Cloud computing can offer advantages in the right circumstances, writes Wikibon Analyst, Consultant and former CIO Scott Lowe in his latest Wikibon Professional Alert. But reaping the greatest benefit — and avoiding the pitfalls — requires careful planning and analysis. To this end, Lowe discusses five important questions that he says CIOs need to answer before the company moves major systems to the Cloud:

How does the cloud solution impact the organizational budget? Lowe says this is the most important question, and it is often one of the hardest to answer. Essentially by moving a major system to the cloud, IT is trading capex — the cost of the software and the hardware it runs on plus floorspace in the data center and other ancillary costs — for opex — the added cost of the fees the company incurs for use of the cloud service. Whether this is a good deal long term or not is a complex financial computation. Then there is the change in cost of internal support — traditional staffing costs for running the system in house are replaced by the costs of managing the service. Then the risk structure, and its associated costs change — the risk of a server or storage array failure is replaced by the risk of an external network failure or just slow service when the network or some other part of the system outside internal IT’s control is overloaded or malfunctioning, which also has a business cost. And given that ultimately IT infrastructure questions must be driven by financial concerns, the answer to this question determines whether the company goes ahead with the project.

Are internal skill sets and systems prepared for inclusion of cloud technologies? A cloud service is not the same as an internal application. It demands different technical skill sets, different organization, different work processes both from IT and end-users. The cultural changes can be the most difficult part of the transition. It offers significant advantages, particularly for companies that are moving to a more mobile business model, but the organization has to be ready to take advantage of those.

How does cloud impact IT governance and workflows? The IT department also has to change its methodologies and organization.

On what metrics will we select and monitor one or more cloud providers? The answer depends on the needs of the business, and one application may require different metrics than another. For instance an application where fast response is critical to productivity will require one set of metrics while one that is focused on decision support, where the important issue is getting the right answer and response time is secondary, will require another.

In what way does the new environment impact disaster recovery/business continuity plans? Theoretically a cloud service should solve many DR issues by getting vital data out of the office. But what happens when the provider experiences a disaster? Does it have multiple copies of the data in different sites or is everything on the array that just burned up? And if the company is caught in a regional disaster how quickly can it move operations and key personnel to an alternative site, and what kind of access with the people there have to the service?

Overall, Lowe emphasizes that careful planning is the key to successful cloud implementations, particularly when important IT services are involved.

Like all Wikibon research, this Alert is available in full without charge on the Wikibon Web site. IT professionals are invited to register to join the Wikibon community. Membership allows them to post their own questions, tips, and research, as well as comment on published research on the site. Members also receive invitations to the periodic Peer Incite Meetings at which their peer present on how they are using advanced technologies to solve business and technical challenges.