Cloud computing is being over-hyped, and enterprises should be wary after high-profile outages at providers such as Amazon cloud services, said analyst firm Ovum.

A raft of software as a service offerings have emerged in recent years, including Amazon Web Services, Elastic Compute Cloud (EC2) and Simple Storage Service (S3) along with Google Apps offering and the Salesforce platform.

But Ovum warned companies to avoid using cloud for critical infrastructure.

"Enterprises are right to be cautious about relying on such consumer/SME-oriented suppliers for anything resembling a mission critical application or service," said research firm Ovum in a report.

"A spate of service outages on the Amazon and Google platforms has increased enterprise caution about the reliability of consumer-market-oriented cloud providers."

The cloud creates new management challenges for CIOs, because it runs like an electricity grid. Unlike under an outsourcing deal, where any slip in quality is protected by service level agreements, an outage of a cloud service may not be remedied quickly.

"We take it for granted the electricity grid occasionally fails. We also know that when the power is out, we are usually not the only one affected," said Ovum.

What's more, virtually any service has been branded 'cloud' and the term has been over-hyped, according to the analyst firm.

Yet cloud computing is more than just vapourware, Ovum added. During these recessionary times, the analyst firm predicts CIOs will turn to cloud services for its massive economies of scale.

Ovum urged CIOs to start limited trials of cloud computing now, to gain practical experience on what it can and cannot do, and how the new management challenges will be overcome.

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