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Descriptions of cloud computing often emphasize the silver lining more than the chances of getting wet. Utility computing offers many benefits, but will the cloud — especially the public cloud — lead to the extinction of CIOs because IT will be consumed as simply as electricity? No doubt, cloud computing is a breakthrough technology that will continue to unleash new innovations and bring new efficiencies and advantages to business. It removes infrastructure and capital expense as a barrier to entry and allows startups to scale up cheaply and rapidly. On the other hand, enterprises face limitations in using the cloud for high-performance and mission-critical applications such as ERP. Unfortunately, the cloud’s limits are often obscured by all the hype. It’s time to stop looking at the cloud as a panacea. This presentation seeks to clear up some misperceptions and help people make better choices. 1. The Sunny Side of the Cloud Certainly, cloud computing offers many attractive benefits to enterprises. The cloud model moves IT infrastructure from an upfront capital expense to an operational one. Companies can use the cloud for large batch-oriented tasks — those involving large spikes in requirements for processing power — that otherwise would be out of reach or require huge investment. Many enterprises provision computing resources for peak loads, which often exceed average use by a factor of 2 to 10. Consequently, server utilization in datacenters is often as low as 5 to 20 percent. One key benefit of cloud computing is that it spares companies from having to pay for these underutilized resources. Cloud computing shifts the IT burden and associated risks to the vendor, who can spread variations over many customers. Organizations can use the cloud to rapidly scale up or down; they can also buy or release IT resources as needed on a pay-as-you-go model. As one group of researchers from the University of California, Berkeley noted, “This elasticity of resources, without paying a premium for large scale, is unprecedented in the history of IT” (www.eecs.berkeley.edu/Pubs/TechRpts/2009/EECS-2009-28.pdf).

The Limits of Public Clouds for Business Applications --An overly simplistic reliance on the utility model risks blinding us to the real opportunities and challenges of cloud computing