Despite confusion among businesses surrounding the potential of cloud computing, IT service providers continue to invest in the offering, according to market watcher Ovum.

Ovum principal analyst John Madden has claimed that services specialists are differentiating their cloud services for customers through technologies such as virtualisation. According to Madden, IT service delivery experience is being differentiated by demonstrating the positive impact of the service during an economic downturn.

He said: “Cloud computing continues to dominate discussions among enterprise IT customers as they look for better and more cost-effective ways to operate and deliver IT services.

“Although cloud-based services hold great promise for customers and the vendors that offer them, for the vast majority of enterprise customers there is still far too much hype surrounding what constitutes a cloud, the kind of services that can be delivered and how those will ultimately evolve."

Regardless of the hype, Madden said cloud services continue to attract attention, if not always actual adoption due to their ability to match IT resources to real-life business needs.

Furthermore, for several service providers - including traditional services players, outsourcers and telecom/network operators offering enterprise-class services - the evolution of the cloud market can bring opportunities and challenges for vendors.

Madden added: “However one views the cloud market, service providers want to remain active participants in the evolution of cloud services. Even if the hype level in cloud computing remains high, providers fear that not talking about cloud as part of their services portfolio could lead to customers viewing them as also-rans in this evolving market.”