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Research Materials for the Paper

Slightly Skeptical View on Nicholas Carr's "IT Does not Matter" Fallacy and "Everything in the Cloud" Utopia

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This page contains research materials for the paper:

Obscurantism in Information Technology: Nicholas Carr's "IT Does not Matter" Fallacy and "Everything in the Cloud" Utopia

Abstract

Nicholas Carr's provocative  HRB article published five years ago and subsequent books suffer from the ignorance of  IT history and lack of understanding of both electrical transmission networks and the group of technologies grouped under the umbrella term  "information technology" (or "IT").  He cherry picks facts to fit his needs instead of trying to see the whole picture. To be more correct Carr tortures facts to get them to fit his fantasy. The central idea of the article "IT does not matter" is simply a fallacy. At best Carr managed to ask a couple of interesting questions, but provided inferior, misleading answers. My feeling is that each and every of his recommendations is a fallacy. While Carr is definitely a gifted writer, ignorance of technology about which he is writing leads him to absurd conclusions which due to his lucid writing style looks quite plausible for non IT audience and as such influence public opinion about IT.

Unfortunately the charge of irrelevance stick and elicited mostly incoherent and ineffective rebuttals. This papar is an attempt to provide a more coherent response to main components of Carr's framework.  But  if one looks closer at what Carr propose, it is evident that this is a pretty reactionary and defeatist framework which I would call "IT obscurantism" and which is not that different from "creativism". Like with the latter, his justifications are extremely weak and consist of one hand of usage of fuzzy facts and questionable analogies, on the other putting forward radical, absurd recommendations  ("Spend less", "Follow, don't lead", "Focus on vulnerabilities, not opportunities" and "move to utility-based "in the cloud" computing)  which can hurt anybody who tries to adopt them.  The irony of Carr's position is that for the last five year since the publication of his HBR article local datacenters actually flourished and had shown no signs of impeding demise.

The paper contains sharp critique of several aspects of Carr's utopia including but not limited to such topics as "frivolous treatment of It history", "Problems with enterprise computing", what is the place of  "in the cloud" computing in future IT, what technologies compete with "in the cloud computing" and to what extent problems typical for distributed computing and "bandwidth communism" can slow its adoption.

For the additional critique of Nicholas Carr views see also:

• The Big Switch review
• Letters to HBR about Nicholas Carr article

Old News ;-)

Linux Today - Editor's Note Cloud is Just Another Word for Sucker by Carla Schroder

Nov 14, 2009 | linuxtoday.com

As much as we warn about privacy, security, and reliability problems in cloud computing, it's coming and we can't stop it. So do we join the cloud party? Heck no.

It seems like it should have some advantages. Geeks back in the olden days used to say that a simple network appliance running hosted applications would be a good thing for unsophisticated users. Pay a monthly fee just like for phone services, use a subsidized terminal, and let the vendor have all the headaches of security, provisioning, system administration, updates, backups, and maintenance. What a boon for the business owner-- outsource to a service provider, no muss, no fuss, and everyone is happy.

Broken Trust

Well here we are on the threshold of this very thing, and now the geeks are complaining and warning against it. Why? Because we like to be perverse? Well maybe that is part of it. But for me the biggest problem is trust. I don't trust many tech vendors because they haven't given me any reasons to trust them, and plenty of reasons to not trust them. Over and over and over and over and over and over and over.

Why would I entrust them with my data when they do not respect my privacy or the privacy of my data? In the US personal privacy is not protected, and vendors who mangle and lose your personal or business data pay no penalty or recourse, other than bearing the brunt of your peeve. Marketers are all about privacy invasion, as much as they can get away with, and collecting, mining, and buying and selling us. Even worse, service providers roll over at the slightest "boo", releasing customer records at toothless DMCA takedown requests, and caving in to law enforcement without even making them go through due process. Where are all those attack lawyers when they can do some good for a change?

No-Nines Reliability

Reliability is a second issue. Google and Skype, to give two famous examples, have distributed datacenters but both have suffered a number of outages and service interruptions. (Speaking of Skype, the excellent columnist J.A. Watson doesn't think much of them.) Even if the cloud vendor has perfect uptimes there are many weak links between the customer and datacenter. In this glorious year 2009 of the 21st century it is still a common recommendation to have two diverse Internet connections. But even if you want to spend the money the wires are consolidated and have a small number of chokepoints. Like when a fiber cable near Pendleton, Oregon was cut a couple of years ago, and it wiped out much of the telephone and Internet for Eastern Oregon. Or when backbone providers have spats with other over peering agreements and teach each other lessons by cutting each other off, leaving customers stranded. So what do we do for redundancy, train some carrier pigeons? Learn ham radio? Interpretive dance?

Performance: Haha

The third problem is why in the heck would any sane person trade in their nice sleek efficient standalone applications for a horrible boggy Web browser abomination with a hundredth of the functionality? I do demanding jobs on my studio computer, both audio production and photo editing. You know what kicks my CPU into the red zone and keeps it there, and eats RAM like popcorn and hits the swap partition until it's crying for mercy? Not loading and editing a gigabyte audio file, or converting a big batch of multi-megabyte RAW files. What brings my whole system to a halt until some half-baked junk script finishes running? Plain old Web surfing and various Web apps I have to use. I'm not keen to buy a desktop supercomputer just to have decent browser performance.

Nobody would even be looking at Web apps if we didn't have all these closed, proprietary file formats and steep barriers to migrating to sane, open platforms and applications.

The cloud, software as a service, hosted applications, whatever you want to call it is coming. The concepts are useful, but I have little faith in the implementations.

A Practical Alternative

As always in Linux-land, there is a role for the do-it-yourselfer to turn dung into gold. Come back next week and I will tell about this.

[Oct 5, 2009] Technology Story Is Cloud Computing the Hotel California of Tech

Slashdot

Prolific blogger and open source enthusiast Matt Asay ponders whether cloud computing may be the Hotel California of tech.

It seems that data repositories in the form of Googles and Facebooks are very easy to dump data into, but can be quite difficult to move data between. "I say this because even for companies, like Google, that articulate open-data policies, the cloud is still largely a one-way road into Web services, with closed data networks making it difficult to impossible to move data into competing services. Ever tried getting your Facebook data into, say, MySpace? Good luck with that. Social networks aren't very social with one other, as recently noted on the Atonomo.us mailing list. For the freedom-inclined among us, this is cause for concern. For the capitalists, it's just like Software 1.0 all over again, with fat profits waiting to be had. The great irony, of course, is that it's all built with open source."

Re-Simple

That's why I don't call it "cloud computing", I prefer OPS (other peoples servers). Its more self-explanatory.

Re: Simple by DuckDodgers

Your own servers don't necessarily cost much more. Check the pricing at Amazon http://aws.amazon.com/ec2/ [amazon.com] for a 'Large Instance' with "7.5 GB of memory, 4 EC2 Compute Units (2 virtual cores with 2 EC2 Compute Units each), 850 GB of instance storage, 64-bit platform". A reserved instance costs $910 per year plus $0.12 per hour, or $1961 per year.

I can assemble a nice rackmount 1U RAID server with better computing resources than that for the same price. Multiply that by a few servers and a few years, and your cost savings over your own hosting / racks / UPs isn't going to be that high. And of course, nothing stops Amazon from raising the prices.

Also, EC2 gives the user no recourse if the system goes down for any reason, or if your data is lost. http://aws.amazon.com/agreement/ [amazon.com] You get a 10% discount if the system uptime is less than 99.95%, but that's the extent of your rights. If you screw up, it's your fault. If Amazon screws up, it's their fault but your problem.

Now, the nice thing about Cloud Computing is scaling. When your magic startup starts generating massive throughput, you can just add resources to your EC2 allotment as needed.

But for small deployments that don't anticipate sudden rapid growth, I don't get the appeal.

Re:Simple by drsmithy

I can assemble a nice rackmount 1U RAID server with better computing resources than that for the same price.

But you can't make it redundant, back it up, give it high-bandwidth connectivity, or maintain it for that price. The hardware itself, is by far the cheapest part of any server room.

But for small deployments that don't anticipate sudden rapid growth, I don't get the appeal.

Because building and maintaining any remotely reliable IT infrastructure is expensive and requires expertise that is, for most companies, utterly irrelevant to their core business.

Re:Simple (Score:4, Insightful)

by DuckDodgers (541817) Alter Relationship <keeper_of_the_wolf.yahoo@com> on Monday October 05, @03:38PM (#29648615)

Thanks. You make some excellent point. I admit, we spend a lot of time and effort (meaning, money) maintaining machines, connectivity, backups, and redundancy (RAID for data redundancy, in addition to backups, UPS and a generator for power redundancy, and separate ISPs for connection redundancy). It's a huge expense for a tiny company.

I'm just very nervous about entrusting the company meat and potatoes to an external business. If our stuff goes down because I screwed up - and it has happened - I can try to fix it immediately. If our power or internet connectivity goes down, I can work with the corresponding vendor to get it restored. If something goes wrong with my Cloud Computing setup, I am at the complete mercy of their technical staff. Instead of actively working to solve the problem, all I can do is stay on the phone with their tech support and hope they fix it. Naturally, I'd rather be working than waiting.

And of course, I'm at the mercy of the vendor. If they decide to shut down, I have to scramble to find replacement as quickly and painlessly as possible. If they decide to raise prices, I'm looking at an instant drop in operating income or else the expense of moving to another vendor.

I'm not saying the cloud is the wrong way to go. I'm just saying that I am nervous.

Re:Yes (Score:5, Informative)by eldavojohn

If you mean a big hit that everyone knows.

I don't think that's what they meant by turning Hotel California into an adjective or analogy.

I believe the one-way street attribute would probably be the easiest way to describe it. Although there's more subtle caveats to 'Hotel California' as a lyrical work. Though interpretations have been numerous (I've heard it compared to prison), the writers describe it as an allegory about hedonism and self-destruction in Southern California [wikipedia.org]--especially the music industry (that we all know and love). From the Wikipedia entry:

"Don Henley and Glenn wrote most of the words. All of us kind of drove into LA at night. Nobody was from California, and if you drive into LA at night... you can just see this glow on the horizon of lights, and the images that start running through your head of Hollywood and all the dreams that you have, and so it was kind of about that... what we started writing the song about. Coming into LA... and from that Life In The Fast Lane came out of it, and Wasted Time and a bunch of other songs."

So if I may elaborate the analogy may be trying to describe cloud computing as something you're kind of forced into and it would seem stupid not to take it ... but then you start to realize that it's not everything it was made out to be at the beginning. You are promised success and all the resources imaginary but then at the end when you realize you don't have control over the situation and your data or privacy becomes seriously important to you, it's nowhere to be found and irreclaimable. The song's final lyrics before the guitar solo and double stop bass: "You can checkout any time you like/But you can never leave."

No, this isn't unique, Lynyrd Skynyrd [wikia.com] felt the same way as did The Kinks [wikia.com] and I bet if I sat and thought I'd come up with much much more. I guess you'd be better off explaining it outright than calling cloud computing Hotel California but the English language allows one to play and invent I guess. The author might consider the younger crowds though for this piece.

verbal meme? (Score:2) by FornaxChemica (968594) on Monday October 05, @02:34PM (#29647777)

Funny, I saw this same Hotel California analogy a few days ago in a tweet [twitter.com]. Where did it all start? These people must have seen it somewhere else, this is some kind of verbal meme. It often happens I noticed, a word or a comparison you wouldn't normally use that suddenly spread all around the Net.

Anyway, I thought this one was referring to the lyrics of Hotel California and specifically to this line: "You can check out any time you like, but you can never leave".

Applied to cloud computing, I also like that one: "This could be Heaven or this could be Hell"

[Jul 23, 2009] Twitter's Google Docs Hack - A Warning For Cloud App Users - News - eWeekEurope.co.uk By Eric Lundquist

20-07-2009

Twitter lost its data through a hack on Google Docs. Learn from this to be very careful how much trust you place on cloud apps and Web 2.0, says Eric Lundquist

Here's the background. A hacker apparently was able to access the Google account of a Twitter employee. Twitter uses Google Docs as a method to create and share information. The hacker apparently got at the docs and sent them to TechCrunch, which decided to publish much of the information.

The entire event - not the first time Twitter has been hacked into through cloud apps - sent the Web world into a frenzy. How smart was Twitter to rely on Google applications? How can Google build up business-to-business trust when one hack opens the gates on corporate secrets? Were TechCrunch journalists right to publish stolen documents? Whatever happened to journalists using documents as a starting point for a story rather than the end point story in itself?

Alongside all this, what are the serious lessons that business execs and information technology professionals can learn from the Twitter/TechCrunch episode? Here are my suggestions:

1. Don't confuse the cloud with secure, locked-down environments.
Cloud computing is all the rage. It makes it easy to scale up applications, design around flexible demand and make content widely accessible [in the UK, the Tory party is proposing more use of it by Government, and the Labour Government has appointed a Tsar of Twitter - Editor]. But the same attributes that make the cloud easy for everyone to access makes it, well, easy for everyone to access.

2. Cloud computing requires more, not less, stringent security procedures.>br /> In your own network would you defend your most vital corporate information with only a username and user-created password? I don't think so. Recent surveys have found that Web 2.0 users are slack on security.

3. Putting security procedures in place after a hack is dumb.
Security should be a tiered approach. Non-vital information requires less security than, say, your company's five-year plan, financials or salaries. If you don't think about this stuff in advance you will pay for it when it appears on the evening news.

4. Don't rely on the good will of others to build your security.
Take the initiative. I like the ease and access of Google applications, but I would never include those capabilities in a corporate security framework without a lengthy discussion about rights, procedures and responsibilities. I'd also think about having a white hat hacker take a look at what I was planning.

5. The older IT generation has something to teach the youngsters.
The world of business 2.0 is cool, exciting... and full of holes. Those grey haired guys in the server room grew up with procedures that might seem antiquated, but were designed to protect a company's most important assets.

6. Consider compliance.
Compliance issues have to be considered whether you are going to keep your information on a local server you keep in a safe or a cloud computing platform. Finger-pointing will not satisfy corporate stakeholders or government enforcers.

Rough Type Nicholas Carr's Blog Cloud may squeeze margins, says Microsoft exec

I'm sorry guys, I just don't get it with "Cloud Computing"! Really... think about it... All this talk about dispensing with the in-house IT staff and not having to buy and maintain servers?? Passing off the application to the "Cloud"? Come on! All this would have held true in the days when companies were spending 250K for a mini mainframe, but you can buy one heck of a server for 10,000 bucks; enough of a machine to run a 40 million a year company on. Desktops are under a $1000. Believe me, it's not a compelling argument for cloud computing.

Also, most companies have a hardware and network person visit them by the hour when needed. Even for a company using MS Server 2003, it's bullet-proof enough that it just sits there and works. It may not be Linux or Unix, but it's good enough for a reasonable price. So the "IT guy" isn't going to break the bank. Computing has become a commodity, so there ARE no big savings there - PERIOD!

Now let's say you rent sofware like Netsuite or Salesforce.com... You pay and you pay! Every two years you'll be paying the equivalent of a one-time software purchase for a product outright. It doesn't even make financial sense. Software rental is not cheap. What if the network or Internet provider goes down? At least with a desktop system you can still work on a local version.

Most desktop systems are rapidly becoming cloud systems anyway. Like Foundation 3000 accounting software from Softrend Systems Inc. http://www.softrend.com/ This software you buy only once and you get both desktop feature and cloud features included. It's not an either/or decision.

Using Online features in software in no way makes the desktop redundant. What the heck do most people use to connect to the Internet with...? A desktop computer! Some software will be Internet-based and some will be desktop based. Most computing platforms of the future will be a mix of both. What we're really talking about here is the software pricing model - not whether your application is sitting on "somebody's" server out in a cloud somewhere.

