You only have a Scale of 1: Why org's should consider cloud solutions

Recently there have been a number of occasions when I have been asked to explain what the potential benefits are for an enterprise organisation of a "cloud" deployment over a typical enterprise CPE (customer premises equipment) deployment.   There is so much hype, and marketing generated positioning that tries to pretend that it is a complex value proposition, where in reality the answer is fairly simple ... simple common sense I think.

Firstly, the value proposition for "cloud" and its potential benefits are not complex (that does not necessarily mean that the techniology underneath is not); and secondly the difference between an in-house controlled CPE deployment and a cloud based deployment can simply be articulated as one of scale.  If one is deploying an in-house CPE solution, no matter how small or large the organisation, the only economy of scale benefit that can be gained is directly related to the size of your organisation .. the level of aggregation is always 1.



The key factor that distinguishes a cloud service from an enterprise deployment is scale.  Service providers have the ability to aggregate customers together. This provides better economies of scale both from a procurement and opex perspective.  Oh, and let's just kill off one myth - SP's do not set out to deliver dodgy service, sometimes outages happen (as they do in enterprise deployments), but what a service provider does understand is how to build a carrier grade solution to support multiple customers.  In reality, most customers get a far more robust solution where there is service aggregation. It is a simple function of the size of the checkbook .... Single customers generally cannot afford to develop the same levels of resilience and redundancy that SP's have to provide as standard.

Mykola Konrad outlines in his post on NoJitter.com an interesting view on the adoption rate of cloud based IP-PBX solutions. The benefits of a cloud based IP-PBX and Collaboration capability are plain to see, the only potential area of debate could be his prediction of market share. My suspicion is that it will be far higher than predicted - the economics potentially may be the deciding factor that drives the difference .... This will probably make the CEO and CFO's of this world sit up and take notice, or will it?