Analysts from Forrester have expressed some less-than-encouraging predictions for IT departments building their first private clouds: You're not likely to succeed. But Forrester analysts insist "that's a good thing," because the failure will pave the way for later success but more importantly pave the way for more positive outlook for IaaS (infrastructure-as-a-service).

"Most of these enterprises aren't ready for a private cloud’, but we expect that in 2011, I&O [infrastructure and operations] departments will start building them regardless. These efforts will most likely fail, but through this failure will come valuable experience and knowledge about what it really takes to create and operate a cloud environment," Forrester analysts James Staten and Lauren Nelson write in a new report called "2011 Top 10 IaaS Cloud Predictions for I&O Leaders."

The key factors in building a successful internal cloud that can provide the types of capabilities offered by the likes of Amazon's Elastic Cloud are virtualization maturity, standardization, automation and infrastructure improvements. And although numerous vendors offer automation tools to virtualize infrastructure and provide cloud-like capabilities -- for example, VMwar and Red Hat "Most enterprises don't have the necessary virtualization maturity and aren't ready for the level of automation and standardization that a cloud environment requires," Forrester writes.
A Forrester survey of 1,252 IT decision makers in the third quarter of 2010 found that 15% are planning to purchase infrastructure-as-a-service resources from Amazon or other vendors, and another 6% have already done so. Among enterprises with at least 20,000 employees, 20% plan to adopt IaaS and 8% have already done so.

Forrester's top IaaS cloud predictions for 2011 also include:

• "Enlightened" IT leaders won't stand in the way of early adopters within their organizations who are eager to adopt new cloud services
• Hosted private clouds -- which are hosted by vendors but offer dedicated, instead of shared, resources -- will outnumber internal clouds by a factor of 3 to 1.
• Community clouds, set up by an association or group of businesses looking to share costs, will thrive in certain markets such as the biotechnology field, higher education and the federal government.
• Cloud-based high-performance computing will come to "the masses" thanks to new applications that offer the power of grid computing without being a hassle to set up.
• Cloud economics will improve greatly, letting developers build applications that start with a small footprint and scale up as needed. New tools will make it easier to compare costs and use multiple cloud services to get the best price.
• Cloud-based analytics will boost business intelligence with speedier and more cost-effective services.
• New features in Windows Azure and other clouds will help enterprises profit from data analysis, potentially helping customers become BI providers themselves by unlocking the value of internal data and building new services that generate revenue.
• Cloud standards will remain in flux in 2011, making "the cloud market ... too immature for standardization." Customers shouldn't let that stop them from adopting cloud services, but they should choose vendors with momentum and strong market adoption to prevent the risk of betting on a loser.
• Cloud security "will be proven," but IT pros must carefully analyze the security, privacy, compliance, legal and contractual needs for all their applications and determine which ones are ready for cloud services. Users should also explore products "that secure your data before it enters the cloud," Forrester says.

Much like the smart phone industry which is today lead by companies that do not have roots in the mobile phone industry like Apple and Google, the IaaS market is lead buy Amazon which is essentially book seller! This is another example of how discontinuities and innovation in technology can change the dynamics of the playing field almost beyond recognition.

Clearly the doubts about internal/private clouds coupled with the limited variety of SaaS applications available on public clouds will give rise to IaaS which is emerging as a much more viable application of cloud technologies. That also suggests that if you are not building your own private or internal could you may not want to spend much time attending those cloud conferences and seminars but rather invest it in deciding whether you will move your organization to SaaS or IaaS, both of which appear to be much more ready for the enterprise.

In general many CIOs are starting to realize that the three most prominent cloud models aren’t really very new: private clouds are almost a rebranding of virtualization, IaaS is good old hosting supported by a smarter infrastructure, and SaaS -which is the only application of public cloud- was existed many years before the term cloud computing was even coined. Nevertheless, both SaaS and IaaS present credible models for CIOs to move into a more predictable cost model and reduce the energy spent in infrastructure and/or applications maintenance.