cloudconnections_0Las Vegas – On a cloud panel here yesterday, a speaker put it plainly: it’s only a “true” cloud service when you unplug the service and stop paying for the servers. That idea may seem straightforward, since cloud services are often characterized by their pay-as-you-go nature.

But what does that mean for so-called “private clouds services.”

If IT “unplugs” a private cloud service, it still has all those servers and related systems sitting in its “cloud-based” data center (and hitting their bottom line). Is that really cloud at all?

In a keynote address at the Cloud Connections conference here, Ric Telford, vice president-cloud services at IBM, presented the case that a cloud-based approach to IT isn’t just about sending servers out the door but rethinking how IT delivers services – and business value.

“If you look at the cloud, you can get a lot of value independent of whether you own the servers or not,” Telford said, noting that the higher level values of standardization, resource pooling and self-service capabilities of the cloud trump simply outsourcing IT. Telford said that enterprises that run a large number of servers in-house – a good starting point is 2000 but it gets even more interesting at 10,000 – can gain almost as much cost savings running that infrastructure as a private cloud in-house versus moving all those resources to a public cloud provider, while maintaining important levels of control.

In such a scenario, IT becomes a cloud service provider itself, provisioning infrastructure-as-a-service and ultimately platforms and applications across the enterprise and typically out to multiple locations or business groups. They do so leveraging most of the same approaches and technologies a public cloud provider would use.

At the same time, such a large enterprise would probably also use some form of public cloud service to gain additional IT resources on demand, to meet spikes in capacity requirements or perhaps to have a cheaper, quicker way to test and deploy brand new applications, Telford said.

Such a “hybrid cloud” environment is “where I think lots of companies are going to settle in,” Telford said.

Telford detailed first year cost savings from a recent IBM cloud engagement with a financial institution. He said 55% of the savings came from reductions in testing process overhead, 36% in system admin costs, 13% in provisioning costs and just 6% in raw hardware costs.

“People are looking at cloud for much more than just saving money. It’s all about giving you the ability to provide more flexible IT to differentiate your business.”

Telford noted that talking about cloud and mobile side-by-side (as at this week’s Cloud Connections and Mobile Connections events here) makes even more sense for the enterprise. “:Having a cloud infrastructure is going to enable [IT] to be much more responsive to people who use your services in the mobile space,” he said. “People want to get connected from whatever device they have regardless of where they are in the world. Cloud is the enabler to make that happen.”

To address the spectrum of cloud deployment models that IBM believes enterprises are looking for, the vendor has rolled out a series of cloud products in recent months including IBM Workload Deployer v3, focused on helping enterprises dynamically manage the middleware to support private clouds; IBM Smart Cloud, a more public cloud platform with two levels of service guarantees depending on the mission critical nature of the services required; and IBM Websphere Cast Iron Cloud Integration, which provides shortcuts and templates to help businesses rapidly integrate public cloud applications (such as Salesforce.com) with internal systems and apps.

This larger view of what it means to deploy cloud services is changing enterprise notions about why the cloud is important, Telford said. In IBM’s most recent Cloud Market Trends 2011 survey, he said, 65% of those surveyed said they thought the cloud would help drive down the cost of running business applications. At the same time, 55% believe the cloud can also help enterprises transform how they do business.