Cloud Value Proposition Must Trump On-Premise

Grazed from WSJ. Author: Clint Boulton.

Although the hype suggests that CIOs are ditching on-premise software in droves for the maintenance-free comforts of cloud computing, the reality is different, with two of cloud’s biggest arguments–lower capital outlays and freedom from on-premises agreements–not enough to convince some CIOs.

For companies with easy access to capital, the cloud’s promise of reduced capital expenditure is not enough. Dropping on-premise vendors means leaving behind expensive service contracts, but also the expected services and the agreed-upon vendor obligations should something go wrong. Some companies considering the cloud fear that today’s cloud service level agreements, which establish the legal relationship between the cloud provider and the client, may not go far enough to guarantee data security and establish financial responsibility…

At the MIT Sloan CIO Symposium Wednesday, Scott Blanchette, CIO of hospital operator Vanguard Health Systems Inc., said that the value propositions from cloud vendors must be “drastically better” than those of his on-premise software vendors to win his business. “If the solution isn’t better, faster or cheaper than what I have organically, it’s not an attractive alternative other than risk transference,” said Mr. Blanchette, during on a panel discussion on the value of the cloud in businesses. Mr. Blanchette, who said most of Vanguard’s mobile and social software is running in the cloud, said vendors and customers must figure out the transference of risk together. “The new cloud environment is going to be very evolutionary over the next five to 10 years,” he said…

Read more from the source @ http://blogs.wsj.com/cio/2013/05/23/cio-cloud-value-proposition-must-trump-on-premise/