The Cloud is ready but the Enterprise is not

Seems like the whole world is talking about Cloud Computing Adoption in the Enterprise. What surprises me more is that some folks with a good sized audience are saying that as the technology is ready and the cost cheap, Enterprises will start replacing their applications with Cloud based apps.

I don't think so.

Cloud Computing Adoption in the Fortune 50, the ones which have an IT budget > 1 billion , is going to be two step process. Step1) Outsource your IT Infrastructure to Infrastructure Managed services provider like CSC , HP/EDS or even HCL and Step2) Finally adopt Saas and IaaS on a case by case basis once you have some sort of a pay per use model working for the Enterprise with the Managed service provider.

You cannot just switch to SaaS applications overnight(or even in an year) , nor are most applications built for use in a virtual environment. I would not be surprised to find that most large enterprises have more than 80% of their applications that cant even be moved to VMWARE without modifications, forget about moving to cloud.

What I am seeing in the Enterprise is that they like the Pay per use model. This not only fixes their internal IT finance issues(like which BU pays what , what are the allocations to the department etc) , but also moves IT to an expense category as compared to Capital expenditure. As a result, I do see a strong push to outsource IT infrastructure , mostly to Managed Service providers with some cost savings , though not as much as what they can save by moving to cloud computing. Now the managed service providers,who typically have their own data centers, are pushing hard to at-least not have dedicated boxes for each application. i.e move to vmvare type solutions.

So my guess is that once the applications move to a virtual environment as a step 1 and the Enterprises start paying for the IT infrastructure in a monthly model , switching to cloud with solutions like CloudSwitch would not be very difficult. It would be like moving from one cable tv operator for your home to another. Although the switch is not 100% smooth like putting in a new appliance , you can still switch with about 2-3 hrs of work