1. Fast start-up

"Cloud computing is really a no-brainer for any start-up because it allows you to test your business plan very quickly for little money. Every start-up, or even a division within a company that has an idea for something new, should be figuring out how to use cloud computing in its plan," says Brad Jefferson, CEO of Animoto, a New York company that creates full-motion videos out of customer-selected photos and music. "Cloud computing has changed the game for entrepreneurs -- the greatest part about it is that on launch day, you have the confidence that you scale to the world."2. Scalability

To figure out if you're a good cloud service prospect, first consider the variability of the resource utilization of your own IT structure, says Tom Nolle, CEO of CIMI, a high-tech consulting firm. "If you've got enormous peaks and valleys, you're forced to oversupply IT resources to address the peaks. It may be significantly less costly for you to outsource the peaks," he says.

3. Business agility.

"Your mind really changes quickly when you can solve problems using IT resources but you don't need a long-term commitment and you don't have to wait a long time to get them," says Michael Crandell, CEO of RightScale, a cloud management and support company. "Cloud computing changes the whole pattern of agility at a much lower cost."

4. Faster product development

Since moving some applications and data to Amazon's cloud last April, Eli Lilly & Co. has seen provisioning time drop from weeks to minutes, says Dave Powers, associate information consultant at the Indianapolis company. "If I can give scientists eight weeks back on their research, that's a huge value there," he adds. "This is really starting to impact how we do business. We're starting to reduce cycle times in research, which is critical for us. That's a trickle-down effect of technology that we can make available to the scientific community."

5. No capital expenditures

Are you out of space in your data center? Have your applications outgrown the infrastructure? Cloud computing services allow a company to shift from capital to operational expenses even in do-or-die cases, says Bernard Golden, CEO of HyperStratus, a consulting firm specializing in advanced IT technologies.

ON THE DOWNSIDE

1. Bandwidth could bust your budget

Such was the case at Sony Pictures Image Works, which considered then ruled out an external cloud service to address storage scalability challenges, says Nick Bali, senior systems engineer at the Culver City, Calif., company. Every day, Sony animators access and generate between 4 and 12 terabytes of data. "The network bandwidth we'd need to put that into someone's cloud and to read it back is tremendous, and the cost would be so large that we might as well buy the storage ourselves rather than paying someone else for it," he says. Now Sony is evaluating a private storage cloud, using ParaScale's cloud storage software.