Data center administrators are faced with the challenge of what to do with in-house versus cloud services. Following two years of lean spending on IT infrastructure, the hype over cloud services has caught the attention of everyone - from the C-suite to the functional leadership in organizations as diverse as finance, marketing, logistics and operations. Providers like Salesforce.com are tailoring their message not to the IT department but to the CEO and CFO, promising cost savings, improved reliability and greater business agility. IT leaders are presented with concepts of "indoor" or "private" clouds.

Over those same two years, existing data center equipment is ripe for replacement. Innovations in areas like virtualization, power optimization, and multi-core processors coupled with increasing maintenance expenses are providing an incentive for many enterprise organizations to increase IT budgets again. For other firms, aging infrastructure and increasing reliance on IT services is forcing a decision.

Don't Lose Your Head in the Cloud
IT managers today have found themselves stuck right in the middle of what may well be the biggest decisions of their careers: Which data or applications should migrate to the cloud now? How quickly should they do so? What internal policies or governance is in place to guide such decision-making? In fact, the situation might even be worse that it seems. IT managers are both reluctant to spend on their own data centers, given the interest level in cloud, but also not ready to move applications or data onto the cloud. It's not uncommon for decision making to be frozen in place - not ready to move forward, but in desperate need to modernize.

The good news is that it's possible to take a pragmatic approach to the Cloud versus In-House decision. Despite the hype, this is not a cut-and-dried/either-or decision. In fact, IT leaders can choose to make infrastructure upgrades now while they to consider what can or should they be doing to prep their data center for the future in terms of cloud computing.

We've found in conversations with clients that the confusion and hype over cloud, private cloud, infrastructure/platform as a service, and all the various other multi-tenant options that have entered the discussion have paralyzed IT leaders. Coming out of the recession, firms want to upgrade aging (and expensive to maintain) technology, but they are frozen in fear of making the wrong decision. Making this more difficult is a full cloud migration can be quite complex and difficult, forcing companies to begin dealing with new concepts such as cloud lock-in and cloud security.

Where to Start? Good Governance Trumps the Public vs. Private Debate
The most import aspect is to realize that planning for cloud doesn't start with the data center but with the firm's data governance and business policies. Getting involved in a cloud migration opens up questions on data privacy and ownership, and IT leaders should be working closely with their business unit owners to find out their requirements and expectations on data protection requirements, service-level agreements, expected changes in size and scope of the database, and other factors. IT leaders should work with their legal department and make sure the general counsel is on board.

The second thing to realize is that cloud services are not all-or-nothing propositions. 2010 might be a good year to run trial programs with cloud providers, working through issues like data migration, access to services, and integration with business processes. Better to work those issues on a small scale as opposed to getting bogged down on a major migration.

If IT leaders haven't done so, they should look to their own virtualization efforts as an "inside cloud" or "private cloud" model. Given that most firms have virtualized at least some of their servers, the experience gives the firm an idea of how a private cloud will be managed - can you allocate costs across users? How do you share support resources? Can you migrate data and applications easily? If you're comfortable with your current virtualization projects, it's probably worth holding the discussion with vendors and integrators on taking the next step.

Finally, it's always a good idea to take stock of your present situation. Whether you do a simple inventory of servers, applications, and storage requirements or conduct a full cloud readiness assessment, some analysis of your current state is a worthwhile endeavor.

For small and medium-sized businesses, cloud services have the potential to level the playing field compared with their larger competitors. Before cloud or shared infrastructure was available, an owned infrastructure or application required dedicated and trained programmers and staff to install, update and maintain. A cloud infrastructure can provide the same benefits to a smaller organization without the requirement for dedicated in-house staff. We see this with Salesforce.com, where small firms can take advantage of CRM without a major investment.

We are already seeing consideration of cloud services to be a factor - if not the factor - in decision making. Companies are starting their planning and analysis, and some have already adopted cloud solutions. If not this year, certainly by next year cloud services and applications will enter into the discussion on virtually every IT decision.

Why Now? And What Now?
Three reasons make today the right time to investigate cloud services - the widespread acceptance of virtualization, the deferred upgrade decisions stemming from the recession and the maturity of products and services offered by cloud providers. Without the acceptance of virtualization as a normal everyday part of the IT organization's charter, cloud services may not have gotten off the ground. Overcoming the concerns of shared resources from a technological and managerial base have provided a solid foundation for cloud services. IT leaders have developed confidence that sharing multiple applications on a single server is workable and provides real cost savings. IT leaders have developed a comfort level with shared or muilt-tenant capabilities. Even as recently as a year ago, many firms were reluctant to share a server between two different business functions. Virtualization has become so widespread and has worked so well that the fears of manageability of a shared infrastructure have been overcome.

Despite these advantages its not time to run out and move everything to the cloud. Firms need to develop a framework of governance for their cloud infrastructure, ranging from decisions on what types of data can (and cannot) be migrated to the cloud, how will data and applications move between cloud vendors, and how do concepts like replication and data deduplication play in a cloud environment.

The conclusion is that for most firms, it's time to look at cloud services, perhaps even migrate some aspect of the IT function to the cloud. However, the development of governance, data ownership, lock-in avoidance, and other issues mean that a flash-cut of all capabilities is not advisable. Cloud services are hear to say - and with technology refresh cycles still progressing at a two-to-three-year cycle, it's clear that internal investment is a fully sunk cost. Migration of some services to the cloud is inevitable - as is maintaining some services in house. IT leaders need not make an all-or-nothing decision right now; however, gaining experience in cloud services will be important for future technology migration.