Now that we're well into the hype cycle for Cloud Computing we benefit from some additional perspective. We now know that Cloud Computing isn't the panacea some would have had us believe. Large enterprises will likely never move their IT operations completely to the cloud.
One reason these enterprises will always operate their own data center (or pay a third party hosting provider to operate it for them): Institutional Paranoia
The reality is there will always be data and processes that are considered too sensitive to be allowed out of their organization's control. Presently there are federal and state regulations (i.e. HIPAA) that make it a crime for an organization to move medical data to the cloud. These limitations will likely be relaxed in coming years as Cloud Computing becomes more commonplace. Already there is a move afoot to allow medical records into the Cloud (on certified platforms).
The regulatory environment aside, many organization may feel that their mission (government) or market position (commercial) would be irreparably damaged should sensitive data or processes be compromised. The debate rages if Cloud Computing platforms are more or less safe than On-Premise installations. This debate will and should continue. The reality is that some data and processes will never leave the control of the Enterprise.
Organizations that conduct an analysis of which data and processes are sensitive and which aren't usually discover that only a small subset of their IT infrastructure is sensitive in nature. The remaining applications are a good candidate for a migration to the Cloud at the discretion of the CIO.
Cost pressures being what they are under current economic conditions and given the obvious cost benefits of the Cloud model it follows that that every application that can be pushed to the Cloud must be pushed to the Cloud.
The effect on the enterprise data centers will be significant, but not a death knell. Instead these data centers will first stop growing and then they will start to shrink. Instead of running a whole portfolio of apps needed to keep a large organization functioning, the enterprise data center will be tasked with minding the enterprize's most sensitive data and processes. No small task and one with its own unique challenges.