So let's bring the discussion back to Earth and get our heads out of the Clouds!

Come on... let's debate this!

Posted by: Sandy

I agree with Greg that there is a lot of "cart before the horse" here. I wonder if current build-outs aren't going to create a lot of embarrassingly dark data centers with 0-ROI equipment rusting on the racks.

Sandy:

So, for your $10K server you'll need space, climate control, software vendors supporting your platform in future years, commodity hardware vendors supporting your platform in future years (that's automatic with Microsoft --NNB), a backups solution (can be automated --NNB), etc. You can get by with hourly support for many things but to make all of the purchases you need to make you'll need something like an (at the very least) part-time CIO.

There are a lot of prisoner's dilemmas in those costs. If nobody moves to the cloud, your $10K server solution is a level playing field and the various vendors will compete to make it easy for you. If there's a spike of growth in the cloud at some point, and meanwhile the big-gorilla vendors are pressuring third party software vendors towards the cloud, who is going to want to sell stuff for your $10K server? (that's a theoretical problem so far -- Dell is still here, Microsoft and IBM will sell you software).  In addition to supply problems, for the stuff you can get, you'll be paying larger and larger slices of the vendor's costs for retail marketing to you.

Yet, I agree with you that in-house and private ownership isn't going away anytime soon. Just that it might shift so that what you own looks more and more like a low-flying cloud (what we call "fog" in the Bay Area).

At the very high-end, as well: buying rather than subscribing, sure. But "cloud form."

Sometimes under-emphasized is that this "cloud stuff" is, as much as anything, a reconsideration of the entire software stack. Firms might still buy their own hardware, hire hourly support, and so on but software vendors will treat that "fog" as just an extension of the "cloud": additional nodes on which to install their wares.

Also overlooked: capability limitations have caused many first generation web hosted apps to be "dumbed down" compared to locally hosted apps that they replace. That might be permanent not because capability won't grow but because firms will discover that it lowers training costs, increases the portability of skills in the labor force, and is "good enough". The cloud can (at least appear to) save money that way, too.

-t

Posted by: Tom Lord  at May 20, 2008 12:42 PM

 

Nick Carr The many ways cloud computing will disrupt IT by InfoWorld Yahoo! Tech

• By Tom Sullivan - Wed Mar 25, 2009 6:00AM EDT
• Add articles about technology to your My Yahoo! 

Whether you prefer the term "utility computing" or "the cloud," the industry is headed in that direction, however slowly, and the transition will have a multifaceted impact on IT in some ways productive, others unpleasant. And it will strike to the heart of the very technology professionals who provide a significant chunk of what is today's enterprise IT.

Nicholas Carr, author of the tech-contentious Harvard Business Review article "IT Doesn't Matter" and, more recently a book "The Big Switch," spoke with InfoWorld Editor at Large Tom Sullivan about how enterprises will transition to a more utility-like model for IT, why a small cadre of companies is gobbling up 20 percent of the world's servers and the unheard of possibilities that creates, how Web 2.0 replicates business fundamentals, as well the human factor in all of this.

[ Follow the developments in the world of cloud computing with whurley's blog, Cloud Computing | Find out what cloud computing really means ]

InfoWorld: There are those who would say that The Big Switch is something of a shift away from your position in "IT Doesn't Matter." Is that true?
Nick Carr: Even as far back as my original HBR article "IT Doesn't Matter," one of the basic arguments was that more and more of the IT that companies are investing in and running themselves looks a lot like infrastructure that doesn't give you a competitive advantage. I even made an analogy with a utility that everybody has to use but becomes over time pretty much a shared infrastructure. And so what happens when most of what companies use is indistinguishable for what their competitors use? Doesn't that mean we'll move toward more a shared infrastructure, more of a utility system?

The rise of cloud computing in general reflects the fact that a whole lot of the IT that companies have been investing in is really better run centrally and shared by a bunch of companies than it is maintained individually. Now, having said that, I see it as a logical next step from "IT Doesn't Matter." On the other hand, you could say that if a company is smarter in how it takes advantage of this new technological phenomenon, it might at least get a cost advantage over its competitors. So at that level, you can say there's some tension between the idea that you can't get an advantage from technology and what we're seeing now with cloud computing.

IW: A shift toward IT as a utility will be long-term. It's happening in really small ways, such as Salesforce.com, but in the here-and-now, not a lot is going on. So do you have a timeline for this?
NC: It's a 10- to 15-year period of transition. Particularly if you look at large companies, big enterprise users, that's probably about the right timeframe. They have huge scale in their internal operations, and it's going to take quite some time for the utility infrastructure to get big enough and efficient enough to provide an alternative to big private datacenters. I completely agree that we're in a transition period that's going to take some time. And I'd say at this moment that the hype about cloud computing has gotten a bit ahead of the reality. Still, the uptake of cloud services over the last year has moved faster than I would have expected. So there is a lot going on, but there's still a long way to go.

IW: Indeed, and there's also a human element at play. IT folks are in the position to push back on cloud services, if only to preserve their own jobs. How do you envision that playing out?
NC: Well, there is a basic conflict of interest that IT departments face as they think about the cloud, and that's true, of course, of any kind of internal department that faces the prospect of being displaced by an outside provider. We also saw some of this with outsourcing as well, so it's not necessarily new. What I think is more powerful than the resistance that may come from IT departments looking to protect their turf is the competitive necessity companies face to reduce the cost of IT while simultaneously expanding their IT capacity -- and the cloud offers one good way to do that. What I mean by competitive pressure is if one of your competitors moves to more of a cloud operation and saves a lot of money, then whether your IT department likes it or not, you're going to have a competitive necessity to move in that same direction. Over time, that is going to be the dynamic of why cloud computing becomes more mainstream.

IW: And that leads to fewer IT folks, even though some say cloud services won't eliminate IT jobs?
NC: You hear that all the time, not only from vendors but IT managers as well, who say, "If we can get rid of these responsibilities, then we'll be able to redeploy our staff for more strategic purposes." That's a myth, obviously. Any time you get rid of a job, then the person in that job has to prove that their continued employment is worth it for the company. When you get rid of a job, more often than not, the employee goes out the door, particularly when you have an economy like today in which companies are looking not only for greater efficiencies but also to reduce their staff.

IW: How do you see the current recession reshaping IT?
NC: I have mixed feelings. On the one hand, it continues or even intensifies the cost pressures that have been on CIOs and IT departments over the last decade, and that would seem to imply there will be a search for more efficient and less costly ways to do the things you need to keep your business running, whether that's purely at the level of computing and storage capacity, or how you get a particular application in. From that standpoint, it should promote the use of cloud services simply because at the outset they're much cheaper and don't require capital outlays.

On the other hand, whenever you have the kind of severe economic downturn we have right now, companies tend to get very conservative and very risk-averse and so they might be less willing to experiment with a new model of IT. So there are these two contrary forces at work: One pushing companies to find more efficient ways to do things, and the other kind of this sense that "let's batten down the hatches and not do any experiments." And I don't know how those two forces play out. Earlier signs, if you look at Salesforce's results, which have held up pretty well so far, would indicate that maybe it is pushing companies to move more quickly to explore or even buy into the cloud, but it's too early to make a definitive statement on that.

IW: I read your recent blog post in which you state, in short, that a handful of big companies -- Microsoft, Yahoo, Google, and Amazon -- are buying about 20 percent of the servers sold today, and that fact along with more powerful edge devices, is leading to a new architecture that makes applications unheard of before now possible. What are some examples?
NC: I wish I knew. I don't mean that in a glib way. We don't know yet. The New York Times' use of Amazon.com is a small but telling example of what happens when you radically democratize computing so that anyone has access at any moment to supercomputer-type capacity and all the data storage they need. So it's about what can you do with that? I think you can do a whole lot, and smart people will do a lot. But almost by definition we don't know what it is yet because it hasn't been done. But if you think of constraints on IT experimentation within companies, a lot of them have to do with the fact that traditionally there's been a lot of upfront expenses required to build the capacity to do experiments, to write applications that may or may not pay off, and so that cost squelches innovation. And suddenly those costs are going away, so there can be a lot more experimentation going on than we've seen in the past. That's just looking within IT departments' purview.

Beyond that, when you look at Amazon's Kindle the most interesting thing about it isn't that's it's another e-book reader, but that it has a perpetual Internet connection essentially built into the product, by which I mean there's no extra cost, it's just a feature of the product. What happens when more and more products have Internet services essentially bundled into them and you don't even have to think about it? It seems inevitable that's coming, and companies are going to have to think about how that changes the nature of products and services when they're always connected to this incredibly powerful cloud.

IW: Now, this idea that such a small number of companies are buying such a large chunk of servers -- what are the implications?
NC: Well, first of all this comes from a guy at Microsoft [Rick Rashid, senior vice president who oversees Microsoft Research]. So I'm assuming he has good information and that's an accurate number. But if that is, 20 percent is a huge chunk of the server market, and to have that consolidated into the hands of a few purchasers in what's only the last few years, really shows a fundamental shift in the nature of that industry that more and more of the product is going to be consumed by fewer and fewer companies. That radically changes the server industry.

Is it surprising to me that that trend is underway? No, it reflects the fact that more and more computing is done in central datacenters now. Forget about the corporate world. If you look at how individuals use their PCs or smartphones today, a huge amount of stuff that used to require buying a hard drive is now done out in the cloud. All Web 2.0 is in the cloud. It doesn't surprise me because it reflects how people view the way their computers work. But if it's already at 20 percent that seems pretty remarkable in such a short span of time.

IW: In what ways are you seeing enterprises use Web 2.0 today?
NC: The value of that model isn't limited to college kids on Facebook trying to find dates. There's a lot of opportunity for companies to take this Web 2.0 model that builds on shared systems, the ability to provide the user with a lot of information, and tools that enable them to control what information they share and who they share it with at any given moment. It really replicates the fundamental aspects of business organizations where a lot of what you do is figure out which colleagues have information that you can use, how to share it with others, how to get information into the right hands.

We really haven't seen powerful social networking tools evolve for individual businesses. It will be a generation shift. People who are so plugged into social networks at home or at school, they're going to want those same capabilities at work. It's really driven by the user because it upsets the traditional IT apple cart. IT departments and staffers will generally drag their feet and then will play catch-up.

IW: Vivek Kundra, the new federal CIO, has said that the personal technologies he uses are so much better than what he was using professionally that he just had to adopt things like YouTube for the D.C. city government…
NC: Quite a while ago, I was interviewing Marc Benioff about the origins of Salesforce.com and he had a very similar story. He was working at Oracle at the time but using things like Amazon.com online. And he said, "This is really powerful and I can do all sorts of customized stuff with it. Why can't I do this with enterprise applications?" In the story he tells, that was the inspiration for Salesforce. You can relate to that because when you compare most corporate applications to what you find a-dime-a-dozen of online, computing is much easier through the services you get online everyday than it is going through your traditional corporate applications.

IW: One last question for you. What is the most significant thing enterprise IT shops should brace themselves for?
NC: The big thing they'll have to brace themselves for is that the functions that until now have accounted for most of their spending and most of their hiring are going to go away, such as all the administrative and maintenance jobs that were required to run complex equipment and applications on-site. This isn't going to happen overnight, but much of that is going to move out to the utility model over time. That doesn't mean IT shops won't continue to exist and have important functions -- they might have even have some more important functions -- but it does mean that their traditional roles are going to change and they're going to have to get used to, I think, having a lot fewer people and probably having considerably lower budgets. Again, I'm talking about change that will play out in 10 years, not change that's going to happen in two years.

Data center operators to share energy tips, test results next week

James Niccolai

June 20, 2008 (IDG News Service) Some of the biggest names in the data center industry will gather in Silicon Valley next week to discuss the results of real-world tests intended to help identify the most effective ways to reduce energy consumption in data centers.

Operators of some very large data centers, including the U.S. Postal Service, Yahoo and Lawrence Berkeley National Laboratory, will present about a dozen case studies documenting their experiences with technologies and practices for improving energy efficiency. They include wireless sensor networks for managing air flow in data centers, modular cooling systems that reduce heat spots around densely packed servers and high-efficiency power transformers.

One of the goals is to produce real-world data that will help other organizations decide which technologies they can implement to reduce power consumption and what savings they can hope to achieve from them, said Teresa Tung, a senior researcher at Accenture, which plans to publish a free report on its Web site next Thursday that pulls together the results.

"If you want to make the case for your data center to use some of these initiatives, it's nice to have real-world data you can point to and say, 'Here are the savings that somebody got,' " she said.

The project has been organized by the Silicon Valley Leadership Group, which represents some of the area's biggest technology companies, along with Berkeley Labs. Other companies hosting tests in their data centers include Oracle, NetApp, Synopsys and Sun Microsystems, which is hosting the event next Thursday. The event is called the Data Center Energy Summit. The data centers have been testing technologies from SynapSense, IBM, Cassatt, Powersmiths, Power Assure, Liebert, APC, Modius, Rittal and SprayCool.

The vendors' motives for taking part are not only altruistic. As organizations try to expand their data centers and add more powerful servers, energy consumption could be a major inhibitor to growth in the tech industry and the economy as a whole. The event is a chance to promote technologies that allow organizations to keep growing their data centers.

The effort by industry may also help ward off potential government regulation in this area. "If there were to be regulation and certification, we definitely want it to be couched in real results that we know can be achieved by adopting these best practices and technologies," Tung said.

In a report last August (PDF here), the U.S. Environmental Protection Agency estimated that in 2006, data centers accounted for about 1.5% of total U.S. electricity consumption, or enough to power about 5.8 million homes. It forecast that the energy consumed by data centers would almost double by 2011 if current trends continued, although it said widespread use of best practices and "state of the art" technologies could reverse the growth.

Part of Accenture's role is to compare the test results with the projections in the EPA's report. Andrew Fanara, head of the EPA team that authored the report, said next week's findings would "complement" the EPA research and help validate its projections. Fanara said he expected to attend the summit next week, along with representatives from the Department of Energy.

Participants said the event is unique because of the cooperation from data center operators, who typically are secretive about their operations. "This level of transparency is rare in the data center industry, but it’s a sign of how committed the participants are to increasing energy efficiency," said Jim Smith, vice president of engineering at Digital Realty Trust, another of the data centers taking part.

All the technologies being tested are available today. The case studies cover basic best practices, such as improving air flow management and consolidating server equipment, as well as emerging technologies like the wireless sensor networks. The case studies will all be published at no charge, along with Accenture's consolidated report.

Sun tested modular cooling products from five vendors, and Accenture will present a side-by-side comparison of the results, Tung said. Digital Realty Trust, Yahoo and NetApp tested air economizers, which use outside air to supplement cooling systems when the outside air is cold enough, a technique also called "free cooling."

The U.S. Postal Service is in the process of upgrading a data center in San Mateo, Calif., that will use high-efficiency power transformers, also called power distribution units, or PDUs, made by Powersmiths. Its case study will compare the operating losses of transformers already in place with the new high-efficiency products, said Peter Ouellette, Powersmiths' district manager for Northern California.

Not all the technologies were tested thoroughly. Only two weeks of data were collected for the free-cooling equipment, so the results had to be extrapolated for the year, Tung said. But she thinks most of the data will be valuable. "In each case, we've given the 'before' and the 'after,' so the before sets the baseline and the after shows what was actually saved," she said.

The summit is one of several initiatives to address energy use in data centers. Others include the Green Grid, a vendor-led effort. The Uptime Institute and McKinsey published a report on the subject in May, and the EPA is working on an Energy Star specification for both servers and data centers.

Summit organizers said the event plugs a gap between recommending energy-efficient technologies and documenting the savings from their usage.

