At the same time, the Schumacher IT group was struggling to keep with the demands of a company whose revenue was growing 20 to 30 per cent a year, even faster when measured by the number of complex contracts it needed to manage. "We can go out and turn on five or six hospitals tomorrow. We need the flexibility to move data quickly," Menefee says. But setting up and provisioning new regional offices was taking months.

As he settled into the job, the new CIO realised that running at least some of his applications outside the Schumacher data centre would solve a number of problems. Menefee decided to combine a custom application built by Apptus, an ISV, with a Salesforce.com CRM application to handle thousands of contracts for his company, the hospitals and the doctors. "The moves, which involved about half of the company's IT infrastructure, avoided the expense of his hiring an additional three to five full-time IT staff, at a cost of $40,000 to $80,000 a year, plus a large outlay for additional hardware," he says.

Security, of course, poses an issue. "Single sign on service and password management were the biggest pain points," says the CIO.

While very upbeat about his experience in the cloud, Menefee says his datacentre isn't going away, anytime soon. According to Menfee, the company deals with very large image files and charts scanned into the system, which means that latency becomes an issue. So for now, that type of work stays in house. There's also robust legacy billing system to deal with that wouldn't fit well into a hosted environment.

Is Schumacher utilising cloud technology, or is it really SaaS? "There's a lot of gray area around that term (cloud computing)," Menefee says. "But for me, the idea of us using an infrastructure that isn't our own, that is managed outside makes it a cloud. But I'm not looking to be part of a trend. I find a problem and look for a solution."

Control Fears

Security, latency, service levels and availability are issues that rightly concern IT executives when the talk turns to cloud computing, and vendors will have plenty of work to do in the next few years to resolve them to IT's satisfaction. But there is a less concrete, but equally important, issue on the cloud computing table: culture.

"Some people still view this as a loss of control," says Adam Selipesky, Amazon vice president for product management and developer relations. "They're starting to come to terms with the idea of data leaving their four walls, but we're not there yet."

Indeed, when asked what advice he has for other CIOs considering cloud computing, Menefee says, "Your traditional IT staffer is going to be resistant. Enlist the guys who have experience developing for the web."

More caveats: Although it's not a common issue, some applications call for specific hardware. "If that's the case, says Forrester principal analyst James Staten, forget about running the application in the cloud. Database performance in the cloud can still be problematic," says John Engates, CTO of Rackspace, an IT hosting company based in Texas.

On the other side of the ledger, CIOs will find benefits from cloud services including more scalability, faster deployment times, and a simpler data centre. There's no rush, but while you keep your feet firmly on the ground, it's time to take a peek into the cloud.