The Cloud is often associated with the eventual run-time deployment of business applications and the corresponding benefit: less IT op resources required, less hardware … the reasons you highlight. But prior to production deployment, there is first two critical stages: IT development, and IT application testing and QA. Aside from the resource equation for hosting applications, there are additional resource requirements for setting up and maintaining the necessary infrastructure to build and test new applications. In many cases, due to the cost of provisioning new hardware, many IT web applications often do not have test environments that mimic their eventual run-time environment to properly stress-test an app before release. Whether or not a company prefers on-premises software for their app, there is massive benefit to building and testing apps in the Cloud – and leveraging new vendors like SOASTA for proper Cloud testing to boot. In addition to cost reduction, the flexibility the Cloud affords for quickly enabling IT to prototype, build, and test new apps at low cost is a great aid to IT agility – and running faster at lower cost is always a good thing to get an edge in a recessionary economy.

In this way the Cloud has some similarity to open source adoption: with open source, IT developers can simply download needed software and at no cost prototype and test new applications before choosing whether or not to put in production use, which in some cases may trigger the purchase of a commercial license (as in the case of my company Day) or a subscription license (as in the case of commercial open source firms). Like leveraging the Cloud for IT dev and testing, open source promotes greater agility and lower costs – not necessarily just from the end-run production perspective, but from the initial point of IT project kick-off.

It is sad , but it does take a recession for people to really change the way they make their decisions. Remember the way offshoring boomed after the last recession.

This time it is going to be Capital Investments that will get hit and cloud computing takes it out as a expense.