[Jun 23, 2008] DEMYSTIFYING THE CLOUD

June 23 2008, | Information Week

When people talk about "plugging into the IT cloud," they generally have something very simple in mind-browser access to an application hosted on the Web. Cloud computing is certainly that, but it's also much more. What follows is the longer, more detailed explanation.
With so much happening in the technology industry around cloud computing, InformationWeek set out to define the megatrend in a way that helps IT professionals not only understand the nuances, but also make informed decisions about when and where to use cloud services in lieu of on-premises software and systems. Cloud computing represents a new way, in some cases a better and cheaper way, of delivering enterprise IT, but it's not as easy as it sounds, as we learned in a discussion with a few yet-to-be-swayed CXOs. The venue was the recent Enterprise 2.0 conference in Boston, where InformationWeek and TechWeb, our parent company, brought together senior technologists from the California Public Utilities Commission, Northeastern University in Boston, and Sudler & Hennessy to engage leading cloud vendors in an open forum on The Cloud.

Everyone agreed that cloud services such as Amazon Web Services, Google Apps, and Salesforce.com CRM have become bona fide enterprise options, but there were also questions about privacy, data security, industry standards, vendor lock-in, and high-performing apps that have yet to be vaporized as cloud services. (For a recap of that give and take, see "Customers Fire A Few Shots At Cloud Computing," June 16, p. 52; informationweek.com/1191/preston.htm.)

If we learned anything from our Enterprise 2.0 cloud forum, it's that IT departments need to know more. Our approach here is to look at cloud computing from the points of view of eight leading vendors. In doing so, we're leaving out dozens of companies that have a role to play, but what we lack in breadth, we hope to compensate for in depth.

And this analysis is just the beginning of expanded editorial coverage by InformationWeek on cloud computing. Visit our just-launched Cloud Computing blog on InformationWeek.com, and sign up for our new weekly newsletter, Cloud Computing Report, at informationweek.com/newsletters. We're also developing video content, an in-depth InformationWeek Analytics report, and a live events series in the fall.

Where does cloud computing fit into your company's strategy? We'd love to hear from you.

-John Foley (jpfoley@techweb.com)

AMAZON

Amazon made its reputation as an online bookstore and e-retailer, but its newest business is cloud computing. One of the first vendors in this emerging market more than two years ago, Amazon is a good starting point for any business technology organization trying to decide where and when to plug into the cloud.

Amazon's cloud goes by the name Amazon Web Services (AWS), and it consists, so far, of four core services: Simple Storage Service (S3); Elastic Compute Cloud (EC2); Simple Queuing Service; and, in beta testing, SimpleDB. In other words, Amazon now offers storage, computer processing, message queuing, and a database management system as plug-and-play services that are accessed over the Internet.

A tremendous amount of IT infrastructure is required to provide those services-all of it in Amazon data centers. Customers pay only for the services they consume: 15 cents per gigabyte of S3 storage each month, and 10 to 80 cents per hour for EC2 server capacity, depending on configuration.

Already, AWS represents three of the defining characteristics of the cloud: IT resources provisioned outside of the corporate data center, those resources accessed over the Internet, and variable cost.

Amazon's first cloud service was S3, which provides unlimited storage of documents, photos, video, and other data. That was followed by EC2, pay-as- you-use computer processing that lets customers choose among server configurations.

Why is Amazon moving so aggressively into Web services? In its rise to leadership in e-commerce, the company developed deep technical expertise and invested heavily in its data centers. Now it's leveraging those assets by opening them to other companies, at a time when many CIOs are looking for alternatives to pumping more money into their own IT infrastructures. "What a lot of people don't understand is that Amazon is at heart a technology company-not a bookseller or even a retailer," says Adam Selipsky, VP of product management and developer relations for AWS.

Developers-defined as anyone, from individuals to the largest companies, who signs up for AWS-are glomming onto Amazon's infrastructure to develop and deliver applications and capacity without having to deploy on-premises software and servers. More than 370,000 developers are on board.

Amazon Web Services weren't aimed initially at big businesses, but enterprises are tapping in for the same reasons that attract small and midsize businesses-low up-front costs, scalability up and down, and IT resource flexibility. To better support large accounts, Amazon began offering round-the-clock phone support and enterprise-class service-level agreements a few months ago. For instance, if S3 availability falls below 99.9% in a month, customers are entitled to at least a 10% credit. Amazon isn't foolproof-its consumer-facing Web site recently suffered a series of outages and slowdowns.

Amazon hasn't morphed into a software-as-a-service vendor, but startups and other software developers are using AWS to offer their own flavors of SaaS. They include Vertica, which sells S3-based data warehouses, and Sonian, which built its archive service on Amazon infrastructure.

GOOGLE

Google built a supercharged business model around searching the Internet. Now it's opening its cloud to businesses in the form of application hosting, enterprise search, and more.

In April, Google introduced Google App Engine, a service that lets developers write Python-based applications and host them on Google infrastructure at no cost with up to 500 MB of storage. Beyond that, Google charges 10 to 12 cents per "CPU core hour" and 15 to 18 cents per gigabyte of storage. This month, Google disclosed plans to offer hosted enterprise search that can be customized for businesses.

Yet Google, like Amazon, has demonstrated the risks of cloud computing. Google App Engine last week was crippled for several hours. Google blamed the outage on a database server bug.

For end users, there's Google Apps-Web-based documents, spreadsheets, and other productivity applications. Google Apps are free or $50 per user annually for a premium edition. Microsoft's PC-based Office 2007 suite, by comparison, costs up to $500 per user.

More than half a million organizations have signed up for Google Apps-including General Electric and Procter & Gamble-and there are now some 10 million Google Apps users. But keep that in perspective: The majority of those users are consumers, college students, and employees of small businesses, not the corporate crowd. Google senior product manager Rajen Sheth acknowledges that Google's apps aren't in- tended to replace business tools like Office.

Google has taken steps to make its applications, originally aimed at consumers, more attractive to IT departments. Last year, the company acquired Postini, whose hosted e-mail security and compliance software is now part of Google Apps, and in April it partnered with Salesforce.com to integrate Salesforce CRM and Google Apps, including a premium package that comes with phone support and third-party software for $10 per user each month.

Google is also adjusting to the reality that users sometimes need to work offline. Google Gears is a browser plug-in for doing that.

Google has teamed with IBM to provide cloud computing to university students and researchers. The Google-IBM cloud is a combination of Google machines and IBM BladeCenter and System x servers running Linux, Xen virtualization, and Apache's open source Hadoop framework for distributed applications.

"One great advantage we have, and one of the reasons we started to explore this, is that we run one of the largest online apps in the world, if not the largest," says Sheth, referring to Google's Web search engine. The project, Sheth says, will help "foster new innovation and new ideas" about cloud computing.

Google and IBM have been cagey about any plans to extend their cloud collaboration to enterprises, but it would be an obvious next step. "There's not that much difference between the enterprise cloud and the consumer cloud" beyond security requirements, Google CEO Eric Schmidt said a few weeks ago. "The cloud has higher value in business. That's the secret to our collaboration."

With its plug-and-compute simplicity, the cloud seems ethereal, but don't be fooled. Google's cloud represents a massive investment in IT infrastructure. Google has recently completed or is in the processing of building new data centers in Iowa, Oregon, North Carolina, and South Carolina, at an average cost of about $600 million each.

SALESFORCE

Salesforce became the proving ground for software as a service with its Web alternative to premises-based sales force automation applications, and dozens of SaaS companies followed. Salesforce's next act: platform as a service.

Marc Benioff's company is making its Web application platform, Force.com, available to other companies as a foundation for their own software services. Force.com includes a relational database, user interface options, business logic, and an integrated development environment called Apex. Programmers can test their Apex-developed apps in the platform's Sandbox, then offer the finished code on Salesforce's AppExchange directory.

In the early going, developers used Force.com to create add-ons to Salesforce CRM, but they're increasingly developing software unrelated to Salesforce's offerings, says Adam Gross, the vendor's platform VP. Game developer Electronic Arts built an employee-recruiting application on Force.com, and software vendor Coda crafted a general ledger app.

At the same time, Salesforce continues to advance its own applications, which are now being used by 1.1 million people. An upgrade due this summer will include the ability to access Google Apps from within a Salesforce application, more than a dozen new mobile features, an "analytics snapshot," enhanced customer portals, and improved idea exchange and content management.

Salesforce is getting into other cloud services, too. In April 2007, it jumped into enterprise content management with Salesforce Content, which lets users store, classify, and share information similar to Microsoft SharePoint and EMC Documentum.

Salesforce has adopted a multitenant architecture, in which servers and other IT resources are shared by customers rather than dedicated to one account. "There's no question there's an evangelism involved with doing multitenancy, but, with education, customers quickly come on board with the model," says Gross.

The proof is in the sales figures. Salesforce's revenue grew to $248 million in the quarter ended April 30, a 53% increase over the same period a year ago, keeping it on pace to become the first billion-dollar company to generate almost all of its sales from cloud computing.

MICROSOFT

If any technology company has had its cloud strategy questioned, it's Microsoft. Now, after a couple of years of putting the pieces into place, Microsoft is showing progress.

Some vendors envision a future where most, if not all, IT resources come from the cloud, but Microsoft isn't one of them. Its grand plan is to provide "symmetry between enterprise-based software, partner-hosted services, and services in the cloud," chief software architect Ray Ozzie said a few months ago. More simply, Microsoft calls it "software plus services."

Microsoft's first SaaS offerings for business, rolling out this year, are Dynamics CRM Online, Exchange Online, Office Communications Online, and SharePoint Online. Each will be available in a multitenant version, generally for small and midsize businesses, and a single-tenant version for companies requiring 5,000 or more licenses. For consumers, Microsoft's online services include Windows Live, Office Live, and Xbox Live.

A handful of large companies-Autodesk, Blockbuster, Energizer, and Ingersoll-Rand among them-are early adopters. Anyone who doubts that Microsoft has entered the cloud services game should consider this: Coca-Cola plans to subscribe to 30,000 seats of Microsoft-hosted Exchange and SharePoint by next year.

Microsoft senior VP Chris Capossela says customers can mix and match hosted and on-premises versions of its software, an attractive option for companies with branch offices that lack IT staff. Microsoft hasn't disclosed pricing for its online services, but Capossela says it's naive to think that cloud services will be cheaper than on-premises software over the long haul. "You're going to pay forever," he says. "It's a subscription, for goodness' sake."

What's next? A project called MatrixDB would extend on-premises SQL Server databases to Microsoft-hosted databases in the cloud. That's still a couple of years away, but it hints at future possibilities. And Microsoft points to BizTalk Services, its hosted business process management software, as one element in a forthcoming "Internet service bus" that functions like an enterprise service bus, albeit online.

As for the Windows operating system, Microsoft's upcoming synchronization platform, Live Mesh, and some of the Windows Live services will be more tightly integrated with it.

The shift to cloud services has forced Microsoft to rethink not just the way its products are architected, but its data center strategy, too. For years, Microsoft leased its major data centers, but it has now begun to design, construct, and own them, with U.S. facilities recently completed or under construction in Illinois, Texas, and Washington, and another under way in Dublin, Ireland.

SUN MICROSYSTEMS

John Gage, Sun Microsystems' co-founder, coined the phrase "the network is the computer" nearly 20 years ago. Arguably, that was the beginning of the cloud-but the wind changed direction.

Sun "got it backwards," CTO Greg Papadopoulos now says. How so? With its Sun Grid technology, Sun focused on mission-critical, highly redundant data center environments. "We found that nobody cared about that," says Papadopoulos. "They just want it to be easy to use."

Making cloud computing easy to use is now the focus of two initiatives at Sun: Network.com, a collection of grid-enabled online applications available on a pay-per-use basis, and Project Caroline, a research effort to make cloud-based resources available to developers working on Web applications and services. They coincide with what Papadopoulos calls "Red Shift," his theory that computing demand will exceed capacity at many companies. The obvious solution: cloud computing.

Network.com is evolving into a "virtual on-demand data center" that customers can use in real time as business demands change, says senior director of software Mark Herrin.

Project Caroline is intended to become a hosting platform for SaaS providers. The goal is to make it "far more efficient to develop multiuser Internet services rapidly, update them frequently, and reallocate resources flexibly and cost-efficiently," according to Sun. An open source project led by Sun VP of technology Rich Zippel, Caroline supports applications built in several programming languages, including Java, Perl, Python, Ruby, and PHP. "We don't really think that 'all applications will tie back to Sun servers on the Internet,'" Zippel writes on his blog. "We're really bullish about the ability to develop, deploy, and deliver software services on the Internet."

Like Microsoft, Sun expects businesses to continue to need some of their own IT infrastructure. Sun's data-center-in-a-box, Blackbox, is designed for companies that face massive computing requirements but aren't ready to shift all their infrastructure to the cloud. Similarly, Sun's Constellation groups together Sun Blade 6000 servers.

"The public clouds will be spillover points for enterprises," says Papadopoulos. "They'll be able to make a judgment. I may not like my crown-jewel data living in the cloud, but it'd be good to pull in another 1,000 nodes and do some work."

IBM

IBM last year unveiled Blue Cloud, a set of offerings that, in IBM's words, will let corporate data centers "operate more like the Internet by enabling computing across a distributed, globally accessible fabric of resources." The pieces of Blue Cloud include virtual Linux servers, parallel workload scheduling, and IBM's Tivoli management software. In the first phase, IBM is targeting x86 servers and machines equipped with IBM's Power processors; in phase two, IBM will loop in virtual machines running on its System z mainframes. Blue Cloud is "not just about running parallel workloads but about more-effective data center utilization," says Denis Quan, CTO of IBM's High Performance On Demand Solutions unit.

IBM's first commercial cloud computing data center is going up in Wuxi, in southern China. It will provide virtualized computing resources to the region's chipmaking companies.

IBM's advantage in cloud computing is its expertise in building, supporting, and operating large-scale computing systems. IBM got into cloud computing a few years ago with its Technology Adoption Program, an "innovation portal" run out of the Almaden Research Center to give engineers on-demand resources, such as DB2 databases and Linux servers.

Last October, IBM announced a partnership with Google to provide cloud computing gateways to universities. Intended as a way of teaching university students how to use parallel programming models, the initiative is "critical to the next generation of cloud-based applications," Quan says. Three cloud computing centers for academia have gone live, one at Almaden, one at the University of Washington in Seattle, and one in a Google data center.

For IT departments, IBM's cloud software, systems, and services can be brought together into what the vendor calls the "New Enterprise Data Center," with quality-of-service guarantees to reassure CIOs that there's nothing hazy about the cloud.

ORACLE

Despite its sometimes-contradictory signals, Oracle was an early proponent of the on-demand model, launching Oracle Business OnLine in 1998. At that time, CEO Larry Ellison described the new Web-based delivery model as an extension of the company's existing software business. Today, it's clear that Oracle's destiny lies in the cloud, even if the company has been reluctant to switch its lucrative on-premises software license business over to a subscription model.

Speaking to financial analysts last September, Ellison downplayed the SaaS movement, saying there's no profit to be made in delivering applications over the Internet. (He's obviously wrong on that point.) President Charles Phillips has said Oracle plans a "stair-step" approach to the cloud, gradually moving on-premises customers over to Web-based software.

Oracle got into cloud computing in one fell swoop with its 2005 acquisition of Siebel Systems for $5.8 billion. At the time, Oracle executives called the deal a beachhead against SAP, but it's clear in hindsight that Siebel's on-demand CRM applications were every bit as important to Oracle's long-term strategy. Oracle On Demand comprises much of the vendor's software stack, including the company's flagship database.

Oracle has developed a "pod" architecture for its on-demand data centers. Pods can be configured for individual customers, in clusters for large companies with multiple departments, or in multitenant versions for shared use.

