With customers re-evaluating their capital IT budgets, but still seeing the need for more and more storage and storage solutions every year,  cloud storage is generating a lot of buzz among solution providers looking to on demand storage.

The technology can offer cost savings, incredible scalability, high availability and the flexibility of on-demand capacity. In fact, IDC research forecasts spending on IT cloud services is expected to reach $42 billion by 2012, and will account for 25 percent of IT spending growth in that year. By 2013, cloud computing will account for nearly a third of IT spending growth, according to IDC, and storage will be a major component of that spending.

But it’s not a one-size-fits-all technology, and there are a number of variables to take into consideration before deciding if a solution is right for your customers.

To make sure you’re choosing the right kinds of solutions for customers, you have to take into account the types of data customers need to store, their access needs and their price constraints. And don’t count out traditional storage solutions just yet; there’s still plenty of room for NAS, SAN and other on-site storage technologies.

Why look at the cloud?

Cost is one of the major reasons customers are looking to the cloud to help ease their storage, archiving and backup capacity needs, but there are as many different pricing structures as there are ways to leverage the cloud.

Obviously, a major source of cost savings is realized in terms of physical infrastructure costs, as using cloud storage services saves customers from expensive investments in traditional storage arrays, data centers, and offsite backup and recovery facilities, for instance.

Sajai Krishnan, CEO of ParaScale, a cloud storage vendor, says the solution provider stands to benefit from any technology they can use to deliver cost savings to their customers, especially in the pricey storage market.

“Regardless of the economy, resellers are going to find customers will choke a little on the thought of expensive, name brand storage.  It’ll still be a financial problem even if they don’t buy name brand,” he says.

And why use enterprise-class, expensive hardware to store archival data, when the cloud provides a less expensive option that’s just as secure and accessible?

“What does it cost for me to get it through the cloud, and what does it cost to provide it internally? If the price is less and the performance is the same, then why would I not buy it from the cloud?” says Noemi Greyzdorf, research manager with IDC.