The biggest threat to IT organizations faced with these new cloud developments is that they set the new bar of expectations. If AOL can get a server up in eight seconds, and the IT organization takes two weeks, it's going to be seen as hopelessly ineffective-and ripe for a complete teardown.

Far better would be to evaluate the application portfolio and identify those applications for which the skills of experienced personnel are required to ensure performance, compliance or other characteristics uncongenial to cloud deployment. A case should be made for those applications to be deployed, administered and monitored by the IT organization. The rest of the application portfolio should be aggressively migrated to cloud providers who can apply their efficiency and cost advantages to them.

The biggest mistake most IT organizations make is failing to recognize the urgency of this application sorting. When an industry adopts a new technology that provides a significant cost advantage, those who tarry in adoption threaten the survivability of the entire company. Viewing cloud computing with skepticism, representing it as another turn in the centralization vs. decentralization cycle fails to comprehend how big a shift it represents in computing. Cloud computing is no timesharing-with-a-gloss, as many people think of it. Believing that one has plenty of time to maintain current practices fails to draw lessons from previous cost revolutions, and poses the threat that one's company will become the Studebaker of today.

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