COMPLIMENTARY ADVISORY REPORT

Playing in the Cloud:
New IT Services Reality or More Vapor in an Already Foggy Economy?

| March 19, 2009 | Managed IT Services | Advisory Report

| Analyst: Amy Larsen DeCarlo, Principal Analyst, Managed IT Services

Ask ten corporate IT executives for their assessment of the cloud services making the technology headlines today, and you‘ll likely get ten different answers ranging from “science fiction future” to “yesterday’s news”. So is the cloud play just another marketing scheme, a promising but flawed new computing model, simply another name for delivering managed IT services, or some combination of those? Practically speaking, defining cloud services as a superset of managed solutions that leverage a Web delivery model — with multi-tenant, pay-per-use software-as-a-service (SaaS)/platform-as-a-service (PaaS) emerging as a new archetype — may be the most accurate way to view the market today.

Though there is plenty of hype around the cloud concept, there is some truth behind the talk about it being a real paradigm shift. Providers have been offering managed services over both the public Web and through private IP networks for years with hosted applications and utility computing offers. But the delivery of technology services to enterprise clients is evolving, as are the business models that support service delivery: In some ways, these models mirror the way popular consumer applications such as Apple iTunes and Web-based games are supplied to users. Add a floundering global economy and rising budget woes to the mix, and cost-effective cloud services are bound to resonate with a broad customer set.

However, prospective clients will have legitimate concerns around stability, security and even expenses that will keep them on the sidelines. What will motivate these customers to make the jump into the cloud, which providers are in the best position to capture their business, and what can other companies learn from them?

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