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Are Cloud-Based Services Overhyped?

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In these hard economic times, cloud computing is becoming a more attractive option for many organizations. Industry analyst firm, The 451 Group predicts that the marketplace for cloud computing will grow from $8.7bn in revenue in 2010 to $16.7bn by 2013. Accompanying this is an increasing amount of hype about cloud computing.

Cloud computing has gone through different stages, yet because the Internet only began to offer significant bandwidth in the 1990s, it became something for the masses over the last decade. Initial applications were known as Hosted Services. Then the term Application Service Provider emerged, with some hosted offerings known as Managed Services. More recently, in addition to these terms, Software as a Service (SaaS) became a catchphrase.  And as momentum for hosted offerings grew, SaaS is now complemented by Infrastructure as a Service, Platform as a Service, and even Hardware as a Service.

Is this a sign of some radical technology shift, or simply a bit more of what we have seen in the past? 

The answer is both. We are witnessing a great increase in global investment towards hosted offerings. These providers are expected to enjoy accelerated growth as Internet bandwidth becomes ubiquitous, faster, and less expensive; as network devices grow smaller; and as critical mass builds. Also, organizations are moving towards cloud services of all kinds through the use of different types of network devices – take, for example, the rise of smart phones, the iPad tablet, and the coming convergence of television and the Internet.

Yet, although cloud solutions may emerge as dominant winners in some emerging economies, on-premise solutions will remain in use. While start-ups and small businesses might find the cloud as the cheaper and safer option for their business – enjoying the latest technology without needing to spend money on an IT infrastructure, staff, and other expenses that come with on premise solutions; larger businesses usually stick to on-premise solutions for both philosophical and practical reasons such as wishing to retain control, and the ability to configure products for their own specific needs.

Gartner's chief security analyst, John Pescatore, for example, believes that cloud security is not enough when it comes to the upper end of the enterprise, financial institutions, and the government. On the other hand, he states that smaller businesses may actually get better security from the cloud. The reason behind this is that while the former has to protect confidential data and cannot pass it on to third parties, the latter is given better security (multiple backup locations, 24/7 monitoring, physical security protecting sites, and more).

Although the cloud might appear to be finding its fertile ground only now, especially in these times of belt-tightening, hosted services have been around for a while. For this reason, when choosing a cloud provider, always make sure you choose a company that has proven itself in the marketplace.


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