Over the last year or so, major IT service providers have progressed in their efforts to position themselves in the Cloud Computing market-space as well as building out what is still a limited number of product offerings that can be delivered to the marketplace.

Industry analysts suggest that enterprise demand for Cloud Services may be hampered, or slowed down, until more progress is made on critical technical and business issues around cloud computing.

Come on now, how hard can cloud computing really be?

Well…upon investigation it turns out that clouds are not always the transparent, fluffy cotton balls that come and go with ease… as it relates to highly flexible, demand oriented pay-as-you-go services, clouds can in fact be fairly hard!

Despite their progress, IT service providers have a number of thorny issues to deal with before prospective clients feel comfortable enough to do more than plan around the eventual need to consider Cloud Services.  Likewise, provider management is not yet convinced there is a sustainable market for what is being built or that given the business, technical and economic models in place today that providers can confidently price and deliver Cloud Services at a reasonable profit.  Finally and perhaps most importantly, assuming the issues are successfully dealt with by providers and client organizations…how do you contract for these services and govern the relationship successfully over time from an IT outsourcing point of view?
The purpose of this blog is to initiate a discussion around these (and other) thorny issues and to explore the nature of them from a number of perspectives.

First, from a client’s point of view:

• What are the things that have to change for you to feel comfortable that Cloud Services are real and that there is substantial value in them for the enterprise?
• Why are the majority of enterprises (a recent market assessment indicates from 65- 85%) are not aware of, not interested in, or not budgeting for Cloud Services today? 

Second, from a provider’s point of view:

• How do the Business, Technical and Economic models in your business need to change to successfully deliver Cloud Services to your clients?
• What has to change for you to be assured of a favorable Return on Investment from the delivery of Cloud Services?

Finally, from an IT Outsourcing point of view:

• How do the parties contract for these evolving services to ensure that value is delivered over time?
• How do ITO relationships and their underlying agreements need to be governed differently, through Service Level Metrics, Measures and Agreements for example?