Some thoughts/experience... The cloud is like any new product, in a way. It's being marketed like crazy right now. Datacenters are pushing it hard. Really though, you have to look at it on an individual basis. It will never be a solution for everybody. I think it's best as a solution for particular applications, not an entire infrastructure. When I was doing upgrades/redesign for a company recently, I had to talk to a datacenter that they were using as a colocation facility and they were like OMG you have to move to the cloud (and pushing hard)!! Telus was saying the same thing, when they only thing I was asking them for were quotes on fiber-based MPLS and internet. It pissed me off, actually because they weren't listening to what i needed, they were just trying to sell me shit i didn't want. In this case, moving the entire company's infrastructure, which was what they suggested, would not only have been stupidly expensive, but completely idiotic, because if you really want to do cloud for everything, you need 2 bulletbroof internet connections imo, and in this case, there was one fiber provider, and to get another would have incurred hundreds of K in build costs. Copper wouldn't have been reliable enough or fast enough, or for a copper service that was fast enough, it was too expensive. Even that aside, sticking dozens of servers into a cloud environment isn't cheap. We replaced all the servers and storage and it cost 8x the monthly recurring a cloud would have been, so within less than a year, the cloud would have been costing us more, not accounting for staffing costs (which wouldn't have changed). For a medium to large company, it's probably not any cheaper in most cases, and it can also be more expensive. What it does is shift expenses from CapEx to OpEx, which some people like for various reasons, but if you've got a medium to large environment, i don't see how it can save you much money, but it really depends. Some apps lend themselves very well to a cloud environment. Any app where most of your users are external are best there imo, especially if you don't have multiple sites interconnected via mpls or some other private network tech, and with bgp running on your internet routers. Websites/ecommerce are the obvious ones. Salesforce is a great example. Payroll works well in the cloud since a medium-sized company might have one or two payroll guys so if they lose internet for a hour or two it's not the end of the world. Losing an ERP system because of downed internet would be a huge disaster though. And speaking of ERP, many are heavily customized, so even if you were sticking it in a cloud, you'd still need staff to support it. Salesforce is basically the same for everyone that uses it, so it's easy for them to provide the support as well. Many apps/services that businesses use are not like that though, so it's harder to realize economies of scale. Many companies have stringent security requirements that can't be met in the cloud. huntsman touched on compliance issues that are very real. What happens if you lose your internet? Do hundreds of people lose their ability to do work? Onsite inspections are often impossible, so you could never achieve Level 1 PCI compliance if you were in the cloud, from my understanding. The way I'm looking at the costs is that no matter whether you store data in house or in a cloud somewhere, you need to purchase storage and processing and you need the same amount of processing/storage whether you're in the cloud or not. A datacenter will get things for cheaper on a per ghz/gb basis because they are buying so much of it, but not that much cheaper. When you stack up cloud-based costs vs. the old model of physical servers with a mix of san or local storage, the cloud looks really good. When you stack it up against a fully virtualized solution, which get MUCH better resource utilization, is a lot easier to maintain, makes high-availability easy, makes replication between sites easy, and makes failover between sites easy, the cloud doesn't look nearly as attractive, and advanced SAN/virtualization technology has come down a LOT in price recently. In the cases I've looked at, cloud has been more expensive, actually. And why wouldn't it be? Cloud providers do need to make their margins every month, after all. I also don't think that the OpEx savings on IT staff ever materialize to the degree cloud vendors claim they will, for a variety of reasons. Also, what are support costs going to be? How quick will you get support? If you have dedicated IT staff, you can say "hey this is broken, fix it NOW," and someone will be on it. It doesn't work like that if you're calling into support for some huge vendor. I know. I've done it. Now, there are always different tiers of support, but the best support is always pretty expensive. For a lot of smaller companies that don't have dedicated IT staff, putting as much on there as possible makes a lot of sense. Email would definitely make sense to host there if your users weren't heavy outlook users. Hosting your be/ecommerce there is almost a no-brainer. Bulk storage is cheap on amazon, etc. Btw Douglas, there's also something called MS Small business server, which could make sense for a small operation. It's a domain controller and exchange in one, which keeps costs down. You really have to decide whether you need the features and feel of outlook+exchange. I know that my users wouldn't be happy with gmail as their only client.