When is cloud computing right for your business? That depends on the state of the business's current IT environment.

Cloud computing makes immediate sense for most small and medium-sized businesses (SMBs). The economic argument between in-house IT and cloud computing has already been settled in favor of the cloud, which can provide more capabilities and access to greater IT expertise than most SMBs could ever afford in-house - at tremendous cost savings.

Larger enterprises, on the other hand, should approach cloud computing in stages. If the company owns highly underutilized assets, there is less impetus to move to the cloud as long as those assets can be utilized over time without significant additions to IT staff. Even in this case, however, cloud computing principles used in-house to virtualize IT and deliver the technology as services - creating an internal cloud - will be more cost-effective than the traditional IT model of delivering discrete silos of technology.

Deploying an internal cloud is less about changing technology than it is about transforming culture and how the IT function is managed. Many organizations still have hardware dedicated to specific business units (BUs). As each BU must be provisioned for peak usage, about 75 percent of that capability is unused much of the time. Each BU has its own hardware and software budgets, makes independent decisions about which hardware and software to purchase, how many licenses it needs, and so forth. Consequently, these resources are sub-optimized across the organization, as a great deal of computing capacity is tied up in dedicated, underutilized equipment.

In an internal cloud, where resources are virtualized, each BU purchases the capacity it needs, when it needs it. An entire organization can be served with fewer resources at lower cost because of the cloud's ability to scale. There is little need for excess capacity, because the BUs rarely will require peak capacity at the same time, and peaks usually can be planned for and provided on an as-needed basis.

Internal clouds will represent an interim phase in enterprise IT migration to hybrid and public cloud services. Traditional, siloed IT shops will struggle to compete with cloud-computing providers in the areas of cost, flexibility, and scalability unless they virtualize their own operations. In addition to the near-term financial benefits realized by deploying an internal cloud, the process also assures cloud readiness. The philosophy of "Don't outsource what you don't understand" should still apply - if you get your processes right before you move to the cloud, you'll be well positioned to make the transition successfully.

Here is a five-point roadmap to help enterprises embark on the most essential elements of a cloud-computing program:

1. Optimize the current environment by providing an internal set of cloud services and enabling the incorporation of external services.
2. Identify cloud services opportunities based on business needs, value proposition, and the ability to adopt/support those services.
3. Communicate with the business units about cloud services and the roadmap and process for incorporating them into the architecture, whether the services are internal or external.
4. Experiment with and pilot various services, internally and externally, to identify where the real issues will arise.
5. Designate a cross-functional team to continually monitor which new services, providers, and standards are in this space, and to determine whether they affect the roadmap.

This five-step process allows the organization to achieve cloud readiness for either the public or private cloud.