Current pricing levels for private cloud services are too expensive for many organisations, say experts, though increased competition as the market develops should bring them down to more affordable levels.
In the meantime, there are opportunities for hybrid platforms that mix local IT provision with remote, hosted applications and services to a variable extent, such as that currently being implemented by Loughborough University.
IT director Phil Richards recently signed a deal that will see the majority of the academic institution's IT services hosted on systems integrator Logicalis' bespoke on-site cloud service (BOCS).
"As soon as it becomes possible we would want to put as much as possible - around 80 per cent - in the remote part of the cloud, though we'll keep research and latency-critical apps local, as well as those with licensing issues," he said.
"Pricing for remote hosting is still in the relatively early days - about two to three times more expensive than local hosting - and the reality of service provision in the UK is that it has yet to catch up with the hype."
Cost was by far the biggest factor in thrashing out the deal with Logicalis, which the university has estimated will save it £2.5m alone by eliminating the need to construct a new datacentre of its own to handle the growing IT requirement.
Loughborough's systems support 3,000 staff and 1,600 local business ‘tenants', as well as up to 20,000 students, and the university will also serve as the official preparation camp HQ for the British Olympic team in the run-up to the 2012 games.
"We had a 40-year-old datacentre which is now end of life, so the choice was upgrading that or using a local cloud based on Logicalis BOCS," said Richards.
"Other people are commissioning large datacentres but we looked at the sums and they did not add up - we reckon we've avoided spending £2.5m on the same thing."
The project will see a vast consolidation of the university's existing servers, with Richards anticipating that up to 90 per cent of its 400 physical boxes can eventually be virtualised (he is aiming for 50 per cent by July this year), and the majority of those then hosted remotely.
And he trusts VMware's virtualisation platform to eliminate the perceived issues with security and performance which many associate with cloud computing services.
"With VMware vCloud and project Redwood it is my understanding that these problems have been solved," he said.
That server consolidation should provide additional savings of around £100,000 a year in power costs, with parallel reductions in IT management duties which could present opportunities to look at staffing resources to see where people can be redeployed.
With both the university and Logicalis already connected to the Joint Academic Network (JANET), no upgrade to the campus LAN was required to support the implementation.
Another factor that weighed heavily in Logicalis' favour among the four shortlisted suppliers was the fact it already had reference architecture up and running in Slough, which the university's deans and professors could see working before approving the investment.
The local cloud infrastructure will fit into half of the university's old datacentre, while ‘dead storage space' on the other side of the campus has been drafted in as a disaster recovery facility.
"Logicalis built the local cloud solution in its Slough headquarters and shipped it as a job lot and we will plug it in quite soon," said Richards.
"We didn't need to spend money on a new building or in rack cooling, which is where a big chunk of the savings come from."
Richards also plans to use virtual desktop infrastructure (VDI), initially just for its corporate PCs but also as the basis for a student virtual learning environment at a later date.
As well as exploring the potential for remote virtual cloud application delivery, the university will run Cisco's unified communications software on a virtual server for the first time.
"We have not run on UC in a virtual environment before so that will be a big change, but the number of vendors that do not enable their software to run under VMware is becoming less and less - even Oracle offers two to three options," said Richards.
"In the worst case scenario there are some apps we may have to run natively on the blades, but we do not have to make a decision about that today."