Oracle's on-demand business generated $174 million in revenue in the fiscal quarter ended March 26, up 23% from the same quarter last year, and it's on track for $700 million for the year. While On Demand represents only about 3% of Oracle's revenue, it's the fastest-growing part of the business, with 3.6 million users.

To support growth, Oracle, like other cloud service providers, is building a new data center. This summer, it will break ground on a 200,000-square-foot facility in Utah and puts the initial investment at $285 million.

EMC

CEO Joe Tucci barely touched on EMC's plans for cloud computing at EMC World last month, but you can be sure he's thinking about it. The cloud by its very nature is a virtual computing environment, and where there's virtualization, there's EMC, owner of VMware.

Earlier this year, EMC acquired personal information management startup Pi and, with it, former Microsoft VP Paul Maritz, who's been tapped as president of EMC's new cloud infrastructure and services division. In fact, the acquisitive EMC has been pulling in for a few years companies that bolster its abilities to deliver on cloud computing. In 2004, it bought Smarts, whose software configures distributed networks and monitors storage. And last year, EMC acquired Berkeley Data Systems and its Mozy backup services.

EMC has expertise in information life-cycle management, which is one area where it expects to have a role in cloud computing. "If we look at EMC's core asset portfolio, all of the key areas of the information infrastructure lend themselves not only to current models of up-front acquisition but also the new model of SaaS and pay-as-you-go subscription delivered over the Internet," says CTO Jeff Nick.

Nick sees companies moving to cloud storage and information management services as a way to "outtask" jobs to cloud computing vendors. "The key to storage in a cloud environment is not just to focus on bulk capacity but as much as possible make it self-managing, self-directive, and self-tuning," Nick says.

What kinds of cloud services might EMC offer? Storage is a no-brainer, though it doesn't have such an offering yet. Beyond that, EMC might be able to bridge compliance monitoring across online and on-premises storage. EMC sees opportunities for SaaS business process management and collaboration, as well as personal information management for consumers. Data indexing, archiving, disaster recovery, and security are all possibilities, too, Nick says. Several of EMC's acquired businesses, including Documentum (indexing and archiving), RSA (security), and Infra (IT service management) are likely paths to getting there.

EMC's VMware division will find its way into the mix. "We want to be the plumbing and the enabler of cloud computing," says VMware CTO Stephen Herrod.

Like his colleague Nick, Herrod is looking ahead. He hints at enabling on-premises server infrastructure to scale up via on-demand virtual servers, disaster-recovery scenarios, and using management software like that acquired in VMware's purchase of B-hive Networks to maintain service-level agreements.

In other words, today's cloud represents just the beginning of many new possibilities.

Write to J. Nicholas Hoover at nhoover@techweb.com.

See all our Reports at informationweekreports.com

Sidebar-

SMBs Will Rise To Cloud Computing

If cloud computing offers benefits to enterprise IT departments, it's an absolute godsend to small and midsize companies. Instead of making do with a small, underresourced IT staff trying to emulate the productivity of IT outfits with multimillion-dollar budgets, smaller companies can now access enterprise-class technology with low up-front costs and easy scalability.

Important as those things are, they're only the first steps in a larger shift. Cloud computing doesn't just level the playing field-it promises to tilt it in the other direction. Simply put, today's most powerful and most innovative technology is no longer found in the enterprise. The cloud makes leading-edge technology available to everyone, including consumers, often at a far lower cost than businesses pay for similar or inferior services.

Years ago, most people had access to the best technology at work, Google VP Dave Girouard said recently. "You had a T1 line to access the Internet at the office, for example, then went home to watch three channels of TV."

Those days are gone. Compare a typical Exchange Server, offering perhaps 500 MB of e-mail storage per user, to Web-based e-mail services that give users up to 7 GB of storage at no cost. (Google's corporate version offers 25 GB per user for $50 a year.) Likewise, compare on-premises enterprise content management systems to easier-to-use and more-flexible cloud-based publishing and sharing systems like Blogger, Flickr, and Facebook. They're free, too.

Those comparisons may not be relevant to big companies, but they are to SMBs. While large enterprises typically use the cloud for infrastructure services such as storage, SMBs are more likely to plug into the cloud for day-to-day productivity applications, says Michelle Warren, a senior analyst at Info-Tech Research.

In fact, as cloud computing matures, we'll see small companies rely on the cloud for more and more of their technology needs, gradually eschewing the costs and complexity of in-house IT infrastructure.

"We're moving toward a world where IT is outsourced," Warren says. "Maybe not 100%, but 95%. It will happen more in the SMB than in the enterprise, for sure." -Fredric Paul, publisher and editor in chief of TechWeb's bMighty.com, which provides technology information to SMBs

DIG DEEPER

SAAS STRATEGY Web-based apps can be a compelling alternative to on-premises software, but you need a plan. Download this InformationWeek Report at:

informationweek.com/1182/report_saas.htm

showArticle

Cloud Computing's Strengths Play To Smaller Companies' Needs ...

For small and midsize companies, cloud computing offers enterprise-class or even better, consumer class -- applications for far less than enterprises pay to do it themselves

If cloud computing offers significant benefits to IT departments in the enterprise, it's an absolute godsend to small and midsize companies. Instead of making do with a small, under-resourced IT staff trying to emulate the productivity of billion-dollar IT outfits, smaller companies can now access enterprise-class solutions with limited up-front costs and easy scalability.

Important as this is, though, cloud computing is only the first step in an even larger tectonic shift in the technology world. Cloud computing doesn't just level the playing field -- it promises to tilt it in the other direction.

Simply put, today's best, most powerful, and most innovative technology is no longer to be found in the enterprise. Google VP and enterprise GM Daven Girouard looked back on how it used to be at a recent product announcement. "20 years ago, you had access to the best technology in the workplace," he recalled. "You had a T-1 line to access the Internet at the office, for example, then went home to watch three channels of TV."

Those days are gone. Today, the cloud makes leading-edge technology available to everyone, including consumers, often at a far lower cost than businesses pay for similar or inferior services.

Hard to Beat Free
Compare a typical Exchange server -- offering perhaps 500MB of email storage -- to Web-based email services that offer up to 7GB of storage. Free. (Google's corporate version offers 25GB per user for $50 a year. And don't forget Apple's just-announced MobileMe service, which costs $99 per user per year but doesn't require any infrastructure.) Compare enterprise content-management systems with easier-to-use and more-flexible cloud-based publishing/sharing systems like Blogger, Flickr, and Facebook. They're free, too.

Those comparisons may not be relevant to the enterprise, but they are to SMBs. According to Michelle Warren, senior analyst at Info-Tech Research in Toronto, while large enterprises typically turn to the cloud for things like storage or disaster recovery (or for departmental requirements like CRM or HR), day-to-day cloud computing applications are more appealing to SMBs.

Many smaller companies don't really care about infrastructure, adds Agatha Poon, Senior Analyst, Enterprise Research at Yankee Group, and "have no idea what cloud computing is about." But they are driven to outsource applications to meet their business needs.

Apps Are in the Office
Ultimately, companies large and small may have little choice. As workers become accustomed to high-powered cloud applications available in the consumer space, they are sneaking them into the business environment whether IT departments are ready or not. While most corporate IT departments resist Instant Messaging, for example, rank-and-file users find creative ways to introduce IM to the workplace because they don't want to live without its proven business benefits just because they happen to be at the office.

Cloud computing concerns remain, of course. Warren advises SMBs to look for providers who deliver adequate security and support -- and be willing to pay for it when appropriate. Yankee Group's Poon warns SMBs not to underestimate network bandwidth expenses and to make sure their providers will be around for the long haul.

That's important, because there seems little doubt that over the long term cloud computing will supply more and more of smaller companies' technology needs, helping them avoid the costs and complexity of an in-house applications and infrastructure.

The only question is when. While Poon sees technology startups as today's pioneers in this area, she says traditional SMBs still face a steep learning curve on cloud computing. And she cautions that "it's going to take some time to see if the cloud model works and if it's mature enough" to fully support even smaller businesses.

Warren is more bullish. "We're moving toward a world where IT is outsourced," she says. "Maybe not 100%, but 95%. I think it will happen more in the SMB than in the enterprise, for sure."

See more columns by Fredric Paul

[June 21, 2008] Guide To Cloud Computing

June 23, 2008 InformationWeek

The market is getting crowded with Web-based software and storage offerings. Here's what you need to know about the cloud computing strategies of Amazon, Google, Salesforce, and five other leading vendors.

By Richard Martin J. Nicholas Hoover

When people talk about "plugging into the IT cloud," they generally have something very simple in mind--browser access to an application hosted on the Web. Cloud computing is certainly that, but it's also much more. What follows is the longer, more detailed explanation.

With so much happening in the technology industry around cloud computing, InformationWeek set out to define the megatrend in a way that helps IT professionals not only understand the nuances, but also make informed decisions about when and where to use cloud services in lieu of on-premises software and systems. Cloud computing represents a new way, in some cases a better and cheaper way, of delivering enterprise IT, but it's not as easy as it sounds, as we learned in a discussion with a few yet-to-be-swayed CXOs. The venue was the recent Enterprise 2.0 conference in Boston, where InformationWeek and TechWeb, our parent company, brought together senior technologists from the California Public Utilities Commission, Northeastern University in Boston, and Sudler & Hennessy to engage leading cloud vendors in an open forum on The Cloud.

Everyone agreed that cloud services such as Amazon Web Services, Google Apps, and Salesforce.com CRM have become bona fide enterprise options, but there were also questions about privacy, data security, industry standards, vendor lock-in, and high-performing apps that have yet to be vaporized as cloud services. (For a recap of that give and take, see "Customers Fire A Few Shots At Cloud Computing")

If we learned anything from our Enterprise 2.0 cloud forum, it's that IT departments need to know more. Our approach here is to look at cloud computing from the points of view of eight leading vendors. In doing so, we're leaving out dozens of companies that have a role to play, but what we lack in breadth, we hope to compensate for in depth.

And this analysis is just the beginning of expanded editorial coverage by InformationWeek on cloud computing. Visit our just-launched Cloud Computing blog on InformationWeek.com, and sign up for our new weekly newsletter, Cloud Computing Report. We're also developing video content, an in-depth InformationWeek Analytics report, and a live events series in the fall.

[Jun 16, 2008] Down To Business- Customers Fire A Few Shots At Cloud Computing ...

Information Week 

It's a variation on the old straw man argument, whereby a vendor defines its customers' main concerns about a product, technology, or technology model and then proceeds to explain them away one by one. When it comes to cloud computing, the next great information technology movement, the leading vendors express customer concerns along these lines: Is it secure enough? Is it reliable enough? Does it make financial sense?

Potential customers are indeed grappling with those issues, but they have so many more questions about cloud computing. Will they get locked into a single vendor, with their data or applications held hostage? Will mostly consumer-oriented vendors such as Google and Amazon.com stay in the enterprise IT business for the long haul? Given the laws and regulations governing certain industries and business practices, what data can live in the Internet cloud and what data must organizations keep closer to the vest? Are there adequate applications and other IT resources to be found in the cloud?

At a session on June 9 at the Enterprise 2.0 Conference in Boston, a panel of executives from Google, Amazon Web Services (AWS), and Salesforce.com pitched their cloud-based services to a panel of CXOs from potential customer organizations and then answered their pointed questions. Here's what's on those CXOs' minds, and how the vendors responded

- Security. Yes, it's still top of mind for most customers. Is data held somewhere in the cloud (customers don't always know its exact location) and piped over the Internet as secure as data protected in enterprise-controlled repositories and networks?

The vendor argument usually comes down to scale and centralized control. Few enterprises can allocate the money and resources that companies such as Amazon, Google, IBM, and Salesforce do to secure their data centers. Salesforce senior VP Ross Piper makes the point that Salesforce's data centers had to pass the intense muster of security vendor customers Cisco and Symantec. Adam Selinsky, VP of product management and developer relations for AWS, which offers cloud-based storage, compute, billing, and other services to enterprises and individuals, notes Amazon's years of experience protecting tens of millions of credit card numbers of retail customers.

Data stored within the cloud, the vendors argue, is inherently safer than data that inevitably ends up on scattered laptops, smartphones, and home PCs. Google relates how one of its execs, Dave Girouard, had his laptop stolen at a San Francisco Giants game. Girouard evidently called the CIO with one concern: Do I replace it with a PC or a Mac?

But the cloud vendors realize that when it comes to security, enterprise customers aren't going to take their word for it. "We need to prove to you that security is strong with all Web apps," Google Enterprise product manager Rishi Chandra said in a keynote address at Enterprise 2.0.

- Vendor lock-in and standards. Object Management Group CEO Richard Soley, a leading standards setter in his own right, wonders if Internet specifications are mature enough to ensure data portability across the cloud. "How easily could I pick up my application from one vendor and move it to another?" Soley says.

The cloud vendors emphasize the openness and extensibility of SOAP, XMPP, and other Web services protocols. AWS's Selinsky notes that the vendor's IT infrastructure services require no capital or other up-front investments, and Piper points out that Salesforce's app service customers can start with as few as five users and commit gradually. A cloud vendor retort: How easy is it, by comparison, for customers of SAP, Oracle, or EMC premises-based wares to up and leave?

- Regulatory and legal compliance. Organizations looking to move some of their data into the cloud must navigate a labyrinth of vertical (HIPAA, PCI, FERPA, etc.) and horizontal (SOX, Patriot Act, FISMA, etc.) rules on where information must be stored and how it must be accessed, especially for e-discovery. And most of those rules are open to interpretation. The cloud vendors offer no pat answers. They can't change the laws and, in seeking clarity for potential customers, they, too, get five opinions for every four lawyers they consult.

Then there are the related privacy concerns. "We have your Social Security numbers ... we know where your children go to school," says Carolyn Lawson, CIO of the California Public Utilities Commission, emphasizing a concern among most government IT organizations: What if that sensitive data were to fall into the wrong hands?

- Reliability. Mary Sobiechowski, CIO of health care advertising and marketing agency Sudler & Hennessey, questions whether the cloud renders the capacity for transmitting the kinds of large files typical in an agency environment. "There's bandwidth issues," she says. "We also need real fast processing."

And no matter how robust their technology infrastructures are, the cloud vendors experience outages. For example, the Amazon.com site suffered downtime and slowdowns several times in recent days, and AWS's storage service went down one day in February. Google customers experienced technical difficulties with Gmail on April 16. In both vendors' cases, the performance problems weren't major. But Amazon and Google could learn a thing or two from Salesforce, which has had its share of outages, about customer-friendly transparency. Its trust.sales force.com site lets users view daily performance and availability in a traffic light format. Salesforce also is more responsive to the media about its infrastructure problems.

All the major cloud vendors point to their service-level agreements, which, of course, compensate customers for service disruptions, not for lost business. In the end, their value proposition is this: Is your application, database, storage, or compute infrastructure any more reliable than theirs? And even if it's comparable, wouldn't your IT organization rather spend its time on matters that make a competitive difference instead of managing and upgrading servers, disk arrays, applications, and other software and infrastructure? Google business applications development manager Jeff Keltner refers to the 70% to 80% of most IT budgets spent on infrastructure management and maintenance as "dead money."

- Total cost of ownership (or rental). The cloud vendors make an excellent case that it's cheaper to subscribe to their services than to buy and run premises-based hardware and software. Pay no up-front costs; pay for only what you use, with the ability to scale up and down quickly; and take advantage of the vendors' huge economies of scale. AWS's storage service, for instance, costs just 15 cents per gigabyte per month. With subscription software services, the cost equation is less clear. In most cases, it's at least a wash.

- Choice. So you're considering moving some IT resources into the cloud. What options are available?

