Although the bulk of its customers are small companies, Amazon Web Services has also signed up big players such as Nasdaq Stock Market and The New York Times , says Selipsky. In fact, he says that adoption among enterprise customers has "happened a little quicker than we would have imagined."
"The choices we have about what [IT activities] we do in-house and what we can have outsourced continue to improve," says Beach Clark, CIO at the Georgia Aquarium. The aquarium's Web farm, including two Web sites, is hosted elsewhere by a third party that also hosts its Web servers. But like other CIOs, Clark believes that IT activities that are core to the mission of a business will continue to be handled internally.
For instance, Clark's five-person staff handles most of the aquarium's online ticketing support and much of its business intelligence work -- functions he deems critical to the organization -- even though some of the programming itself is outsourced. And he doesn't see that changing anytime soon.
The shift among enterprise IT organizations toward hosted IT infrastructure services is real, says Paul Major, managing director of IT at Aspen Skiing.
But even though he finds the prospect of outsourcing IT infrastructure support to third parties "appealing," Major raises one of the red flags that have continued to prevent widespread adoption among large companies.
"My concern is what happens if [the service provider's] business model flops and someone comes in and buys them," says Major. "How do I go back in and get my data and format it? I'd rather keep it local and keep it under control."
For that reasons and others, Storage Networking Industry Association chairman Vincent Franceschini believes there will be "many shades of gray" when it comes to adopting hosted IT infrastructure services among Fortune 2,000 organizations.
For instance, the chemical and avionics industries have vastly different business processes and data workflows. But at the core of both industries is intellectual property "that they very much want to be controlling," says Franceschini. So even though he envisions companies outsourcing some level of rote IT infrastructure activities to third parties, "it will take some time" for core business applications -- particularly those containing IP -- to move off premise, he says.
"If there's anything that's going to cause a slowdown [in managed services adoption by enterprise customers], it's [concerns about] data protection," says Nick Sharma, senior vice president of infrastructure managed services at Satyam Computer Services.
There are other reasons that many CIOs are still resisting the hosted IT services model. "I think there's going to be a swing back to a more traditional [on-premise IT support] model because IT departments are understanding that users want to interface with a real human being in English," says Carmen Malangone, director of IT at Coty, a maker of fragrance and beauty products. "That's one area where these [managed] services fall short," he says, alluding to the use of offshore service reps whose English language skills may be spotty.
And those aren't the only inhibitors to widespread adoption. "One of the biggest barriers is the IT organization itself," says Sun's Dutra. "There is a cultural history of building things." There's also a bias among some business customers that have become accustomed to having their IT organizations "own and operate" systems, Dutra adds.