The demonstrated success of software as a service (SaaS) such as Salesforce.com, Zoho, etc., has inspired hosting providers and infrastructure vendors to provide similar capabilities such as Infrastructure as a Service (IaaS) through cloud based computing.

Many organizations have begun exploring cloud computing for hosting their applications. If not for production stage deployments, there are benefits in using the cloud for development and testing purposes. Obviously, the key benefits of embracing the cloud are lower capital costs of infrastructure, lower operational and maintenance expenses, lower storage costs, ability for universal access through the net, and ability to leverage virtualization effectively amongst others.

From a purely financial perspective since the cloud infrastructure is a leased asset, it can be construed to be off- balance sheet financing, and can be attractive to many companies in need of cash and could treated akin to vehicle and other infrastructure leasing etc., but that is a different topic in itself lending itself to comparison  possibly with Outsourced Managed Services.

Though the traditional resistance to go to a cloud based environment because of issues such as information security and data leakage, reliability, availability etc., are still pertinent and valid, one of the major risk is vendor lock-in and getting pigeon holed into a single service provider.  What would happen if a customer wants to change the cloud infrastructure vendor? How seamless would be the transition to move from one vendor to another? This is where standards are required for interoperability between cloud vendors. Apparently there are already disagreements between IBM, Amazon and Microsoft on the Open Cloud Manifesto. Another organization called Open Cloud Consortium comprising of a few universities and companies such as Cisco and Yahoo are attempting to evolve standards around cloud interoperability.

Until such time interoperability standards evolve, companies may choose private clouds as an alternative. This is a safer bet, since it provides the benefits of cloud but is managed internally by companies.