noting that "in terms of capacity, Google currently has sharp limits on many of it Web services while Amazon has been impressively open-ended about 'sky-is-the-limit' capacity ceilings." However, Google may appeal more to developers seeking a more integrated approach versus Amazon’s services , which are "essentially a box of high quality pieces without much integration."

Readers -- give us your thoughts on Cloud computing. Is it a good bet, or too risky for mission-critical business systems right now?

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