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The fact is, many companies are uncomfortable giving up control. In a March study of IT managers, sponsored by computer reseller CDW, one curious result was that most respondents said that their preferred way to use the cloud would be to have a private one. Private clouds feel the same to end users but are run by the companies themselves, not by a third party such as Amazon. But building a private cloud is no small undertaking. Private clouds need to have all the capabilities of cloud systems—virtual computing infrastructure, data centers with redundant cooling and power, off-site backup, etc.—but the costs are borne by a single organization, without the best benefit of the cloud: the utility pricing. As CDW points out in its analysis, running a private cloud means essentially “becoming a cloud hosting provider,” except you never recoup costs by selling your product. Private clouds might make sense only for organizations that have hundreds of thousands of employees or data that is so sensitive—such as military information or the financial transactions of a Swiss bank—that it can never be allowed near the public Internet.

One of the few areas where cloud-based offerings are not vastly superior to the systems that they replace is desktop productivity apps—word processing, spreadsheets, presentation software, and calendars. Yes, Google and Microsoft both offer cloud-based office applications. But the desktop versions still are faster, more flexible, and easier to use. What’s more, you can put 10 years’ worth of documents on your laptop and edit them on a cruise, on an airplane, or in one of the few remaining coffee shops that lack a decent Internet connection. But because laptops get lost, stolen, and dropped in swimming pools, be sure to encrypt the files on that laptop—and you should probably back them up to the cloud.

The facts are really simple: although every organization on the Internet essentially is using some cloud-based service, they should use more. The economies of scale are becoming mind-blowing. Someone who wants to go buy a rack of servers probably hasn’t done the math.

Simson L. Garfinkel is an author and researcher in Arlington, Virginia, who focuses on such topics as computer forensics and privacy. He is a contributing editor at Technology Review.

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Credit: Jason Madara

Tagged: Business, Business Impact, Business in the Cloud

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