Ending the IT investment cycle

IT equipment is generally replaced on a three to four-year cycle – a cycle that cloud computing can help bring to an end by making better use of existing capacity and also by enabling the organisation to obtain IT services on-demand from external providers. This means that over time many of the organisation’s IT functions can move ‘into the cloud’ where huge economies of scale mean that they can be delivered at a fraction of the cost of internally delivered services. To an organisation such as a university or local authority, this could mean millions of pounds saved annually from the capital budget. With capital budgets frozen or in decline, Cloud offers a way to make the most of the existing investment in IT, extracting far more value from expensive machines and applications. Crucially, when it’s time to grow, Cloud Computing will allow that to happen seamlessly, on demand, and without further capital investment.

Any new paradigm will be met with scepticism – particularly, in this case, by encumbent IT vendors wedded to selling expensive in-house IT systems, and by the IT departments who install and manage those systems. But the cloud view is taking off because the economies of scale involved in utilising the cloud make economic sense in absolutely the same way that they did when businesses moved gradually from managing their own electricity generation and their own telephony to consuming these services as utilities.

The industry’s biggest hitters, including Microsoft, Google, and IBM have now committed their futures to cloud computing. Cloud Computing is no longer a fad, or a buzz word, and is emerging from the industry hype and internet chatter that has surrounded its development. It will be a real force in 2011 and beyond – and it’s time that public sector organisations embraced it.

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