The scenario played out Thursday during the keynote panel session at Interop New York where key officials of the three vendors pitched their respective cloud offerings and then were grilled by the prospective enterprise customers on the panel.
"Based on the economics and the technical service model, there's a lot that's hugely attractive," said Louis Gutierrez, CIO Emeritus of the Commonwealth of Massachusetts and CIO Emeritus of Harvard-Pilgrim Healthcare. "[But] issues around risk management really are central to any movement in that direction."
Rico Singleton, deputy CIO for the state of New York, agreed. "Can you give me a private cloud that can provide all the benefits that you provide now on my private network closed to the outside, and still be able to give me similar ROI?" Singleton asked.
"It can be done but I would strongly encourage you to do the easy things first. Don't make it more complicated than it is," said Don Dodge, a developer advocate at Google who joined the company this week. Dodge was among those laid off by Microsoft earlier this month, much to the surprise and chagrin of the developer community.
Dodge cited the city of Los Angeles, which earlier this month said it would migrate 30,000 employees to Google's managed Gmail service for $50 per year. But Singleton questioned the cost.
"Once you start looking at BlackBerry services and archiving services and record retention services, that's not included in your $50," Singleton said. "You've got to look at the total cost of being able to provide the mail services." Even more concerning, though, is having the data outside of its control.
Deploying more transaction-oriented services will be even more difficult, he added in a follow-up interview. "We are always looking at ways that we can reduce our cost, in terms of transaction-oriented services like licensing and permitting, but I haven't seen any providers that have service-oriented applications that are conducive to the cloud," he said.
"It's going to be a tough sell," added John Merchant, assistant vice president at The Hartford, a large insurance company, in an interview. "As a Fortune 500 company with highly regulated data and a very conservative outlook, it's going to be difficult for any insurance company or any financial institution of any size to migrate any data to the cloud."
It may be some time before the cloud providers are able to answer these concerns. Amazon Web Services Vice President Adam Selipsky acknowledged it cannot offer datacenters that are hosted just in New York state.
Yousef Khalidi, a distinguished engineer for cloud infrastructure at Microsoft, said he is aware of the desire of larger enterprise customers for private clouds. Microsoft, which rolled out its Azure cloud service this week at the Professional Developers Conference in Los Angeles, said the next phase of its cloud evolution will address that need.
"We believe there is a place in the spectrum for private clouds that offer many of the benefits of the cloud including a scale-out architecture," Khalidi said. "Unlike public clouds, private clouds can be kept under lock and key. We have the benefit of capacity on demand, global reach and all of the benefits of a large shared multi-tenant infrastructure."
In a follow-up interview, Khalidi said Microsoft has not set a timetable for delivering a private cloud offering. "Stay tuned," Khalidi said. "We have said that we believe in this full spectrum and we will deliver using our software stacks. We have a lot of IP involved here but the dates and the like, we haven't discussed yet."
Meanwhile, Khalidi believes the early adopters of Azure will be those building Web 2.0-type applications and those used by multiple business partners such as extranets and collaborative portals.
"If you're a company that works with suppliers, all of these companies have these scenarios and many of these are amenable to moving to the cloud sooner than others," he said. "Others may follow when the technology and regulations catch up, others may never go to the cloud which is fine with us. We're not going to try hit everyone with the same thing."
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