Are you drinking the "Cloud" fruit punch?

There are literally tens of millions of dollars being spent in a campaign to convince you that cloud computing (also being referred to as SaaS or software as a service) is the next best and greatest thing for managing the business technology portfolio. While I won't argue that, in some instances, offloading your controls of specific technology requirements may not cause a problem, I recommend you carefully consider any cloud-related decision from a perspective that is both tactical and strategic (short term as well as long term).
    Since the early 90's I have been recommending that smart business management absolutely needs to adopt an intelligent business process improvement framework to help minimize costs and risks while maximizing the ROI on business technologies. Cloud computing is a great place to start your technology asset management improvement initiative. 
Consider: A majority of your current licenses for operating systems and software are perpetual - you pay once for the use of the product and you do not have to pay again until you upgrade or change products. In many cases this single up front payment permits you to use the same product for five or more years - only requiring change when absolutely necessary.
    Moving to the cloud will take this level of cost control away from you. No matter how prettily the software industry tries to wrap the cloud package, it will always look just like a yearly subscription fee once you get past the honeymoon stages. (You will be paying for the product again and again, every year you use the service.)

Bottom Line: Higher software costs...

Consider: This yearly fee for access to operating systems or software is the TOP reason why mainframes have been priced nearly out of existence. The problem isn't merely the carefully crafted yearly fee structure that magically keeps changing. Instead, the core problem with the yearly subscription model is that, once you are committed to it, the copyright holders are well aware that conversion costs will literally force you to accept any changes they choose to send your way. (I've seen countless examples of companies under yearly subscription plans being held hostage with threats of "...reduced or discontinued access unless you agree to this new contractual change...") After all, once committed, what are your options? With the cloud licensing model you have given up virtually all of your negotiations capabilities.

Bottom Line: You'll Take What They Give You...

Consider: The vast majority of enterprises operating at any level around the globe do not honestly read or understand the licenses, terms, and conditions that govern their acquisition and use of operating systems and software. (After all, if you genuinely understood the onerous vendor licenses, you probably wouldn't accept the majority of these agreements.) The cloud agreements are even more deadly - read them. (Now, read them again and note all the "We have all the rights - You have all the responsibilities..." clauses.)

Bottom Line: They're Not Going to Give You What They Say They're Going to Give You...

Consider: Under the current licensing models, you – the business technology consumer – determine when you will move to the new releases or versions of products. There are plenty of costly land minds you have to negotiate such as: will your computers support the new product; or will the new product be compatible with all your other software; or will the new product be compatible with your printers or other devices. Managed incorrectly, your costs for a single upgrade could easily exceed the value of your existing hardware base.
    Moving to a new product under the existing license is determined in-house or, in worse case scenarios, when the provider refuses to support that perfectly acceptable product you purchased six years ago. Under the cloud, you'll move to the new product when the supplier says you'll move. After all, your hardware and compatibility issues are of no concern when you have no cost-effective alternative, right?

Bottom Line: You'll No Longer Control Upgrade Frequency of Software or Hardware

Consider: Coming full circle to my original comment - All this money being spent on the hard sell for cloud computing isn't being spent to educate you about the wonderful new silver bullet business technology solution. Instead it is being spent to ingrain the new "miracle service" in the executive psyche and ensure that business technology consumers fail to recognize the true costs and risks relating to relinquishing control over the systems your enterprise must rely on to survive.
    Prior to any cloud-related decision, conduct a seriously honest and scrupulous cost-benefit analysis. This step alone could help you reduce the artificially inflated costs and risks relative to virtually all business technology goods and services. If you want to increase the real world return on your technology investments, THIS is one of your key steps toward successful business process improvement.