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The future is cloudy

22 Jun

Nicholas Carr first gained wide-spread fame when he stirred the hornet’s nest with his article IT Doesn’t Matter published in the May 2003 issue of Harvard Business Review. This article caused an outrage in the IT industry and Carr was flamed by many industry big-wigs. He followed up with his book Does IT Matter? Information Technology and the Corrosion of Competitive Advantage that expanded on the theme of the article and included rebuttals to many of the criticisms lobbed at his original article. In summary, his proposition in this book is that IT is becoming a commodity and the result is that while IT is necessary to survive, it no longer is sufficient to provide a competitive advantage.

Carr’s second book The Big Switch: Rewiring the World, from Edison to Google draws interesting (and convincing) parallels between evolution of the electrical grid and evolution of computing. In a sense, it picks up where first book left off. Does IT Matter? discussed what is happening (i.e. IT is becoming a commodity) and The Big Switch continues with how cloud computing it is making it happen. The book begins by tracing the history of power generation industry. In its infancy, towards the end of the 19th century, big companies were generating their own power on sites of their factories with windmills and water wheels. The discovery of electricity altered the landscape dramatically within a few decades. Instead of setting up and operating their own power plants, companies simply plugged into a ubiquitous electrical grid. Specialized companies were born whose primary focus was to generate and supply electrical power. Suddenly the playing field was leveled. You no longer had to be a behemoth and operate a power plant to be able to assure yourself a reliable supply of electricity. The same reliable supply of electricity available to a factory that employed thousands was now also available to a 10 person shop. Carr says that we are seeing a similar thing happening in the IT industry. In the early days everyone was writing their own custom software for essential business operations like accounting, inventory management, sales and so on. This meant and investment of millions of dollars in hardware and software resources. Soon, home-grown software began to be replaced by commercial off-the-shelf software like SAP, Oracle, PeopleSoft etc. While not as intensive and expensive as writing your own software, it still costs huge amounts of money to buy, implement and maintain these packages.  These costs are still prohibitively high for small companies. Carr argues that with the age of internet and advent of Google AppsAmazon Elastic Computing Cloud, and other such companies, computing is becoming a commodity and is leveling the playing field. It used to take thousands of dollars and several weeks to obtain the hardware servers to run your business software. Now, the same computing power is available to you in minutes and at a fraction of the cost. You just pay for what you use. Similarly, enterprise-level software once available only to Fortune 500 companies is now becoming available to mom-and-pop entities on a subscription basis. This is a harbinger of things to come. The shift is beginning to happen.

All the parallels, arguments and examples put forth by Carr are very compelling and persuasive. In the last couple of years almost all the big IT vendors like Microsoft, IBM, Oracle, SAP etc. have jumped onto the cloud computing bandwagon. Will computing and IT some time in the near future become as ubiquitous as electricity is today? Will organizations be simply able to plug into the cloud for all their IT needs? Only time will tell.