Virtualization and Cloud Advisor

Expert analysis and advice on server virtualization technologies, deployments and management.

RSS
All Posts | RSS

Our blogger: Bernard Golden is CEO of consulting firm HyperStratus, which specializes in virtualization, cloud computing and related issues. He is also the author of "Virtualization for Dummies," the best-selling book on virtualization to date.

Wed, November 05, 2008

How to Explain Cloud Computing to Your CFO

By Bernard Golden

Keywords: cloud, cloud computing, Forrester

CONNECTIONS
Forrester
Forrester has just released a report outlining the CFO-ish benefits of cloud computing. The report, entitled "Talking to Your CFO About Cloud Computing," is aimed at communicating the benefits of cloud computing to him or her. (Someone a bit more cynical than me might say a companion report, to help you communicate cloud computing's benefits to a CIO, is in order as well).

A couple of things about the report (see the executive summary on Forrester's site) stood out for me.

First, Forrester emphasizes the fact that use of cloud computing matches cash flow to system benefits more appropriately than the packaged software use model. In the old way of doing things, a large investment is made early in the project prior to system build out, and well before the business benefits (presumably financial in some shape or form) are realized. This model is even more troubling given the risk factors associated with IT systems: they are notorious for failing to deliver their promised benefits, and a large percentage of projects end up scrapped due to poor user acceptance.

By contrast, cloud computing is a pay-as-you-go (aka pay by the drink) approach, in which a low initial investment is required to get going, and additional investment is incurred as system use increases. In this way, cash flows better match total system cost.

This mirrors use of open source software versus proprietary software and, in fact, that's no accident. Cloud computing infrastructures are built, by and large, from open source components. After all, the cloud providers don't want to make large investments upfront without knowing the financial outcomes, either. One might say that cloud computing is a proxy for end user open source adoption, since it acts as a middleman to "civilize" open source for end users.

The second thing that stood out for me: the report makes the argument that cloud computing provides a way to outsource non-critical applications to organizations better suited to run them, allowing IT to focus on critical applications. This makes a ton of sense and is already applied throughout companies in many different areas.

For example, many companies use outside service providers to run their mail rooms and copy centers. Other companies use fleet management services to run their vehicle fleets. Cloud providers, according to the report, are more efficient at IT operations, using fewer man-hours for standard tasks. In addition, cloud providers get better pricing on hardware because they buy in such volume. This core vs. periphery discussion is a long-established one; perhaps the biggest challenge to it is IT organizations more focused on process than outcomes and therefore insistent on controlling (and running) everything.

More from IT Drilldown « Back to Virtualization
CASE STUDY
Disaster Can Inspire Quick Move to Desktop Virtualization
In the wake of a hurricane, a Texas hospital system's IT group overcame user reluctance to virtualize desktop PCs. Here's a look at their journey and the thorny little issue that Citrix just solved a few weeks ago: USB port support. Full Story »

Loading...
Virtualization Vendor Matrix

Find out what vendors offer the products you need.

View the Vendor Matrix »
Virtualization ABCs

Get up to speed on virtualization.

Learn More »
Virtualization MarketSpace
Maximum Efficiency Gains with Virtualization
Learn best practices to optimize your infrastructure and operations department and gain the most from virtualization. Learn more »
Manage Virtualization Initiatives
Learn how you can better manage virtualization initiatives to recognize this technology's maximum value. Learn more »
 
SPONSORED LINKS
 

White Paper: Right-Sizing Your Power Infrastructure

Taking a Seat at the Executive Table: The Reality of Virtualization

Server Consolidation: Leveraging the Benefits of Virtualization

White Paper: 4 Customer Service Myths

White Paper: Managed Security for a Not-So-Secure World

White Paper: 5 Best Practices for Smartphone Support

White Paper: Next Generation Remote Infrastructure Management

Keeping Your Members Safe from Online Scams and Predators

The Total Economic Impact of Network Security Intrusion Prevention

Join us at the US-Brazil IT-BPO Summit, on November 10th in New York.

Increase UPS efficiency without sacrificing protection.

Learn how advanced forecasting tools can deliver significant business results for global corporations.

Lower IT Costs with Oracle Database 11g Release 2

White Paper: Visibility and the New Normal of Mobile Work

Taking the Service Desk to the Next Level

Learn about The Information Technology Infrastructure Library.

Top Five CIO Challenges

Streamline IT Costs. Boost Performance with WAN Optimization.

Want to know how you can maximize employee productivity?

Build your 1st app FREE with Force.com

TDWI checklist helps define data readiness for analytics. Download report.

A new fleet of PCs with a total ROI in 10 months. Find your ROI.

eZine: A Roadmap to Reducing IT Complexity

Reduce risk, gain agility. See how Progress can help your business.

Virtualization Technology as a Business Solution

Global Research: CIOs Weigh In On Virtualization

5 Key Virtualization Management Challenges

See how AT&T can help protect your network.

Webcast: Unleashing the Power of Customer Data

White Paper: Improve Agility with Operational Responsiveness

White Paper: Legacy Tools: Not Built for the Helpdesk

Secure Email and Web-Based Communication from Evolving Attacks

WagerWorks Takes Fraudsters Out of the Game using iovation

Seven Design Requirements for Web 2.0 Threat Protection

Generation Remote Infrastructure Management - Changing the Paradigm

Cloud-Based Email Management: Opinion Shifts In Favor

eBook: How Can You Make Your People Productive Anywhere?

Achieving Business Agility with Application Grid

Ready to virtualize tier one applications? Check your virtualization maturity.

Seven Ways ITIL Can Help You in an Economic Downturn

Tips for successful virtualization management.

Unified Communications: Thoughts, Strategies and Predictions. Join the discussion

Read the RSA report: Security for Business Innovation

Webcast: Looking to the Cloud for Email and Collaboration Services

64-page prescriptive guide to security, compliance, and IT operations.

Keep your IT expertise up to date. Join the Intel Premier IT Professionals.

A Clear View Toward Virtualization

Virtualization Technology as a Business Solution

The rules of infrastructure management just changed.

A Clear View Toward Virtualization

 
 
RESOURCE CENTER