That is the verdict of analyst house IDC, which said research showed only provided short-term cost savings. Within three years of implementing software as a service, it said, large businesses regularly found the costs exceeded that of running their own on-premise systems.

"Cloud costs need to come down much further to be a realistic long term option," said Matthew McCormack, IDC analyst, at the company's recent Cloud Computing Summit in London. "It could be useful in the short term financially for companies with severe cost overruns."

"Your datacentre would have to be really poorly run for it to be more expensive than cloud in the long run," he added.

Businesses would be wise, he said, to look at their capital and operational costs over at least the last five years, to analyse their datacentre workload efficiency, and to take a long term view, before making any move to the cloud

But IDC also predicts that cloud service costs will eventually fall, as more competitors enter the fray, and as suppliers act to improve market-take up.