Cloud computing and its components are a further development of utility computing and in our discussion we shall often use cloud computing to encompass both concepts. The idea behind cloud computing if it could be simplified is that businesses will no longer have to focus on initial investment in IT hardware, upgrades, software licenses and fixed maintenance fees, but on the variable investment on IT resources based on consumption under pay-as-you-use models (Siemens IT Solutions and Services, 2009).
The recent credit crunch has created a number of significant challenges especially with regards to capital availability. This has implied that businesses are increasingly finding it difficult to maintain operations and grow in the short term. Also, we cannot neglect the impact of globalisation for example the effects of the credit crunch are not uniform around the world. The emerging markets such as China and India have experienced less significant slowdowns compared to the developed countries yet globalization has meant that businesses must remain competitive regardless of their location (Verizon Business, 2009) because the world has become a single market. This necessitates that businesses have to be redefined if they are to survive today or in the future.
Utility computing offers business the option to shift their IT investments and costs from fixed to variable costs. However, more importantly, according to Gliedman, Erickson and Brown (2004) utility computing offers businesses the much needed flexibility, scalability and adaptability to confidently face rapid business changes and future business uncertainties.
The first phase towards flexibility for a business is where the organisation is referred to as the isolated enterprise. Here the enterprise is characterised by undefined assets, IT silos, incompatibility and lack of processes (Starkey, 2009). Silos occur naturally within ...
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