News.com has a new article by Martin LaMonica that surveys some reactions, mainly negative, to my recent article on utility computing, “The End of Corporate Computing.” CIOs and tech execs point to various challenges that utility suppliers must (and I think will) address, including security and customization at the user end. Dan Farber also chimes in, saying that “those who fail to gear up culturally and technically for utility computing in the next few years will end up at a competitive disadvantage.”
LaMonica asked me for my thoughts on his piece and I emailed him the following response:
“What we don’t know is the ultimate shape of the IT utility model or the course of its development. That’s what makes it so interesting – and so dangerous to current suppliers. What we do know is that the current model of private IT supply, where every company has to build and maintain its own IT power plant, is profoundly inefficient, requiring massively redundant investments in hardware, software and labor. Centralizing IT supply provides much more attractive economics, and as the necessary technologies for utility computing continue their rapid advance, the utility model will also advance. Smaller companies that lack economies of scale in their internal IT operations are currently the early adopters of the utility model, as they were for electric utilities. My guess is that larger companies will as a first step set up their own internal IT utilities, consolidating their fragmented IT assets, and will begin shifting to the external supply model only when outside utilities have proven themselves and gained superior scale economies. Again, this follows the electricity pattern.
“There are certainly tough challenges ahead for utility suppliers. Probably the biggest is establishing ironclad security for each individual client’s data as hardware and software assets become shared. The security issue will require technological breakthroughs, and I have faith that the IT industry will achieve them, probably pretty quickly. The technical challenges are tough, but the industry has overcome bigger ones in the past.
“In the end, the pressure on companies to embrace the most economical supply model for any important resource becomes too great to resist.”
As I wrote in my article, the biggest barrier to the adoption of utility computing will be attitudinal rather than technical, and some of the people LaMonica quotes illustrate that point. I fear that they may, as Farber suggests, end up playing catch-up.
Technology trends support your argument. The future move toward Service Oriented Architecture (SOA) and the early adoption of shared data would lead one to see the future of IT utility. Unfortunately, the power plant will not be located near the river or a few miles down the road. This time, Asia will be the supplier of power unless we do something soon to re-invent our education system.
to Todd: the “unfortunately” in your text is a bit the bone of contention! But your right in your point with the education system improvement – it’s the most important factor.
Finally it’s the old outsourcing / offshoring debate – everybody is crying for democracy and free-market economy but nobody is believing in the economic laws.
(see “international technology transfer: who gains and who loses?” by Roy Ruffin and Ronald Jones -> a very good explanation)
There is another response to the utility computing view, see –
The End of Corporate IT? Not Quite.
Recent data shows that it’s not how much you spend on IT; it’s how you spend it.
http://www.computerworld.com/managementtopics/management/itspending/story/0,10801,102616,00.html?source=NLT_ROI&nid=102616
You are correct with your thoughts and comments. The unfortunate part is that I live in a country that is driven by the masses of middle class. The global economy will create a global middle class which will bring an enormous quantity of people up to a level they have never seen before. However, our standard of living will be forced down which is not a force or erosion but rather one of equalization