Those options grow every day. Salesforce's Web platform, Force.com, includes an exchange for hundreds of third-party applications, as well as a relational database service, business logic services, and an integrated development environment. Google offers a range of cloud-based app and storage services. Amazon's offerings include storage and computer processing services, and a database service now in beta. EMC, IBM, Microsoft, Sun, and other major players are ramping up a range of services, and scores of tech startups are embracing the subscription approach. The big question: How much customization is possible?

- Long-term vendor commitment. Will consumer giants such as Google and Amazon get bored slogging it out with slower-moving, more deliberative enterprise buyers? The cloud vendors like to compare the current IT provisioning model with the early days of electricity, when companies ran their own generators before moving to a handful of large utility providers. But the metaphor may be apt in another way. Northeastern University CTO Richard Mickool questions whether high-energy, high-innovation companies such as Google and Amazon will lose interest in selling commodity, electricity-like services.

Of course, the vendors insist they're in this business for the long term, and that customers are warming to the movement. Says Google's Chandra: "It's not a matter of when or if the cloud computing paradigm is coming. It's a matter of how fast." That depends on how fast vendors can assuage customers' concerns.

Rob Preston, VP and EDITOR IN CHIEF (rpreston@techweb.com)

[May 29 2008] Response to Alastair McAulay’s article on whether it will live up to its billing

By Kishore Swaminathan, chief scientist, Accenture

Published: May 29 2008 17:32 | Last updated: May 29 2008 17:32

THREE ISSUES MUST BE ADDRESSED BY PROVIDERS BEFORE CLOUD COMPUTING IS READY FOR PRIME-TIME

Cloud computing has received plenty of attention of late. Its colorful name notwithstanding, it promises tangible benefits to its users such as sourcing flexibility for hardware and software, a pay-as-you-go rather than fixed-cost approach, continuous upgrades for mission-critical enterprise software, and the centralized management of user software.

Yet, as presently constituted, cloud computing may not be a panacea for every organization. The hardware, software and desktop clouds are mature enough for early adopters. Amazon, for example, can already point to more than 10 billion objects on its storage cloud; Salesforce.com generated more than $740 million in revenues for its 2008 fiscal year; and Google includes General Electric and Procter & Gamble among the users of its desktop cloud. However, several issues must still be addressed and these involve three critical matters: where data resides, the security of software and data against malicious attacks, and performance requirements.

Data

Say you use Salesforce.com as your Software as a Service (SaaS) provider. In theory, this is where you would locate your CRM data. However, in practice, most organizations are likely to have proprietary applications running on their own data center and that use the same data. Furthermore, if one provider is used for CRM, another for human resources and yet another for enterprise resource planning, there’s likely to be considerable overlap between the data used by the three providers and the proprietary applications in the company’s own data center.

So where do you locate the data?

There are existing and potential options. First, is the platform scenario. Some SaaS providers have evolved from offering single vertical capability (such as CRM) into providing SaaS ”platforms” that bundle their vertical capability with a development environment and an integration environment. The theory is that while an enterprise may use multiple SaaS providers and proprietary applications, there will be a primary provider that hosts all the data and provides a development environment where data can be integrated with all the applications (including other SaaS) using the data.

Next, is the database-as-a-service scenario. In this case, one provider – which could be the organization's data center – only hosts the data and provides ”database as a service” to all the applications. While this model does not presently exist, it’s a distinct possibility that would offer the advantage of not tying the enterprise to a single SaaS provider for all its data and integration needs.

Security

Perhaps the primary concern when it comes to cloud computing is security. While this is likely to be a significant near-term concern, one could argue that a large SaaS provider whose entire business is predicated on securing its clients’ data and applications would be in a better position to do so than the IT organization of a single company itself. As an example of the confidence certain global organizations have in this new paradigm, Citigroup recently signed up 30,000 users with Salesforce.com to address CRM needs after extensive evaluation of the SaaS provider’s security infrastructure.

The point is that providers are endeavoring to improve their offerings to meet clients’ enterprise-grade security needs. Still, companies in certain industries, such as defense, aerospace and brokerage, are likely to avoid the cloud computing environment because of their security and compliance concerns.

However, not too far off is the emergence of “gated community” clouds that, like gated communities, would keep out the riffraff. These highly selective private clouds or consortia would have dedicated networks that connect only their members. Unlike a single company’s data center, a private cloud can consolidate the hardware and software needs of multiple companies, provide load balancing and economies of scale, and still eliminate many of the security concerns.

Performance

While the Internet is fast enough to send data to a user from a remote server, it lacks the speed to handle large transaction volume with stringent performance needs if the applications must access their databases through the internet.

The emergence of a full ecosystem of enterprise SaaS (for ERP, HR, CRM, supply chain management) plus database-as-a-service, all within a single hardware cloud, will help solve performance problems. An ecosystem cloud also has the added advantage of better integration across the different providers that are part of the same ecosystem.

Just as today’s enterprise software falls into distinct ecosystems (Microsoft, Oracle, SAP), cloud computing may well organize itself in a similar fashion, with a number of hardware clouds and a set of complementary (non-competing) SaaS providers and a database-as-a-service provider.

For now, cloud computing offers several potential benefits for both small and large companies: lower IT costs, faster deployment of new IT capabilities, an elastic IT infrastructure that can expand or contract as needed and, most importantly, a CIO freed from the more mundane aspects of managing the IT infrastructure. In fact, industry analyst Gartner estimates that by 2012, one in every three dollars spent on enterprise software will be a service subscription rather than a product license and that early adopters will purchase as much as 40 percent of their hardware infrastructure as a service rather than as equipment.

Although individual aspects of cloud computing are already relatively mature, how they will all come together and which of the scenarios discussed will play out remains unclear. For now, organizations that take a tactical approach that includes moving aging, non-strategic applications to a hardware cloud: using SaaS for processes that don’t have a significant data overlap with other critical processes and experimenting with network-based desktop for small, deskbound workforces can gain valuable experience and insight into how to take advantage of this emerging phenomenon.

This gives CIOs ample time to develop long-term strategies as the paradigm continues to evolve in order to solve those data, security and performance issues.

[May 29 2008] FT.com - Digital Business - Utility computing - Response to Phill Robinson’s article on the shift to SaaS

Response to Phill Robinson’s article on the shift to SaaS

By Marc Davies, strategic management specialist and principal leader for the CIO group at CSC

Published: May 29 2008 17:32 | Last updated: May 29 2008 17:32

Whereas I agree with Phill Robinson and his view that software as a service has ‘happened’, I disagree with the inference of the title, which pushes the reader into envisaging a world where SaaS has successfully transformed business, all we have to do is wait for the laggards to catch on that their incumbent IT infrastructures have gone the way of the Dinosaur. What has ‘happened’ is the appearance of another way of consuming technology for potential competitive advantage, with its attendant risks.

To be fair, Phill does himself point out that this paradigm will ‘…grow and develop.’ Further, that ‘There will not be a sudden shift…’ Of course, both these statements appear at the bottom of the article at a stage where we are already imagined to be fully onboard with this thinking.

As a serious proponent of service orientation for many years, I have one or two observations that should give business decision-makers pause for thought, let’s tackle them, contextually, against some of Phill’s assertions.

Transumerism; is it a new paradigm for online consumer driven expectations? I’m minded to say both no and yes. No, because in fact Transumerism is not in my opinion new either in the world of the general consumer nor the IT exposed worker. Yes, because the emergence of the internet-savvy, broadband-enabled consumer has driven the rate of perception that change and experience can be both dictated and controlled.

A useful analogy may be the invention of the printing press – which, through prolific (by comparison) production of the written word in a ‘new’ completely consistent form many more people had the opportunity to become entrepreneur, gathering together far more options through information than had been possible before. As for the rent-not-buy principles, there are so many examples of this approach to society, from 17th century aristocrats to 19th century industrialists to 20th century media stars, as to make it difficult to see it as a completely new paradigm in anything other than a pure IT context. As we are playing with the notion that SaaS is being driven by societal change with IT as an enabler this pose a significant contradiction.

So, if Transumerism is not necessarily new, nor necessarily a societal paradigm; then SaaS as a fundamental business driver is indeed true?

I’m not so sure we are there yet and I’m going to draw on the concept of the trysumer to bolster my case. If we consider businesses such as Facebook, then the fundamental of the trysumer is in essence consumerism as a fashion accessory and, the one certainty of fashionista society is its transcience. Now, Phill makes this point but, I’d like to just ask the question – if you are the owner of a SaaS site, how do you construct a business model around a fashion accessory? In addition, how do you profitably break out of the culture that expects most of the services to be free?

Going deeper, how does a corporate consumer ensure that an external SaaS supplier relationship is managed in their best interests’ once critical business processes are in the hands of outside agencies? I am not talking about the dangers of outsourcing here – this is more fundamental by far. If a business makes a decision to outsource a service, such as its IT management for example, then there are physical and contractual guarantees on both sides that ensure the business has a degree of confidence in the service contract. If, on the other hand, the business finds that a key step in its own transactional capability had (a) moved to Eastern Europe, or (b) bought out by a rival and (c) goes offline without notice, all in the space of 24 hours – then how does the business survive such a commercial shock?

Entrants into the world of supplying SaaS products have significant challenges in ensuring their future products are sufficiently agile to move with the fashion trends of popular vs. unpopular websites, which will continue to challenge their shareholders’ faith in any real return. A few will make it very big but, in a global context, this may reduce choice and market flexibility rather than enhance it.

Corporate consumers of external services still have to overcome the twin challenges of trust and cost; trust that the website delivering the services will still be there tomorrow and the cost of survival if one of the key business processes disappears overnight.

As a serious proponent of service orientation for many years, I have one or two observations that should give business decision-makers pause for thought, let’s tackle them, contextually, against some of Phill’s assertions.

The views expressed in this piece are the author’s own.

[May 12, 2008] FT.com - Digital Business - Utility computing - Will it live up to its billing second time around

By Alastair McAulay

Published: May 12 2008 10:24 | Last updated: May 12 2008 10:24

From reading the latest vendor announcements telling us that Software as a Service (SaaS) and cloud computing are going to transform how IT is provided to the enterprise, it is easy to forget recent history.

It was only five years ago that Gartner was predicting that by 2008 utility computing (a broadly similar concept) was going to be in the mainstream. At the time, there was a huge wave of publicity from the big vendors about how utility computing was going to transform the way IT services were provided.

Plainly, utility computing has not yet become a mainstream proposition. So what has happened to it in the past five years, and will things be different this time round?

Five years ago, many of us in the industry were working with clients, helping to set up some of these utility computing sourcing deals. It soon became clear from the fine print that on-demand services were only available under certain circumstances, such as with applications hosted on mainframes. That was hardly earth-shattering when you consider that mainframe technology has allowed virtualisation and charging-per-use for decades.

Of course, there were differences. But fundamentally, the deals were never as exciting as they were hyped up to be. A large part of this was due to the fact that the necessary virtualisation technology was not mature enough to allow the foundation IT infrastructure to be run as flexibly as it needed to be for true on-demand services.

This time round, the vendors are playing a subtly different tune. They seem to be saying: “With virtualisation technology, such as the near-ubiquitous VMWare, now fully mature, we really can deliver utility computing. Trust us.”

However, we are finding that while businesses are more than happy to use virtualisation technology within the boundaries of their own organisations for its flexibility and efficiency gains, they are not really paying much attention to utility computing, be it SaaS or cloud computing or whatever its being called this week. Indeed, according to silicon.com’s recent CIO Agenda 2008 survey, utility computing was languishing at the bottom of the wish list next to Vista and RFID.

But let us set this indifference aside and, for the sake of argument, assume that we trust some of what the vendors are now saying, and that we are disciples of Nicholas Carr, author of “Does IT matter?” and believe that IT can be purchased as a utility. So what should we do now?

The first thing to do is to add a word to the title of Mr Carr’s 2003 Harvard Business Review article to make it “IT doesn’t matter . . . sometimes”. The challenge therefore becomes working out what “sometimes” is. There are three steps that need to be taken to define this IT strategy for the real world

Step one is to recognise that within most organisations of more than 100 people there are unique business requirements where the IT involved does have to be tailored to individual circumstances. This may be because of unique regulatory and security requirements that strictly stipulate where data is stored and processed (eg, the public sector).

Perhaps more significantly, it could be because IT can be used in innovative ways to provide a competitive edge. The big banks, for example, will put a lot of effort into running their proprietary risk models quicker than their rivals – even down to developing their own hardware. In these instances adopting a utility computing model and migrating on to processors and storage somewhere or other in the world is not going to be viable.

The second step is to acknowledge that there may well be cases where legacy information systems are working pretty well. Typically, this is IT that was installed around five years ago (and we have seen 15-year-old systems that continue to work well). All the painful deployment wrinkles have been ironed out and if you take care of the underlying hardware, the systems more or less run themselves. Why bother replacing when the cost and pain of moving the system to a new utility computing platform is not going to achieve the payback within a sensible timescale?

The third and final step is to identify where there really are areas that IT can be sensibly commoditised and handed over to an IT utility service provider.

These are likely to be areas that do not have an unusual business process, that are not sensitive to user response times, where there are not legal implications for data storage, and where availability is not super critical (Amazon’s much publicised “Elastic Compute Cloud” gives 99.9 per cent availability – which translates into more than a minute of downtime a day).

We can also say from PA’s own experience of using the Second Life platform that businesses should make sure any scheduled downtimes – designed to minimise impact for Californian business – do not disrupt you too much.

Given the above, you may well conclude that for now you can use utility computing to do some one-off business data analysis that requires a burst of server and CPU resource, or you may decide that your sales team can easily be supported by the Salesforce.com service without risk to the business.

Being a cautious early adopter is not a bad place to be with utility computing. Despite the rebranding exercises and the continuing hype, this time around there may well be some benefits available, even when the real world constraints are considered.

However, it would be a very foolish CIO who bet the business on a major shift to the utility computing model. That would mean ignoring why IT still does matter to the business, and will still do so in five years, when we are calling utility computing something else again.

Alastair McAulay is a senior IT consultant at PA Consulting Group

[May 31, 2008] Gartner Identifies Top Ten Disruptive Technologies for 2008 to 2012 eHomeUpgrade

Gardner deteriorated to the level when it becomes a joke...

Speaking at the Gartner Emerging Trends and Technologies Roadshow in Melbourne today, Gartner Fellow David Cearley said that business IT applications will start to mirror the features found in popular consumer social software, such as Facebook and MySpace, as organisations look to improve employee collaboration and harness the community feedback of customers.

“Social software provides a platform that encourages participation and feedback from employees and customers alike,” he said. “The added value for businesses is being able to collect this feedback into a single point that reflects collective attitudes, which can help shape a business strategy.”

Multicore processors are expanding the horizons of what’s possible with software, but single-threaded applications won’t be able to take advantage of their power, Cearley said. Enterprises should therefore “perform an audit to identify applications that will need remediation to continue to meet service-level requirements in the multicore era.”

By 2010, Gartner predicts that web mashups, which mix content from publicly available sources, will be the dominant model (80 percent) for the creation of new enterprise applications.

“Because mashups can be created quickly and easily, they create possibilities for a new class of short-term or disposable applications that would not normally attract development dollars,” said Mr Cearley. “The ability to combine information into a common dashboard or visualise it using geo-location or mapping software is extremely powerful.”

According to Gartner, within the next five years, information will be presented via new user interfaces such as organic light-emitting displays, digital paper and billboards, holographic and 3D imaging and smart fabric.

By 2010, it will cost less than US$1 to add a three-axis accelerometer – which allows a device, such as Nintendo’s Wii controller, to sense when and how it is being moved – to a piece of electronic equipment. “Acceleration and attitude (tilt) can be combined with technologies such as wireless to perform functions such as ‘touch to exchange business cards,’” said Mr Cearley.

