Barriers to the take-up of cloud computing by enterprises are falling and previously reluctant companies are starting to use the cloud to deliver their IT services, say analysts.
According to sourcing consultancy TPI, traditional barriers are being broken down and large enterprises are beginning to implement plans for cloud computing.
Arthur Bolton, director at TPI, says, "Cloud computing has been seen as only relevant for small and medium-sized companies. But we are seeing this change and large enterprises we work with are engaged in work to implement cloud computing."
Big companies are still in early adopter phase. But the fact that they have begun demonstrates that companies have found ways to overcome barriers to entry, he says.
Bolton cites four key barriers to large companies adopting cloud computing: security, functionality, flexibility and auditing.
Security fears are diminishing and functionality gaps are being filled, but flexibility and auditing remain major stumbling blocks.
Security - the barriers are coming down
Security has always been seen as the biggest barrier to putting applications in the cloud. Trusting a supplier with business-critical data has been a step too far for many large companies. Businesses have been rightly afraid that their data might fall into the wrong hands if they lose control of its security.
But Bolton says this is changing. He says suppliers of cloud computing do not want customers auditing their security but they do not mind independent standards organisations doing so."They are now willing to put in place security that meets industry standards such as ISO," he says.
Functionality - the barriers are coming down
When moving from an in-house service to one in the cloud there will inevitably be gaps in functionality, says Bolton. A cloud computing service will not have all the features of the in-house service and businesses will have to fill gaps. But Bolton says, "Suppliers are working pretty hard in coming up with new releases of products that increase functionality. Customers are having to fill fewer gaps."
Flexibility - barriers not moving
Cloud computing is sold as a way to make it easier and cheaper to increase or decrease the volume of services used. But Bolton says in practice this is not the case for large enterprise services.
To make cloud computing work, businesses will need be able to pay for services as they use them. When business is good and they use a lot they pay more. When sales volumes are low, they will use less ERP and will therefore pay less. They can increase and decrease usage seamlessly.
But Bolton warns that true pay-as-you-use models do not exist for enterprise software.
Auditing - barriers will never move but there is an answer
Suppliers of cloud computing will never want customers auditing their systems. But they could be given control over the audit. "If they can agree on the audits customers will have more confidence," says Bolton.
Cloud computing has yet to take off in the large corporate sector. It is short of a poster boy in the form of a household name going public about a project.
This would kick-start the adoption of cloud services within large companies. The deal will need three characteristics. It will need to be a multimillion-pound deal signed by a FTSE 100 company that provides business-critical applications in the cloud.