It's a competitive market, this cloud business. What makes the difference between success and failure?

I was preparing a training event for Capacity Managment recently, and came across this excellent article on the CIO website: Cloud Makes Capacity Planning Harder - 3 Fight Back Tips.  It strikes me that one aspect of cloud computing that represents the paradigm shift more than any attempts (and there have been many) to characterize cloud models, is that suddenly there is a competitive market for the provision of IT services.  No longer does an enterprise remain constrained by internal IT services, and IT Executives are being asked to support external services as well as their own.

Not since the major transition from silos to shared services has there been such a significant change, and challenge to CIOs.  The challenge from the CEO is this - become more competitive, or risk losing your business to external providers.  As the competition grows stronger, internal IT providers struggle harder and harder to justify their selection in an open marketplace.  The birth of the private cloud model is the attempt of the CIO to respond to the threat of the external providers.

Any marketplace is defined by offerings which differ in cost and quality.  And the cloud computing marketplace is no different.  Market segmentation into SaaS, PaaS and IaaS offerings allow niche suppliers to prosper alongside larger vendors.  The cost of service provision is transparent and elastic to meet demands. 

The CIO article somewhat skirts around this topic, advising to develop competitive chargeback rates, and a meaningful mixed deployment strategy.  However, ultimately the cloud marketplace will demand choice in cost and quality; meaning Capacity Management and Capacity Chargeback will be key differentiators.  The challenge to private cloud is to provide a meaningful and transparent option to compete.