Cloud computing - Hope or Hype?

One of the session types at Educause is "Point/Counterpoint" where two peolpe present opposing sides of a debate. This morning I went to a "Cloud Computing - Hope or Hype" session. I'll summarise the arguments on both sides:

Hope

• It's inevitable. It's the way the industry is going. It gives us new economies of scale and cost effectiveness. Commodity services can be provided better and cheaper externally. We can't put our heads in the sand and pretend it's not going to happen.
• Services can be delivered with as good as or better service levels than we can provide. We need to question what is the strategic reason for running an email infrastructure for example.
• We can reduce costs and transfer resources to better serving the strategic needs of the institution.
• Cloud services give the user what they want with better features. They're agile services, able to respond quickly to changes in user demand and deploy changes quickly.

Hype

• It's not inevitable. And if is is we should be looking at why, not when. It's just a way of cutting costs. Service levels can't be guaranteed - Gmail does go down.
• There are security and privacy risks with not knowing where your data is being stored. The vendors aren't mature enough yet to deal with these issues.
• How can we say it reduces costs when we don't know what our costs are, and anyway, putting services into the cloud is only putting cots into other areas of the institution such as legal or procurement sections.
• Vendor lock-in is a problem. What happens if the pricing structure changes or the vendor doesn't meet the SLA, or goes out of business?

So that was the debate in a nutshell. I went in firmly on the "hope " side but tried to listen objectively, and I must say my mind wasn't changed! The "hype" arguments came over as defensive and ill informed. She made a big thing of it just being a cost cutting exercise, but in the current financial climate I couldn't see what was wrong with that! Many of the other issues she raised we've dealt with - vendor lock-in is something we're all familiar with (hello - Microsoft anyone?). The privacy and security issues are being addressed, and the service levels of many of the vendors are better than those we're providing - we're just lucky that when our services go down they don't hit the press!