According to Mr Cearley, Chief Information Officers (CIOs) who see their jobs as “keeping the data centre running, business continuity planning and finding new technology toys to show to people” will not survive. Instead, they will have to think beyond the constraints of conventional, in order to identify the technologies that might be in widespread use a few years from now.

Gartner recommends that CIOs establish a formal mechanism for evaluating emerging trends and technologies, set up virtual teams of their best staff, and give them time to spend researching new ideas and innovations, especially those that are being driven by consumer and Web 2.0 technologies.

“The CIO then needs to act as a conduit from the business to the technology. He or she needs to see how it might be possible to use these technologies to solve a problem the business has identified,” Mr Cearley said.

Gartner’s top 10 disruptive technologies 2008-2012:

• Multicore and hybrid processors
• Virtualisation and fabric computing
• Social networks and social software
• Cloud computing and cloud/Web platforms
• Web mashups
• User Interface
• Ubiquitous computing
• Contextual computing
• Augmented reality
• Semantics

Platformonomics - Book Review The Big Switch

Sunday, March 02, 2008

Nick Carr made his name with the provocative Harvard Business Review article "IT Doesn't Matter" (free version here), its expansion into a less definitively titled book Does IT Matter? and his generally erudite blog.  The charge of irrelevance hit the industry hard and elicited mostly incoherent and ineffective rebuttals (e.g. "hogwash"), which hampered real discussion of Carr's argument.

I have gently mocked his thesis previously but found it a mix of the obvious (yes, things get commoditized over time, so you focus on the top of the stack and of course further commoditize the rest of the stack) and the ridiculous (IT had apparently previously been a source of everlasting strategic differentiation, but with the democratization of computing making technology widely available, we should write off the industry in its entirety).  It is like arguing that since everyone has a brain, don't bother thinking...

Carr has a new book, The Big Switch: Rewiring the World, From Edison to Google, in which he contemplates the future of computing and speculates on the broader societal impact of that future.  The book is lucid, well-written and uses lots of historical examples to make the narrative and arguments come alive.  The first half of the book looks back at the evolution of the electrical industry and argues the computing industry will follow the same path.  The later half offers up social, economic and cultural consequences of the shift, again using electrification as an example of how new technologies have secondary and unforeseen effects.  Carr is less than excited about the consequences of the technology path he believes is inevitable-- no one will mistake him for an Internet optimist.

Back in the 19th century, companies generated their own power locally, whether through water, steam or early electrical generation.  The advent of alternating current meant power could be generated remotely and transmitted afar, allowing companies to get out of the power business and buy electricity from the new electrical utilities. 

Carr tells the story of Thomas Edison and his former clerk Samuel Insull.  Edison, with his bet on direct current which didn't lend itself to long distance transmission, focused on small-scale generators that ran "on-premise".  His model was to sell every business equipment to generate their own electricity.  Insull predicted the rise of the electrical utility, foresaw it would eclipse the equipment business and left Edison to join what became Commonwealth Edison.  (Empires of Light is a great account of the battle between Edison and direct current versus Tesla and Westinghouse who championed alternating current).

By offering electricity to multiple customers, utilities could balance demand and reap economies of scale that drove a virtuous cycle, allowing them to drive down the cost of power and thereby attract even more customers.  Their strategy was predicated on maximizing generator utilization and the standardization of electrical current.  Companies that outsourced their power generation to utilities no longer had to worry about generating their own electricity, reducing cost, staff, technology risk and management distraction.

Turning towards computing, Carr reprises his "IT Doesn't Matter" death knell: IT is an infrastructural commodity that every company has access to, so there is no differentiation available, which means it is a dead cost.  He recounts the history of computing, showing a particular fondness for the punch card, and excoriates the industry for cost, complexity and waste.  Siebel is the chief punching bag (while deservedly so, it is an easy target).

His future trajectory for the industry has the Internet playing the role of alternating current, allowing computing to be performed remotely which in turn enables a new breed of computing utilities (with Amazon Web Services, Google and Salesforce as early poster children).  The end result is companies no longer have to run their own complex computing operations.  He calls this new era of computing the "utility age" and states "the future of computing belongs to the new utilitarians".

Enterprise computing vendors who sell "on-premise" solutions will be marginalized like Edison, unless they can reinvent themselves (as Edison's company ultimately did, shifting both technology and customer allegience - they're still around today, a little outfit called General Electric).  Carr dwells on Microsoft's recent embrace of cloud computing, but questions whether the company can navigate the difficult transition of embracing a new model while continuing to harvest profits from the old model.

Is the Big Switch Big or Not?

I have two critiques of the first half of the book.  The first is mild schizophrenia.  The Big Switch is -- wait for it -- as follows:

"In the years ahead, more and more of the information processing tasks we rely on, at home and at work, will be handled by big data centers located out on the Internet."

Wow.  Gather now at the knee of the S-curve to learn what the future holds.  Perhaps he is aiming the book at a more general audience, but with over a billion people regularly accessing the Internet, there are an awful lot of people who have already made the "big switch".  He does some hand-waving about broadband penetration to explain why the book isn't over a decade late, with no mention of the failure of the late 20th century's application service providers.

Carr can't quite decide whether the big switch to his utility age is a revolution or not.  He equivocates about whether a wave of creative destruction is crashing down today or if it will take decades to play out.  He also qualifies the move to the cloud and how far it will go with suggestions that the future may actually consist of cloud-based services working in conjunction with local computers in corporate data centers and/or local PCs.  This qualification I think stems from his general tendency to paint everything with a very broad brush.  In practice, there are many segments and technologies, each with their own dynamics.  He also plays fast and loose with topology, enlisting highly distributed examples to support a centralized thesis.

The Fallacy of the Perfect Analogy

My second critique is that the book turns on the idea that computing is basically similar enough to electricity that it will inexorably follow the same path.  While there are similarities, it is a mistake to assume they are alike in every aspect.  There are enough differences that blind adherence to an analogy is dangerous:

• Electrons are fungible, CPU cycles arguably are, but information is not fungible.  While the flow of electrons could be standardized, the flow of information can't.  His tendency to blur, conflate or confuse hardware and software, clients and servers and individuals and IT doesn't help. 
• Even when you do computing remotely, you still compute locally as well.  A search engine query, for example, gets run in a giant data center somewhere off in the cloud, but there is still processing that happens locally to submit, display and act upon the results.  The browser is hardly a dumb terminal and the trend is to exploit even more processing locally for cloud-based applications (with AJAX and RIA techniques).  Further, there are strong business incentives to use local code to differentiate the user experience and allow eyeball businesses to push interaction rather than just relying on user pull.  Computing is likely to be much more distributed than electricity production, especially when you consider... 
• I am not aware of a dynamic like Moore's Law (and similar rapid improvements in storage capacity and bandwith) for electrical generation, which both projects significant performance improvements over time and introduces the concept of relative scarcity and abundance.  This dynamic undermines the parallel of CPU utilization and generator utilization.  Those who best exploit relative abundance and put the processing closest to the data will prevail (I remain a Jim Gray disciple).
• Distance still matters at scale. For the same reason that the aluminum industry located near cheap sources of electricity, the algorithm for siting new new half-billion-dollar data centers looks at proximity to both cheap power and end customers.  Likewise, Akamai offers proximity with its edge caching network, which in turn means lower cost and more responsive services.
• Just as the computing industry is looking longingly at the electrical utilities, the electrical utilities are envious of the more distributed nature of the computing industry.  A less centralized and more intelligent electrical grid promises greater efficiency and resiliency.  The availability of real-time pricing information can increase conservation and reduce peak-loads.  Distributed generation allows locally produced power to be sold back to the grid, making alternative energy sources more compelling.  Digital power opens up new, differentiated offerings for utilities based on the quality of power.  And a more decentralized grid means that a single point of failure doesn't take down power for 50 million people.  All these trends suggest the electricity industry will look more distributed and information-rich in the future.
• There are probably other relevant differences as well.

So while the book gets the broad trend to more computing in the cloud right, Carr's extended analogy obscures a lot of the differences and subtleties that will make or break cloud computing endeavors.  Between the caveats and the broad definitions, there is a lot of leeway in his technical vision (admittedly the mark of a savvy forecaster).  Victory will go to those who best exploit both the cloud and the edge of the network.  Carr's own examples -- Napster, Second Life and the CERN Grid -- make this case, even if he either misses their distributed nature or chooses to ignore it.

Utility, Not Utopia

The second half of the book focuses on the broader social and economic consequences of the move to utility computing.  It is the bolder and more thought provoking part of the book. 

Carr again begins by looking back through the lens of electrification.  He succinctly credits electrification with ushering in the modern corporation, unleashing a wave of industrial creative destruction, improving working conditions by displacing craftsmanship for the modern assembly line and the gospel of Frederick W. Taylor, improving productivity which begat a broad middle class and white collar jobs to coordinate more complex organizations, the broadening of public education, expanding demand for entertainment, and enabling the suburbs (cheap cars relied on cheap electrical power to power the assembly line).

He also notes that the early years of electrification were accompanied by great optimism and even utopianism about what the future would hold.  Carr, however, leaves his rose-colored glasses at home as he ponders his utility future:

"Although as we saw with electrification, optimism is a natural response to the arrival of a powerful and mysterious new technology, it can blind us to more troubling portents.... As we will see, there is reason to believe that our cybernetic meadow may be something less than a new Eden."

Carr basically finds his utility future dystopian.  He spends the remainder of the book worrying about:

The Hollowing Out of the Workforce - the utility future has little need for workers, which reverses the positive virtuous cycle of employment driven by electrification.  He points to increasing returns businesses like YouTube, Skype, craigslist, PlentyofFish and giant data centers with small staffs leading the way "from the many to the few".  They are free riders on a fiber backbone paid for by others and are ushering in a world where "people aren't necessary".  "Social production" (aka "user-generated content") is simply digital sharecropping and reduces the need for workers further.  Unlike electrification which "played a decisive role" in building an egalitarian society, the utility age "may concentrate wealth in the hands of a small number of individuals, eroding the middle class and widening the divide between haves and have-nots".

The Decline of Mainstream Media - while electrification "hastened the expansion of America's mass culture" and gave rise to mass media, the Internet is undermining the media with its explosion of voices and "some of the most cherished creative works may not survive the transition to the Web's teaming bazaar".  Newspapers are of course the foremost example.  The shift from scarcity to abundance of content is not a good thing to Carr and "the economic efficiency that would be welcomed in most markets may have less salutary effects when applied to the building blocks of culture."  The result is a decline of media and shared culture, the polarization of virtual communities (exacerbated by personalization engines) , "social impoverishment and social fragmentation".

Bad Guys - the Internet in the utility age promises to be a magnet for bad guys, including  criminals, terrorists, botnet operators, spammers, perpetuators of denial of service attacks and fiber optic cable-snapping earthquakes.  The underlying infrastructure is fragile and vulnerable yet critical to the global economy.  This was the least forward-looking of his pessimistic projections.  He mostly reiterates issues.  About the only new claim about the future was that pressure to protect the Internet from "misuse and abuse" will stress the sovereignty of nations  as utility functions migrate to countries with the lowest operating costs.  He is surprisingly silent on whether we should expect the heavily regulated nature of electrical utilities to also apply to computing in the future.

Privacy and the Control Revolution - don't even think about having any privacy in the utility age:

"Few of us are aware of the extent to which we've disclosed details about our identities and lives or the way those details can be mined from search logs or other databases and linked back to us."

Carr believes computing always has and always will be fundamentally a tool of oppression for the Man, the computing revolution is really just part of a broader "Control Revolution" and the empowerment of the personal computer will be "short-lived" as the Man inevitably reasserts control:

"The sense of the Web as personally "empowering"...is almost universal. ...  It's a stirring thought, but like most myths its at best a half-truth and at worst a fantasy.  Computer systems in general and the Internet in particular put enormous power into the hands of individuals, but they put even greater power into the hands of companies, governments, and other institutions whose business it is to control individuals.  Computer systems are not at their core technologies of emancipation.  They are technologies of control.  They were designed as tools for monitoring and influencing human behavior, for controlling what people do and how they do it.  As we spend more time online, filling databases with the details of our lives and desires, software programs will grow ever more capable of discovering and exploiting subtle patterns in our behavior.  The people or organizations using the programs will be able to discern what we want, what motivates us, and how we're likely to react to various stimuli.  They will, to use a cliche that happens in this case to be true, know more about us than we know about ourselves."

Carr is particularly full of disdain for the PC as a device but is conflicted about personal computing.  He readily acknowledges the empowering impact of personal computing, yet simultaneously promotes a dumb terminal future while lamenting the inevitable reassertion of control by the Man (somehow those seem related...).

He concludes on the cheery note that the utility future is no less than another front on "humanity's struggle for survival".  Actually, I took that quote from the Gears of War 2 announcement, but it would not be out of place in Carr's conclusion.  He fears the utility age may devalue quintessential human attributes, making us (even) more superficial, undermining the coherence of the family and relegating us to mere "hyperefficient data processors, as cogs in an intellectual machine whose workings and ends are beyond us".  Bummer, dude. 

The second half of The Big Switch is kind of a dour read and the utility future is boldly painted with a Luddite, elitist and generally defeatist brush:

"...we may question the technological imperative and even withstand it, but such acts will always be lonely and in the end futile."

In a book full of references to big thinkers, from Jean-Jacques Rousseau to Alexander Solzhenitsyn, Ned Ludd does not merit a mention, even though the Luddite fear of automation hollowing out the workforce is repeated almost verbatim.  He doesn't acknowledge the parallel or make a case for why the Luddite fears are more warranted now, despite failing to come to pass in the Industrial Revolution.

And while he bemoans the rise of "a new digital elite", the shifts in media, and survival of our "most cherished" work, he manages to come across as an elitist himself (not that there is anything wrong with being an elitist of course...).  I'm just not sure the Brahmins get to decide what is and isn't worthy media.

It is hard to argue with his position on privacy (read No Place to Hide to shatter any lingering techno-optimism on this front -- large-scale databases go awry, period), but he doesn't make the case that the black helicopters of the Control Revolution are just over the horizon.  Individual freedom is pretty much at an all-time high in world history and information technology gets at least some credit for that.  Carr does admit technology is "dual use", but you won't find much on the positive uses in the book.

The Big Switch is well worth reading if you're thinking about the evolution to cloud computing.  It provokes and stimulates as this long-winded review shows.  Carr's technical foundation is shaky, but he is a good social critic and forecaster, and a great polemicist (and that is a compliment).  My view is Carr's dystopian future is not inevitable, but averting it will take a conscious and proactive effort.  If nothing else, the later part of the book is a call to arms for w

Inside Architecture IT to Business I won't read your mind

In any relationship, it is dangerous for one side to "decide" what the other one wants.  Marriage advisors say things like "Don't control others or make choices for them."  Yet, I'd like to share a story of technologists doing exactly that.  Think of this as a case study in IT screw-ups.  (Caveat: this project was a couple of years back, before I joined Microsoft IT.  I've changed the names.)

The journey begins

Business didn't know what they wanted. 

"Business" in this case is a law firm.  The attorneys are pretty tight-lipped about their clients, and don't normally share details of their cases.  In the past, every attorney got their own "private folders" on the server that he or she must keep files in.  Those folders are encrypted and backed up daily.  A 'master shared folder' contained templates for contracts, agreements, filings, briefs, etc. 

Of course, security is an issue.  One of the attorney had lost a laptop in an airport the previous year, and lost some client files.  But security is also a problem.  Major cases involved creating special folders on the server that could be shared by more than one attorney, just for that client.

