• Regulatory and legal compliance. Organizations looking to move some of their data into the cloud must navigate a labyrinth of vertical (HIPAA, PCI, FERPA, etc.) and horizontal (SOX, Patriot Act, FISMA, etc.) rules on where information must be stored and how it must be accessed, especially for e-discovery. And most of those rules are open to interpretation. The cloud vendors offer no pat answers. They can't change the laws and, in seeking clarity for potential customers, they, too, get five opinions for every four lawyers they consult.

Then there are the related privacy concerns. "We have your Social Security numbers ... we know where your children go to school," says Carolyn Lawson, CIO of the California Public Utilities Commission, emphasizing a concern among most government IT organizations: What if that sensitive data were to fall into the wrong hands?

• Reliability. Mary Sobiechowski, CIO of health care advertising and marketing agency Sudler & Hennessey, questions whether the cloud renders the capacity for transmitting the kinds of large files typical in an agency environment. "There's bandwidth issues," she says. "We also need real fast processing."

And no matter how robust their technology infrastructures are, the cloud vendors experience outages. For example, the Amazon.com site suffered downtime and slowdowns several times in recent days, and AWS's storage service went down one day in February. Google customers experienced technical difficulties with Gmail on April 16. In both vendors' cases, the performance problems weren't major. But Amazon and Google could learn a thing or two from Salesforce, which has had its share of outages, about customer-friendly transparency. Its trust.sales force.com site lets users view daily performance and availability in a traffic light format. Salesforce also is more responsive to the media about its infrastructure problems.

All the major cloud vendors point to their service-level agreements, which, of course, compensate customers for service disruptions, not for lost business. In the end, their value proposition is this: Is your application, database, storage, or compute infrastructure any more reliable than theirs? And even if it's comparable, wouldn't your IT organization rather spend its time on matters that make a competitive difference instead of managing and upgrading servers, disk arrays, applications, and other software and infrastructure? Google business applications development manager Jeff Keltner refers to the 70% to 80% of most IT budgets spent on infrastructure management and maintenance as "dead money."

• Total cost of ownership (or rental). The cloud vendors make an excellent case that it's cheaper to subscribe to their services than to buy and run premises-based hardware and software. Pay no up-front costs; pay for only what you use, with the ability to scale up and down quickly; and take advantage of the vendors' huge economies of scale. AWS's storage service, for instance, costs just 15 cents per gigabyte per month. With subscription software services, the cost equation is less clear. In most cases, it's at least a wash.

• Choice. So you're considering moving some IT resources into the cloud. What options are available?

Those options grow every day. Salesforce's Web platform, Force.com, includes an exchange for hundreds of third-party applications, as well as a relational database service, business logic services, and an integrated development environment. Google offers a range of cloud-based app and storage services. Amazon's offerings include storage and computer processing services, and a database service now in beta. EMC, IBM, Microsoft, Sun, and other major players are ramping up a range of services, and scores of tech startups are embracing the subscription approach. The big question: How much customization is possible?

• Long-term vendor commitment. Will consumer giants such as Google and Amazon get bored slogging it out with slower-moving, more deliberative enterprise buyers? The cloud vendors like to compare the current IT provisioning model with the early days of electricity, when companies ran their own generators before moving to a handful of large utility providers. But the metaphor may be apt in another way. Northeastern University CTO Richard Mickool questions whether high-energy, high-innovation companies such as Google and Amazon will lose interest in selling commodity, electricity-like services.

Of course, the vendors insist they're in this business for the long term, and that customers are warming to the movement. Says Google's Chandra: "It's not a matter of when or if the cloud computing paradigm is coming. It's a matter of how fast." That depends on how fast vendors can assuage customers' concerns.

Rob Preston,
VP and Editor in Chief
rpreston@techweb.com

To find out more about Rob Preston, please visit his page.