FRAMINGHAM, 29 DECEMBER 2009 - Cloud computing is clearly worming its way into the enterprise, especially as a testing and development environment and as a platform for less than critical apps and services. But cloud vendors are, in short, still trying to grow up and become a platform for business-critical applications. They're already working on standards and security issues, improving service level agreements and encouraging vendors to embrace the meter of pricing based on software use -- not per-seat cost.
With that as backdrop, 2010 will be all about moving enterprises to the cloud. Here are the trends driving it.
Commodity cloud price slashing continues
Amazon EC2 cut prices up to 15 per cent in November. A small standard Linux-based instance went from 10 cents to 8.5 cents an hour. That same month, Google cut its Picasa photo storage pricing from US$20 to $5 for a year. Cloud-based apps are on a similar trajectory. Microsoft's Business Productivity Online Suite, which includes the SaaS versions of Exchange, went from $15 a month per user to $10. Anchoring pricing is Google's Apps Premier Edition at $50 per year. Cloud pricing is getting so low it's "ludicrous," quipped Jeff Maling, CEO of Roundarch Inc., a Web services consultancy in Chicago.
"They are pricing very aggressively to get volume on the platform," he said.
A move to simpler cloud pricing models
As providers add in more options and services, the pricing complexity increases. Amazon, for instance, has a calculator for estimating the cost of bandwidth transfers, load balancing and elastic IP. 2010 may see a proliferation of "all-you-can-eat pricing models," where a user contracts for a set number of hours that includes a range of services, said Ahmar Abbas, senior vice president of remote infrastructure management at CSS Corp., an IT services and consulting firm in San Jose, Calif.
Enterprise application vendors embrace metering
This may be a bit of a reach for 2010, because it will be hard to get application vendors to shift off of predictable licensing and revenue models, such as per-seat or named-user pricing, in favor of metering. But metered billing based on usage will help companies such as Accelera Solutions Inc., which provides a hosted virtual desktop via the cloud. This Falls Church, Va.-based firm combines a variety of software tools that utilize different licensing schemes and charges a flat fee of about $25 a month for basic setup, said Joe Brown, Accelera's president. He believes vendors will adapt.
"They all recognize that the cloud is going to drive business for them," said Brown. Industry watchers, who are bullish on the idea of metering, believe this model hinges on technology improvements for tracking usage, something that may arrive over the next year. But for now, cloud providers are, in some cases, still forced to negotiate custom deals.
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