A plot of the Evolution of Computer Capacity and Costs shows that compute power will be 1,000X cheaper in 10 years. How much lower can it go? As this happens the relative cost of managing another computer goes asymptotic to zero, regardless of whether its hosted internally or externally. I don’t think there is an economic argument that shows everyone belongs on the cloud based just on hardware and system administration cost.
Dave Dooling at PolITiGenomics finds two good reasons for considering cloud options: when organizations have peak demands for compute power and when limitations on space/power/cooling preclude building a system in-house. These are two good reasons, but hardly enough to justify all the cloud computing hype.
So, what’s the argument for cloud computing?
Unlike computing which gets cheaper every year, people cost more every year. So, it makes sense to evaluate the annual software development and maintenance costs, the cost of managing the reference databases; integrating and maintaining new applications, the productivity of the end-users and how to change the ratio of end-user-to-support-programmer from 2-to-1 to 10-to-1 or 20-to-1. Cloud computing defined as “Infrastructure” (computers, networks, and storage) doesn’t alleviate these costs.