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however, there are significant technical, operational and organizationalissues which need to be tackled before clouds are usedextensively at the enterprise level [50]. Current cloud computingservices are often not cost-effective for larger enterprises, especiallythose that have achieved best-of-breed efficiencies from theircomputing operations. McKinsey Consulting found that a ‘typical’data center of a large organization can operate at significantly lowercosts than what would be required to outsource it to a cloud servicelike Amazon.com's EC2 (though this price can be significantly loweredthrough pre-payment schemes, and with Linux systems). Further,McKinsey estimates that though the cloud service would lower laborcosts, the extent of decrease (10–15%) is modest. Finally, manyorganizations set their service level agreement (SLA) uptimes at99.99% or higher, which cloud providers currently are not prepared tomatch.The equations are very different for SMEs that do not have thewherewithal to set up the initial infrastructure that is necessary torealize the cost structures of large data centers. The prices and theSLAs from the leading cloud providers are far better than what mostSMEs can realize with their modest investment levels. Even moresignificantly, cloud computing needs no upfront investment, whichwill allow cash-strapped SMEs more flexibility with the use of theircapital. Having much less of legacy IS infrastructure to contend with, itwill also be much easier for SMEs to move to the cloud (and in manycases, the cloud might be the first instance when they try a newfunctionality, e.g. ERP, because the traditional alternative would havebeen too expensive in the first place). Finally, smaller organizationswill have much less of the ingrained “attitudinal” issues that Carr [10]noted to deal with in moving their IS infrastructure to a cloud.
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