Want to be the smartest person in your IT organization—or in the whole company, for that matter? Battle your way through the confusion, hype, proof points, and facts about cloud computing to reach the truth about how your company should structure computing services. It’s at least as tricky a problem as ending the stubbornly lingering recession.

Windows IT Pro industry analyst Paul Thurrott recently called cloud computing “an ill-defined and rarely understood technology if there ever was one” (“Revolution, Not Evolution”). But the promise that cloud computing holds—one of dynamically scalable resources, a power-saving virtualized environment, and pay-as-you-go pricing—is so compelling that everyone is scrambling to find their rightful place in the cloud.

Amidst this headlong rush are some IT pros who are keeping their cool by focusing on technology that delivers real benefits now. Gary Magnuson, an IT specialist with Kroll Factual Data in Loveland, Colorado, made his department’s decision to dismiss cloud computing—at least the hosted services version—sound simple. Magnuson, a longtime subscriber to Windows IT Pro who joined the staff’s recent strategy sessions as a guest panelist, said his team rejected cloud-based services for two reasons: no apparent cost savings and potential security risks.

“We’re such a large virtualized machine environment right now, cloud services would not be a cost savings for us, and we would have to worry about security,” Magnuson said.

Magnuson, whose team maintains the organization’s servers, isn’t kidding when he talks about a large virtualized environment. His team recently shifted 800 physical servers to VMs, and in one case he has 140 VMs running on one physical box. Although this move required investment in new hardware to run Microsoft Hyper-V Server 2008 R2, Magnuson said his team looked at the long-term cost savings.

“It costs you in one way, but saves you in the other,” Magnuson said. “Also, if you have some servers that are running toward the end of life, instead of buying a new server you can convert it to a VM. Besides getting rid of the physical box, virtualization saves you on power. You’re saving the purchase of the physical box itself, physical memory for that box, repairs on the physical box, and power.”

For Magnuson’s team, the security risks are simply a matter of control. “If applications are on the other side of the firewall, they have to be much more secure,” he said. “And sometimes that can get interesting. If a mistake is made in the cloud, you open yourself up to security risks. On the inside of the organization, it’s easy to check the firewall. It would be easier for us to host our own private cloud service than to use a public cloud simply because of the security and ease of use. We have a lot of expertise here, and it’s easier for us to manage security from inside the organization.”

Magnuson said that his team jumped into virtualization when Microsoft released Hyper-V with Windows Server 2008, and their knowledge evolved as they tested and retested scenarios in their lab that they thought could make their jobs easier. His team is constantly looking for workloads to virtualize and improvements to their virtualization environment.

Although Magnuson is a champion of virtualization, he doesn’t rule out cloud services for his server team at some point in the future. But in the meantime, he clearly feels that he and his colleagues have the knowledge and expertise to deliver the performance, availability, and security his company needs with a well-tested virtualized environment. He ran through a quick list of factors that businesses need to consider when evaluating cloud services: Would a private cloud service give you better security? Would your business really benefit from the pricing model of public cloud offerings, or would a virtualized environment give you the best cost savings? Are you more confident in a public cloud service’s security measures or in your in-house network security expertise? Do you have the resources to manage in-house IT staff? Do you know what resources you’ll need to manage outsourced services?

The questions about cloud computing are many, and the answers aren’t easy. For a primer on cloud computing, check out senior technical director Michael Otey’s article “The Rise of Cloud Computing.” Also, check out the virtualization and cloud computing sessions at Penton Media’s Windows Connections conference November 1–4 at Mandalay Bay in Las Vegas. You’ll be able to ask our speakers—including Mark Minasi, Sean Deuby, and Mike Danseglio—about the best solutions for your company. The conversation will make us all a little bit smarter about cloud computing.