I’ve had this article bookmarked for a couple of weeks, mulling over all the blogs, advertising and rhetoric on Cloud Computing.
In the end, I think what Tim O’Brien, Microsoft’s senior director of platform strategy says about Microsoft’s business plan with their Azure Cloud offering really says about about the Cloud and why it’s the big buzz word in the IT industry.
Here’s what time O’Brien says in an article on Information Week by John Foley.
http://www.informationweek.com/news/services/saas/showArticle.jhtml?articleID=222600247
…Microsoft continues to get many questions from industry analysts on how it will make money in cloud services, given its 30-year history of selling software licenses at high margins. O’Brien says the answer is that Microsoft stands to gain a higher percentage of a company’s overall IT spend, rather than just the money that went toward software licensing.
In other words, IT spending that formerly went toward servers, network switches, electricity, and building leases can now be funneled into Microsoft’s Azure cloud. For Microsoft, that may mean “lower margins, but the volume of dollars can be bigger over time,” O’Brien says. “The way you do that is deliver at scale.” O’Brien says software licensing accounts for about 10% of a typical IT department’s overall budget; Microsoft envisions pulling in 50% of companies’ IT spend as they decommission servers and plug into its cloud.
So from John’s article, Cloud Computing buzz, hype, advertising, seems to be nothing more than the latest and greatest marketing spin to get companies to spend a large chunk of their IT budgets on Clould Computing rather than their own networks.
Without really saying it, all the hype, buzz and advertising about Cloud Computing is simply CIOs aren’t smart enough to realize that what the Cloud Providers are really doing to getting business to spend more of it’s allocated IT budget with the Cloud vendor on a montly basis than a 3 or even 5 year one time capital outlay without the depreciation value on pretax earnings.
Maybe if those CIOs got off the latest and greatest craze or having to have the latest gadgets and treated IT like it used to be, IT costs might come down.