None of this was particularly efficient.  They knew that they wanted to improve things, but weren't sure how.  Some ideas were to use a content management system, to put in a template-driven document creation system, and to allow electronic filing with local court jurisdictions.  They didn't have much of an IT department.  Just two 'helpdesk' guys with the ability  to set up a PC or fix a network problem.  No CIO either.  Just the Managing Partner (MP).

To fix the problems, and bring everyone into the 21st century, the MP brought in consultants.  He maintained some oversight, but he was first-and-foremost an attorney.  He hired a well-recommended project manager and attended oversight meetings every other week.   

Here come the geeks

The newly-minted IT team started documenting requirements in the form of use cases. 

The use cases included things like "login to system" and "submit document".  The IT team described a system and the business said "OK" and off they went.  The system was written in .Net on the Microsoft platform, and used Microsoft Word for creating documents.  They brought in Documentum for content management. 

A year later, the new system was running.  The law firm had spent over $1M for consulting fees, servers, software licenses, and modifications to their network.  A new half-rack was running in the "server room" (a small inside room where the IT guys sat).  Their energy costs had gone up (electricity, cooling) and they had hired a new guy to keep everything running.  Everyone saw a fancy new user interface when they started their computers.  What a success!

The managing partner then did something really interesting.  He just finished reading a book on business improvement, and decided to collect a little data.  We wanted to show everyone what a great thing they had in their new system.  He asked each of the firm's employees for a list of improvements that they had noticed.  Partners, associates, paralegals, secretaries, and even the receptionist. 

He asked: Did the new system improve their lives?  What problems were they having before?  What problems were they having now?  Did they get more freedom?  More productivity? 

The answer: no. 

He was embarrassed, but he had told the partners that he was creating a report on the value of the IT work and so he would. 

This is where I came in.  He hired our company to put together the report. 

Business Results: There were as many hassles as before.  Setting up a new client took even longer to do.  Partners and associates still stored their files on glorified 'private folders' (they were stored in a database now).  There were new policy restrictions on putting files on a laptop, but many of the partners were ignoring them.  The amount of time that people spent on the network had gone up, not down.

Things had become worse.

So what did they do wrong?  What did we tell the Managing Partner?

The IT Team had started by describing use cases.  They were nice little 'building blocks' of process that the business could compose in any way they wanted.  But how did the business compose those activities?  In the exact same way as before.

Nothing improved because no one had tried to improve anything.  The direction had been "throw technology at problems and they go away," but they don't.  You cannot solve a problem by introducing technology by itself.  You have to understand the problem first.  The technology was not wrong.  The systems worked great, but they didn't solve measurable business problems.

The IT team should not have started with low-level use cases.  That is an example of IT trying to read the minds of business people.  IT was making choices for the business.  "you need to do these things."  No one asked what the measurable business problems were.  No one started by listening.

They should have started with the business processes.  How are new clients discovered?  What steps or stages do cases go through?  What are the things that can happen along the way?  How can attorneys share knowledge and make each other more successful?

We explained that business processes describe "where we are and what we do."  Therefore,operational Improvement comes in the form of process improvements.  These are different questions than they had asked: What should we be doing?  How should we be doing it?  Where should we be?  What promises do we need to make to our clients, and how can our technology help us to keep these promises?

Business requirements for an IT solution cannot be finalized until these questions are asked and answered.  Writing code before understanding the process requirements is foolish.  Not because the code won't work, but because the code won't improve the business.  All the unit tests in the world won't prove that the software was the right functionality to create.

Our suggestions

Here are the suggestions we gave.  I don't know if the law firm actually did any of them or not.  (I added one that I didn't know about five years ago, but I believe would be a good approach.  I marked it as "new" below).

1. Spend one month figuring out which parts of the new system were actually adding value.  Look for product features in their new software they were not using and consider the value of turning them on.  Their existing investment was not being well spent.  Look for ways to cut costs if their infrastructure was too big.  Roll back bits that weren't working.  Basically, "pick the low-hanging fruit."  We even asked the managing partner to consider undoing the entire thing if necessary (not that they needed to, but we wanted to shatter the idea that technology is good because it's technology).  Don't spend a lot, but don't live with a loss of productivity. 
    
2. Put in an operational scorecard.  Use the techniques for balanced scorecards described by Kaplan and Norton.  Look for the Key Performance Indicators (KPI) and those factors that are critical to quality (CTQ).  Look for measures that describe success.  Start tracking them and reviewing them monthly with the partners. 
    
3. (new) Hire a consultant to help the organization understand their key business capabilities and map them to both their business strategies and their scorecard KPIs.  This helps to focus effort.  "If we improve the ability to share case information, we can reduce costs" or "If we improve the ability for attorneys to keep up to date on changes in agreements, we can improve our client satisfaction and perception of value." 
    
4. Get buy-in from the partners to focus on ONE area of improvement at a time.  Have the entire team pick one area to focus on.  Improvements in other areas can and should occur eventually, but all technical investment would go to that one area.  Agreement is critical.  Churn is an enemy.
    
5. Hire a consultant to create a set of process maps for the identified area.  Think things through from the perspective of he customer (client) and not the attorneys.  Have a steering committee that sees a presentation every month about what the consultant has discovered and recommendations that he currently believes.  That committee must provide feedback and course corrections.
    
6. Only after a good plan exists for the future business process should they invest in technology, and only then, technology to solve a specific problem.

I hate to say it, but the real mistake was starting at the middle.  They started with a IT centric approach: write use cases and then write code.  I love use cases.  But they are not 'step one.'  Step one is to figure out what needs to be improved.  Otherwise, IT is being asked to read minds or worse, to make decisions for their business partners.

Inside Architecture IT to Business I won't read your mind

Naked IT Author Ed Yourdon on the IT - business divide (includes podcast) IT Project Failures ZDNet.com

The Naked IT interview series talks with innovators about the evolving relationship between IT and business. Please listen to the audio podcast and enjoy the additional information included in this blog post.

 

In this segment, we meet Ed Yourdon, an internationally-recognized author and computer consultant who specializes in project management, software engineering methodologies, and Web 2.0 development. He has written 550 articles and 27 books, including Outsource: competing in the global productivity race, Byte Wars, Managing High-Intensity Internet Projects, Death March, Rise and Resurrection of the American Programmer, and Decline and Fall of the American Programmer. Ed’s work spans 45 years, giving him a unique perspective on the computer industry.

Our conversation ranged across a number of important IT issues — including IT / business alignment, project failures, and changing of the guard in technology — which Ed analyzed and put into historical context.

On IT / business alignment:

If you start at the strategic level, [lack of alignment] occurs when systems are proposed and budgeted and justified and launched, either without any support at all from the business community that it ultimately should be serving, or without a full appreciation on the part of the business community about what the risks and the costs are going to be.

The question is: whether IT is building the kinds of systems the business needs, or whether they anticipate, and can work strategically, to help the business make the best possible use of IT. That problem has been around for 30 or 40 years.

I remember back in the early nineties when Computerworld did annual surveys of what the top ten IT problems were, and lack of business-IT alignment was usually number one or number two on the list.

On barriers to senior-level IT acceptance:

It’s amazing today how many senior executives don’t even read their own email. It’s mind boggling, but these people are going to die off sooner or later.

As the older generation of marketing- and finance-oriented, computer-illiterate senior managers die off and retire, you’ll gradually see a new generation coming in that is fully comfortable with the day-to-day activity and the strategic possibilities of IT, and who will be able to work more closely with CIOs.

The generation of people in their forties, whether or not they are marketing people or financial people, grew up with computers all through college, and are more likely to feel culturally compatible with the CIO.

On the gatekeeper role of IT:

Because IT is clearly so critical to the day to day operation of almost any large organization, IT has to serve as somewhat of a gatekeeper guarding the crown jewels, so to speak, so that they don’t get damaged or hacked into, either by insiders or outsiders. That has become a more pervasive and annoying responsibility.

Part of the alignment problem we see when users get excited about new technologies is the notion that IT is preventing the users from getting their hands on these technologies themselves. That sets up a bunch of conflicts.

On losing the battle:

Try to persuade CIOs, much as we did 20 years ago when PCs first arrived on the scene, that if they think they are going to maintain exclusive control over these technologies, and restrict the way employees use them, they are likely to find it a losing battle.

IT departments might be better off trying to figure out how to work in a collaborative and participative fashion. I think otherwise they’ll just be ignored and overrun much the way we saw in the PC era, when people quickly figured out that they weren’t getting any support from IT departments still focusing on COBOL and mainframes. They went out and bought their own PCs, which caused a great deal of chaos and confusion that could have been avoided.

On IT project failures:

As an expert witness, I get called in because I’m a computer guy and the presumption is if the project failed it must have been a technical failure. However, 99.9% of the time it turns out to be project management 101. They didn’t have any requirements, or they kept changing the requirements, or the subject matter experts, who should have been working with the vendor to help identify the requirements, were so busy trying to do their regular job that they didn’t have time to even talk to the vendor, etc. This was true 30 years ago and it’s still true today.

Most of the cases I’ve seen have not involved a whole lot of concern on the part of senior management, or even middle management, during the course of the project about potential technical failures. There’s usually awareness of potential organizational failures, or management failures, or political failures, or whatever, which may or may not be discussed openly, or shared openly, with the business partners involved.

On doomed IT projects:

In many cases you find projects that are doomed from day one, not because of poor technical capabilities in the IT department, but because of these strategic misunderstandings or misalignments.

Senior management never really understood what the true cost was going to be, or the IT department never told them what the true cost was going to be, and senior management never really provided the organizational support that was going to be necessary to make it all work.

 

Podcast Is Carr right Does IT not matter Gartner attendees respond TalkBack on ZDNet

IT like cars

There have been many analogies between IT and autos. Now adays, the type of car you have does
not give a real advantage to a company, but woe to those who try to use horse and buggy instead.
IT is still in the early 1900 mode. Some can
still run a business on foot, or without an auto.
Those with autos do more business, but suffer from the growing pains of an industry.
Carr's words can be applied to ALL R&D.
So why should anybody do any real R&D?
M$ gets it best ideas by buying small companies.
Do you want your company to be a LEADER?
Do you want to be a follower, falling further
and further behind?

Posted by: SirLanse   Posted on: 10/13/06

ramnet

In a lot of ways Carr is right on the money. Business has a love affair with technology because it often allows senior execs to hide behind non performance in other areas of the business and to pretend that by spending on computing they are moving forward in the best direction. This view is not by default correct. A lot of big business overlook small things that could save them big $ and they invent more process which of course justifies a bigger IT spend. The real question is why do we need all this process and red tape for computers to trawl through. Someone is NOT asking the harder and more difficult questions. Many IT professional protect their own jobs this way sadly . Posted by: ramnet@...   Posted on: 10/13/06

But that is not IT leadership ...

Sure, there have always been companies (like people) who cling to this or that as a panacea. That is not leadership. Being a leader is about understanding your business and taking risks so that business may make greater strides than the competition. Throwing dollars (or IT technology) at a problem instead of trying to understand it is useless.

Carr for President (lmao)

Let's see, he obviously does not have a clue, and he's a Harvard grad. Doesn't that sound like our own King George, who also believes that IT doesn't matter enough to even worry about losing all our IT jobs to competing nations? I say we push to get Nicholas Carr on the ballot for 2008, that way we can replace our current narrow minded twit with a new one. Carr and Cheney in 2008 - the clueless and the devil - now there's a great ticket!

Posted by: jonnjonnzdnet   Posted on: 10/13/06

Posted by: mwagner@...   Posted on: 10/13/06

Its always about the toolbox

Small businesses use IT like a carpenter would your basic hammer & saw. You can get a tremendous amount done with just a very basic small toolset. Outsourcing kills IT because it means the businesses never own their own critical tools! Large business also doesn't spend wisely on their tools. You see enourmous budgets for the glitz and hype of chrome hammers and leather grip saws instead of the power drill which would have really helped do the job.

Posted by: sjbjava   Posted on: 10/13/06

Carr irrelevant

If a company needs someone like Carr to tell them whether IT is productive for their company or not, then they should probably not have IT...whether it IS productive or not.

When the dust settles Carr will admit that all he's saying is the obvious: that some companies spend more on IT than they should. He's only making headlines because there are too many IT journalists with not enough imagination to create real news.

Posted by: Langalibalene   Posted on: 10/13/06

Well, that's one dead straw man, for sure

Based on the article, it would appear that Carr's speciality is creating bogus "straw man" arguments, knocking them down, and then telling everybody what a clever fellow he is.

I doubt that very many companies have actually been led to believe that "buying technology can make them more productive" absent a clear business need for that technoloy.

Yes, buying a technology product just because it's the latest or most hyped is stupid, but how often does that actually happen? In larger firms in particular, the reality is more the opposite: the IT folks have to make a very good business case for what they want to buy or the CFO and (if s/he's doing his/her job properly) neither will the CIO.

Carr is clearly a good salesman - look how successful he's been at promoting himself - but I have to see him say anything that isn't either grossly oversimplified ("stop buying technology") or crashingly obvious ("The innovator is going to pay a lot more than those who follow in the innovator's wake" - well, DUH!).

Technology news vendors, ZDNet included, aren't helping any by encouraging this kind of hucksterism.

Posted by: the_doge   Posted on: 10/13/06

IT - it's a tool and by itself cannot be relevant anyway...

Like a tool in someone's "golf bag," IT matters if you are skilled in wielding it, know when to use it and use it with skill.

This overall discussion raised by Carr is not relevant since we are discussing the relevance of a "hammer" when the relevance comes from knowing when and how to apply the "hammer."

I would presume his name and brand association might provide him the right to make the relationship, but I don't see it and I think it might even hint at a lack of both an understanding of and skill with using the "tool" called IT.

I could argue that money is not relevant since it is the understanding of and the use and the skill at using money that can be relevant to differentiation.

So would Carr agree that money is therefore also not relvant?

I would be curious...?

Posted by: beardeddiver   Posted on: 10/13/06

Carr idea of what "IT" is

IT depends on your point of view and the problems you have to solve with what you have (and can afford) If companys only came in 1 size and only had
1 problem they would use IT in amost the same way.
Now, smaller companys have different problems and
different resources and may be forced to use the IT
they can afford in ways the manufactor had never envisioned. that kind of inovation never happens or has a significant impact in large companys
(which tend to use products exactly they way they are intended) Because everyone has a chance to see what others are doing with a given product
(makers of IT as well) this tends to make products that can do things better and faster (and cheaper, when the big companys see the new ways printed on the IT boxes they buy in mass at the IT store)

Posted by: liverwort@...   Posted on: 10/14/06

Small firms and technology...

I work for small businesses and dispute Carr's statement that small businesses don't use technology to the level that large businesses do. My experience is the opposite - not only do they use it more, but generally they have much better, more cutting-edge technology (percentage wise). This allows the small business to compete in the marketplace by keeping their organizations from becoming bloated with unnecessary payroll costs - the technology improves efficiency. In the larger businesses I have worked with, the technology is generally marginally functional and because of the high cost of large scale replacement - mostly outdated - replaced only when it becomes non-functional.

Posted by: ladyirol   Posted on: 10/15/06

Carr's wants us to excell in mediocrity! The choice is ours!

The way IT has been deployed, managed, and justified to date is a good place to start evaluating Carr's thesis. We seem to be in a vortex of IT ignorance using it to automate prevailing inefficiencies-no wonder many CIO's feel IT does not matter. It's like asking the fox for a hen count! Treat IT like a business and due proper due diligence before investing in IT. Use it to create a center of excellence for business productivity nit to excell in mediocrity.

