The Cloud is often spoken of as a tool for business transformation. But what does this actually mean, and how can business leaders realise the business value offered by the Cloud without suffering from the pitfalls?

Fundamentally, Cloud is about economics. Many of the technologies involved in building cloud originate in the virtualisation arena. But Cloud is not simply next-generation virtualisation, and treating it as such will not deliver significant business benefit. The real business transformation opportunity stems from the fact that Cloud changes the balance of supply and demand between IT and the business.

Traditionally, IT has struggled to supply the business with the services it wanted when and where it wanted them. Now, through Cloud-based technologies, the business can procure almost any IT service it needs (or thinks it needs) in minutes, with no more forethought than it takes to type a corporate credit card number into a web portal.

At the same time, best-in-class Cloud providers offer extremely fine-grain measurement of actual resource consumption, allowing costs to track business value delivered, far more closely than was previously possible.

The potential benefits are enormous: new products and services can be brought to market in a fraction of the time previously required; mobile workforces can access sophisticated business applications on portable devices far from the office, and so on. But this flexibility comes at a price.

When most business functionality and data resided in the corporate data centre it was relatively easy to ensure that resources were used properly and that data only went where it was supposed to go.

As a result, IT often regards the Cloud with profound suspicion – not just because it seems like a threat to their livelihood (though few Cloud projects are actually funded by headcount reduction) but because IT risks losing the ability to ensure the performance, availability and integrity of corporate “crown-jewels” assets, data in particular.

IT Auditors are uncomfortable with Cloud for similar reasons. Most Cloud providers cannot tell you where your data is physically located or when it was last backed-up. Recent failures in public clouds have shown the importance of working closely with the provider to understand that the offered service level actually meets the needs of the business.

So how can businesses obtain the benefits of being able to access the services that they want, and pay only for what they use, without exposing themselves to these very real pitfalls?

The first thing to understand is that all the basic disciplines which applied when everything ran in house still apply when migrating to the Cloud. From the outset, the business needs to involve senior IT professionals experienced in Service Management, Information Security and Business Continuity. If the Cloud provider that the business wishes to engage is not prepared to work with IT to address these concerns up front, find another provider.

Secondly, remember that that business needs evolve very rapidly – which is one of the reasons for moving to Cloud in the first place. Cloud is not simply Outsourcing 2.0: make sure that the agreements you have with your provider are flexible enough to change as your needs evolve so that you are only pay for services you actually use, and can add new services as they become available.

Thirdly, Cloud itself is evolving very rapidly. To take advantage of this, business will likely want to provision services from multiple Cloud or SaaS providers. This provides a whole new set of challenges. A strategy for managing service across multiple Cloud providers is essential.

The dominant players in the Cloud world in three years will not be the largest public cloud providers, but the companies that have worked out how to help enterprises meet this challenge.

While there are real pitfalls to be considered when moving to Cloud, with adequate planning and forethought the business can take advantage of the benefits – but to enable this, business and IT must transform together.