The concept of the “cloud” is everywhere, perpetuated by the numerous applications that exist for us to consume (from Angry Birds on your mobile device to salesforce.com, a CRM application). These applications are being developed by large enterprise software companies and smart college students in their dorm rooms. The infrastructure cloud and the internet have made it possible for us to consume these applications with relative ease. Buying a subscription to a CRM application and utilizing it for your sales activity tracking is relatively easy. Purchasing a 99 cents application from iTunes for your mobile device is quick and pain free. Providers have mastered the delivery mechanism for these applications and they deserve all the praise. They have increased productivity, allowed people more access to enjoyable outlets and have, in some ways, made our lives easier.

The ease of cloud application consumption is leading to a skewed valuation of those very things we are consuming. When things are easy to obtain, we expect more as consumers and tend to undervalue them due to their very accessibility. I like to breakdown cloud applications into two broad categories: consumer-focused and enterprise-focused. Applications in both these categories are easy to purchase (a few clicks can get you on-line) and deploy to a team of people. What ends up happening is, we inadvertently fall into the trap of viewing both categories of applications though the same governance lens.

All applications, whether downloaded from a web store or consumed via the Internet are “assets” to the person or company using them. Their purchase value may range from a few cents to hundreds of thousands of dollars, but their personal value (in terms of efficiency, enjoyment, etc.) is almost always significant. Checking your Facebook news feed on your iPhone is entertaining; but if something happened to the device, you would undoubtedly miss your asset (phone & application) and want it back.

This ease of consumption has also led to a conundrum within our traditional IT organizations. Today, most cloud-based application purchases are made by functional business groups (like Sales, Marketing, and Customer Service) and not the IT department, as traditionally was the case. The ability for a Sales Manager to purchase a few CRM licenses on-line is empowering and allows them to avoid the bureaucracies of dealing with IT evaluation and justification. Functional representatives can purchase software as a subscription service and decide to quit when they no longer need the service, or don’t feel comfortable with their initial decision. Such flexibility is just not possible with traditional software hosted by the IT department. IT has a critical dilemma they must address: How do I support my in-house ERP system and also stay engaged with a CRM purchase that happened in the Sales group? How do I show that IT still brings value to the table when the organization has more “cloud” applications than “in-house”? How does IT help the business optimize a cloud-based system that requires less programing skill but more business acumen and analyst skills?

It is time we started recognizing cloud applications purchased for an enterprise as “valuable” assets, with long term value. Even though they are considered expense items (not capitalized) within most organizations, it is vital that they be treated as tools for competitive advantage to further business goals and initiatives. Businesses must develop a plan to support and govern these assets throughout their entire lifecycle.