Cloud technology is emerging as a viable option for companies that want to cut costs, increase agility or augment their own IT resources without building out new infrastructure — or all of the above.

Deciding which type of service is the best fit for your specific needs and ensuring the new cloud offerings play nice with your existing application mix is a challenge, to say the least.

More companies are running head-on into these challenges nonetheless. A study published last year by PriceWaterhouseCoopers found that 41 percent of security and IT respondents said their organisations have already implemented cloud computing, most going with SaaS offerings.

To plot your cloud strategy, analysts and other experts say you should start by looking at your own needs, then work outward to see how cloud platforms, products and vendors can help. Pay heed to fundamentals, the why, what and how of your own situation, by following a three step process:

  • Assess your needs and goals
  • Set your application strategy
  • Identify challenges

Then you'll be better prepared to see how well today's industry offerings match up.

Assess needs and goals

Why do you want to make a move? Cutting or conserving costs is an obvious starting point.

"Probably the biggest challenge for CIOs is the facilities side of our business, all the switches and servers and routers and storage for the data centres; the thickness of all that within our own facilities and the cascading costs that go along," says Mike Lucas, CIO for Hogan Lovells law firm. "There are opportunities to do this differently and benefit, especially now that we have greater market penetration by providers and the economies of scale start taking effect."

The Betty Mills Company, an online retailer of office supplies and janitorial products, decided to move to the cloud rather than spend more than $100,000 (£60,000) for a data centre upgrade. IT director Vlad Shalit said the fully redundant, 20-plus server configuration was designed to run at about 60 percent capacity, leaving headroom for unexpected spikes, such as when the swine flu epidemic hit.

The company's Linux-based applications were all developed in-house, so the transition, which will require some re-writing of code, will be gradual.

"We're not in a hurry because everything is working well today, and we're well ahead of the curve," says Shalit. "We expect to have some cloud apps operational in the next three to four months, and we'll run those side-by-side with our in-house apps, and move our users over a few at a time."

The cloud's pay-as-you-go model is attractive because, if you're vigilant in tracking usage and users, you don't have to pay for infrastructure or personnel that you don't need.

Maybe you need to become more agile, to meet business demands in a more timely fashion. The cloud's ability to scale fast and wide, and at reasonable cost, opens a world of possibilities for transforming your company's more dynamic and strategic applications.

Cloud services can help encourage innovation by quickly making resources available for what-if simulations and proof-of-concept tests. That fast ramp-up can also provide strategic advantages in everything from streaming applications to server-free ERP implementations.

Hot to mitigate risk

Cloud computing can help level the competitive playing field for small and medium organisations by giving them access to risk mitigation, availability and reliability services they might not otherwise be able to afford, or be willing to support.

"Managed security services providers can analyse your security logs, and prevent inappropriate penetration or data leakage," Lucas says. "Those are valuable services that a company might not be able to do internally. At Hogan Lovells we have managed services for security in the cloud."

"For example, we filter all our email in the cloud, we don't have appliances on-site to do that, so we have spam filtering and virus filtering done by a provider globally for us."

Set your application strategy

For an application strategy you should consider the type of application or applications, as well as the platform and the service model.

For instance, the choice of SaaS, PaaS or IaaS comes down to the difference between whether you want off-the-shelf applications, SaaS or development resources, which can be either PaaS or IaaS, depending on the underlying infrastructure.

As for the model, application type along with company privacy or compliance needs will point to public, private or hybrid clouds. Private clouds typically cost more than public, but are better for development or other applications involving intellectual property.

The case for SaaS

For most organisations, SaaS is the likely place to start. Applications are plentiful and investments in start up time and CaPex/OpEx costs are minimal, says Paul Burns, an analyst at Neovise, a research firm specialising in cloud computing.

"With SaaS, the entire cloud stack is all bundled into one: infrastructure, management, installation and the product usage," he says. "And SaaS offers variety. It mirrors just about everything you can find in the application world today."

For cost-cutting, organisations typically select so-called commodity apps, such as email or document management, says James Staten, vice president and principal analyst for Forrester Research.