There have been some interesting developments in cloud computing over the last year.

For over five years our position has been that we acknowledge the enormous economic advantages that cloud computing has to offer, but at the same time recognise that the risk of losing control over data and IT systems is, at this stage, too great for most companies and governments to start utilising the cloud advantages in a serious way.

Traditionally cloud computing has been more successful in the consumer market—companies such as Amazon, Apple, Google, Facebook and many others have basically moved all of their IT activities into the internet cloud. The economic advantages are very clear as most of these services are free for the users; obviously they would not have been developed if they involved the use of the expensive traditional IT structures. ‘Free’ is a magic password for the consumer market and literally billions of people are using these companies via cloud-based services.

However people are becoming increasingly anxious about lack of control over their private data and this trend will most certainly lead to significant changes; unfortunately these changes will probably be forced by regulation, as so far there has been little interest from these companies to come up with effective self-regulation. Ultimately the result will have to be that all personal data is owned and controlled by the users themselves.

More alarming, however, especially to governments and businesses, is the fact that far too frequently ‘cloud-based’ data is lost, misplaced, hacked into, or ends up in the hands of the wrong people.

These developments are causing alarm bells to ring right across the global business and government communities.

And increasingly the aspects that are concerning the business world are surfacing in the consumer market also.

On the one hand, it has become clear that there is no free lunch, as the personal data of the consumers using these services is turned into gold by those involved in cloud computing, and therefore is seen as very valuable.

Even if security is improved significantly it will still be hard to overcome the perception—at least in the business sector—that organisations are losing control as a result of cloud computing and are therefore putting the organisation at risk. Because of this threat very few IT managers would want to be blamed for ‘cloud-based’ disasters. The danger of this is now also well understood by senior management and as a result very few organisations are prepared to sign off on large-scale cloud-based projects; and so it is business managers who are in charge of making the strategic company decisions in relation to the control of their data and their systems.

At the same time everybody is under pressure to operate at lower costs and cloud computing can offer cost reductions, sometimes as high as 60%-80%. Money talks and competitive pressures are powerful incentives to cut costs and, as a result, cloud computing remains well and truly on the radar of those organisations.

The hype of cloud computing is now diminishing and consolidation is beginning to take place in the industry. Many early entrepreneurs have gone out of business as their potential customers didn’t rush into cloud computing as they had expected—and this trend is continuing.

What has proved to be more successful is a far more selective approach. Rather than replacing old IT systems with cloud-based facilities companies are looking at selective enterprise services that can be sourced from outside the organisation but are still linked into their own operation. The in-house security remains paramount but not all services need to be based on in-house systems.

This will be the enterprise trend in cloud computing for the next couple of years. The approach will be far more selective and the ultimate control of all the major critical IT functions will remain strictly under the control of the organisation.