Posted by: ajitorsarah@...   Posted on: 10/14/06

[May 26, 2008] US offshore outsourcing of R&D accommodating firm and national competitiveness perspectives Innovation Management, Policy, & Practice Find Articles at BNET.com

Innovation: Management, Policy, & Practice,  Oct, 2005  by Thomas A. Hemphill

IMPACTS ON US GLOBAL COMPETITIVENESS

There are two primary negative competitive impacts that can emerge as a result of widespread R&D outsourcing. First, fewer job opportunities and downward pressure on wages will occur as greater numbers of scientific and engineering jobs are shifted to lower cost, overseas locations; consequently, these employment conditions are likely to discourage many of America's best and brightest students from pursuing careers in science and engineering (IEEE-USA, 2004). This could eventually weaken US leadership (i.e., the 'brain trust') in technology and innovation, leading to serious repercussions for both national security and economic competitiveness. Second, an issue that has been referred to earlier is the loss of crucial intellectual property to overseas competitors as a result of unidirectional technology transfer. Inadvertent knowledge transfers, or employees consciously transferring trade secrets to competitors (encouraged because of difficulties in enforcing foreign civil law covering confidentiality clauses in employee contracts), adversely impact US global competitiveness.

But offshore outsourcing of R&D does have potentially positive impacts on US global competitiveness. R&D collaboration involving foreign-based firms is a central part of scientific research and increases in importance as research activities grow in expense and complexity (Austin, Hills and Lim, 2003). Outsourcing can be interpreted as a form of collaboration that fosters both domestic and foreign R&D capabilities. Strategic technology alliances (which serve mutual interests) can open doors toward innovation partnerships between US and foreign corporations, governments, and academia. In addition, for US corporations there is a need to build pools of highly skilled scientific and engineering talent to replace the American intellectual capital which will be retiring over the next few years. These firms face the sobering reality that by 2010 there will be 7 million fewer working Americans, ages 25 to 45, than there were in 2000 (Malachuk, 2004).

PROPOSED BUSINESS AND PUBLIC POLICY MODEL

Offshore outsourcing of R&D, while confronted with many organizational and political challenges, is impossible for American firms to ignore as a source of sustainable competitive advantage. For American companies, capturing the valuable insights generated from global R&D require a well-coordinated business strategy. Henry Chesbrough (2003) proposes an 'Open Innovation' paradigm for managing industrial R&D that:

... assumes that firms can and should use external ideas, and internal ideas, and internal and external paths to market, as the firms look to advance their technology. Open Innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model. The business model utilizes both external and internal ideas to create value, while defining internal mechanisms to claim some portion of that value.

[May 18, 2008] Amazon's hosted storage service hits bump - CNET News.com

Amazon's hosted storage services suffered technical glitches last week, mishaps that caused some early users to think twice about using the company's nascent Web services.

Last Thursday, customers of Amazon's Simple Storage Service (S3) started a discussion thread about problems in the service. Users of the service, which lets Web site owners contract with Amazon to store data, complained of slow service and error messages.

By Sunday, a representative from the Amazon Web Services business unit offered an explanation for the service degradation, which had been resolved. The representative blamed the problem on faulty hardware installed during an upgrade.

"The Amazon S3 team has been adding large amounts of hardware over the past several weeks in order to meet and stay ahead of high and rapidly increasing demand. Unfortunately, our most recent hardware order contained several substandard machines," the representative wrote

Customers who responded to the Amazon note appeared gratified to have an explanation. But before the problem was resolved, people voiced frustration with the drop in service levels. The storage service is supposed to operate 99.99 percent of the time.

"We've switched to using s3 in production and we have millions of files on their servers now. We're paying a LOT of money for this service and need it to be stable and reliable. I'm not looking forward to moving everything off s3 to something else, but if it's not reliable, that's what we'll need to do," one customer said before the problem was addressed and resolved.

The episode points to one of the pitfalls of the utility computing, where service providers offer hosted computing services over the Internet.

Hosted application provider Salesforce.com, for example, has suffered a few high-profile outages. The company has set up a program to notify customers of performance problems.

 

Amazon is building up its Web Services product line with the hope of establishing a large-scale business.

The problem with S3 last week is not the first time customers have complained of service issues.

In December last year, S3 had other performance problems, which appeared to have been resolved within a day.

 

[May 17, 2008] Demystifying Clouds by John Willis

February 5, 2008 |  www.johnmwillis.com

... ... ...

The Myths

Cloud computing will eliminate the need to IT personnel.

Using my 30 years of experience in IT as empirical proof, I am going to go out on a limb and suggest that this is a false prophecy. One of my first big projects in IT was in the 1980s, and I was tasked to implement "Computer Automated Operations" Everyone was certain that all computer operators would loose their jobs. In fact, one company I talked to said that its operators were thinking of starting a union to prevent automated operations. The fact was that no one really lost his or her jobs. The good computer operators became analysts, and bad ones became tape operators.

There will only be five super computer utility like companies in the future.

Again, I will rely on empirical data. I have been buying automobiles for as long as I have been grinding IT, and all one has to do is look at the automotive industry’s history as a template to falsify this myth. Some clever person will always be in a back room somewhere with an idea for doing it better, faster, cheaper, and cleaner. In all likelihood, there will probably be a smaller number of mega-centers, but it is most likely that they will be joined by a massive eco-grid of small-to-medium players interconnecting various cloud services.

The Facts

Since cloud computing is in a definite hype cycle, everyone is trying to catch the wave (myself included). Therefore, a lot of things you will see will have cloud annotations. Why not? When something is not clearly defined and mostly misunderstood, it becomes one of god’s great gifts to marketers. I remember that, in the early days of IBM SOA talk, IBM was calling everything Tivoli an SOA. So I did a presentation at a Tivoli conference called "Explaining the ‘S’ in SOA and BSM." Unfortunately, one of IBM’s lead SOA architects, not Tivoli and not a marketer, was in my presentation and tore me a new one. I was playing their game, I forgot that it was "Their Game." Therefore, in this article I will try to minimize the hype and try to lay down some markers on what are the current variations of all things considered clouds.

Level 0

As flour is to a cookie, virtualization is to a cloud. People are always asking me (their first mistake) what is the difference between clouds and the “Grid" hype of the 1990s. My pat answer is "virtualization.

"Virtualization is the secret sauce of a cloud. Like I said earlier, I am by no means an expert on cloud computing, but every cloud system that I have researched includes some form of a hypervisor. IMHO, virtualization is the differentiator between the old “Grid” computing and the new "Cloud" computing. Therefore, my “Level 0" definition for cloud providers is anyone who is piggy-backing, intentionally or un-intentionally, cloud computing by means of virtualization. The first company that comes to mind is Rackspace, which recently announced that it is going to add hosting virtual servers to their service offering. In fact, it new offering will allow a company to move its current in-house VMware servers to a Rackspace glass house.

A number of small players are producing some rain is this space. A quick search on Google will yield monthly plans as low as $7 per month for XEN VPS hosting. It’s only a matter of time before cloned Amazon EC2 providers start pronouncing themselves as Cloud Computing� because they will host XEN services in their own glass house. These services will all be terrific offerings and will probably reduce costs, but they will not quite be clouds, leaving them, alas, at “Level 0."

Level 1

My definition of “Level 1" cloud players are what I call niche players. “Level 1″ actually has several sub-categories.

Service Providers

Level 1 service provider offerings are usually on-ramp implementations relying on Level 2 or Level 3 backbone providers. For example, a company called RightScale un-mangles Amazon’s EC2 and S3 API’s and provides a dashboard and front-end hosting service for Amazon’s Web Services (AWS) offering (I.e., EC2 and S3). AWS is what I consider a "Level 2"offering, which I will discuss later in this article.

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Pure Play Application Specific

This is where I will admit it gets a little "cloudy."Seriously, companies such as Box.Net and EMC’s latest implementation with Mozy are appearing as SaaS storage plays and piling on the cloud wagon. I am almost certain that companies like SalesForce.com will be confused with or will legitimately become cloud plays. Probably the best definition of a “Level 1 Pure Play”  is with EnterpriseDB’s latest announcement of running its implementation of PostgreSQL on Amazon’s EC2. There are also few rumors of services that are trying to run MySQL on EC2, but most experts agree that this is a challenge on the EC2/S3 architecture. It will be interesting to see Sun’s cloud formations flow in regards to its recent acquisition of MySQL.

Pure Play Technology

When ever you hear the terms Mapreduce, Hadoop, and Google File System in regards to cloud computing, they primarily refer to "Cloud Storage" and the processing of large data sets. Cloud Storage relies on an array of virtual servers and programming techniques based on parallel computing. If things like "S(P) = P − α * (P − 1)"get you excited, then I suggest that you have a party here. Otherwise, I am not going anywhere near there. I will, however, try to take a crack at explaining MapReduce, Hadoop, and the Google Files Systems. It is no wonder that the boys at Google started all of this back in 2004 with a paper describing a programming model called Mapreduce. MapReduce is used for processing and generating large numbers of data across a number of distributed systems. In simplistic terms, MapReduce is made up of two functions: one maps Key/Value pairs, and another reduces and generates output values for the key. In the original Google paper "MapReduce:Simplified Data Processing on Large Clusters,"a simple example of using GREP to match URL’s and output URL counts is used. Those Google boys and girls have come a long way since 2004. Certainly, it is much more complicated than I have described. The real value in MapReduce is its ability to break up the code into many small distributed computations.

Next in this little historical adventure, a gentleman named Doug Cutting implemented MapReduce into the Apache Lucene project, which later evolved into the now commonly known Hadoop. Hadoop is an open source Java-based framework that implements MapRecuce using a special file system called the Hadoop Distributed File System (HDFS). The relationship between HDFS and the Google File System (GFS) is not exactly clear, but I do know that HDFS is open and that it is based on the concepts of GFS, which is proprietary and more likely very specific to Google’s voracious appetite for crunching data. The bottom line is that a technology like Hadoop and all its sub-components allows IT operations to process millions of bytes of data per day (only kidding, I couldn’t resist a quick Dr. Evil Joke here "Dr. Evil: I demand the sum… OF 1 MILLION DOLLARS "). Actually, what I meant to say quintillions of data per day.

Most of the experts with whom I have talked say that Hadoop is really only a technology that companies like Google and Yahoo can use. I found, however, a very recent blog on how a RackSpace customer is using Hadoop to offer special services to its customers by processing massive amounts of mail server logs to reduce the wall time of service analytics. Now you’re talking my language.

Level 2

Level 2 cloud providers are basically the backbone providers of the cloud providers. Amazon’s AWS Elastic Cloud Computing (EC2) and Simple Storage Service (S3) are basically the leaders in this space at this time. My definition of a "Level 2"provider is a backbone hosting service that runs virtual images in a cloud of distributed computers. This delivery model supports one to thousands of virtual images in a vast array of typically commodity-based hardware. The key differentiator of a "Level 2"provider vs. a "Level 3"is that the “Level 2″ cloud is made up of distinct single images and that they are not treated as a holistic grid like a "Level 3"providers (more on this later). If I want to implement a load balancer front end with multiple Apache servers and MySQL server on EC2, I have to provide all the nasty glue to make that happen. The only difference between running on Amazon’s EC2 and running one’s own data center is the hardware. Mind you, that is a big difference, but, even with EC2, I still might need an army of system administrators to configure file systems mounts, network configurations, and security parameters, among other things.

Amazon’s EC2 is based on XEN images, and a customer of EC2 gets to create or pick from a template list of already created XEN images. There is a really nice Firefox extension for starting and stopping images at will. Still, if you want to do fancy things like on-demand or autonomic computing type stuff, you will have to use the the AWS API’s or use a “Level 1″ provider to do it for you. I currently run this web site on an EC2 cloud. I have no idea what the hardware is and basically only know that it is physically located somewhere in Oklahoma. At least that’s what one of the SEO tools says. If I were to restart it, it might wind up in some other city – who cares? Clouds are convectious.

The biggest problem with Amazon’s EC2 is that the disk storage is volatile, which means that, if the image goes offline, all of the data that were not part of the original XEN image will be lost. For example this blog article will disappear if my image goes down. Of course, I take backups. One might say, “Hey, that is what S3 is for.” Good luck. S3 is only for the most nimbus of folks. S3 is only a web services application to put and get buckets or raw unformatted data. S3 is NOT a file system, and, even though some reasonable applications can make it look like a file system, it is still not a file system. For example, the tool Jungle Disk can be set up to mount an S3 bucket to look like a mounted file system. Under the covers, however, it is continually copying data to temporary space that looks like a mounted file system. We have found most (not all) of the open tools around S3 to be not-ready-for-production-type tools. Also, remember that EC2 and S3 are still listed as Beta applications. I list at the end of this article a number of good articles about the drawbacks of using EC2/S3 as a production RDBMS data store. Recently, an interesting point was made to me that a lot of how EC2/S3 works is really based on Amazon’s legacy. Before it offered EC2/S3 as a commercial service, it was more than likely used as its core e-tailor infrastructure. Although EC2/S3 might seem like an odd way to provide this kind of service, I am certain that it rocks as an infrastructure for selling books and CD’s.

Another player in the "Level 2"game is Mosso. Mosso is a customer of Rackspace, and it has added some secret sauce to VMWare to provide an EC2 look alike. The good news is that its storage is permanent and that there is no S3 foolishness. It will be interesting to see if Mosso can compete with a proprietary hypervisor (VMWare) vs. an open source hypervisor like XEN, which is used by EC2.

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[May 15, 2008] Keystones and Rivets Cloud Computing

John Willis seeks to 'demystify' clouds and received some interesting comments.  James Urquhart is an advocate of cloud computing and thinks that, as with any disruptive change, some people are in denial about The Cloud.  He has responded to some criticism of his opinions.  Bob Lewis, one of Urquhart's “deniers” has written a few posts on the subject and offers a space for discussion of Nick Carr's arguments.

In order to discuss some of the issues surrounding The Cloud concept, I think it is important to place it in historical context.  Looking at the Cloud's forerunners, and the problems they encountered, gives us the reference points to guide us through the challenges it needs to overcome before it is adopted.

In the past computers were clustered together to form a single larger computer.  This was a technique common to the industry, and used by many IT departments.  The technique allowed you to configure computers to talk with each other using specially designed protocols to balance the computational load across the machines.  As a user, you didn't care about which CPU ran your program, and the cluster management software ensured that the “best” CPU at that time was used to run the code.

In the early 1990s Ian Foster and Carl Kesselman came up with a new concept of “The Grid”.  The analogy used was of the electricity grid where users could plug into the grid and use a metered utility service. If companies don't have their own powers stations, but rather access a third party electricity supply, why can't the same apply to computing resources?  Plug into a grid of computers and pay for what you use.

Grid computing expands the techniques of clustering where multiple independent clusters act like a grid due to their nature of not being located in a single domain. 

A key to efficient cluster management was engineering where the data was held, known as “data residency”.  The computers in the cluster were usually physically connected to the disks holding the data, meaning that the CPUs could quickly perform I/O to fetch, process and output the data.

One of the hurdles that had to be jumped with the move from clustering to grid was data residency.  Because of the distributed nature of the Grid the computational nodes could be situated anywhere in the world.  It was fine having all that CPU power available, but the data on which the CPU performed its operations could be thousands of miles away, causing a delay (latency) between data fetch and execution.  CPUs need to be fed and watered with different volumes of data depending on the tasks they are processing.  Running a data intensive process with disparate data sources can create a bottleneck in the I/O, causing the CPU to run inefficiently, and affecting economic viability.

Storage management, security provisioning and data movement became the nuts to be cracked in order for grid to succeed.  A toolkit, called Globus, was created to solve these issues, but the infrastructure hardware available still has not progressed to a level where true grid computing can be wholly achieved.

But, more important than these technical limitations, was the lack of business buy in.  The nature of Grid/Cloud computing means a business has to migrate its applications and data to a third party solution.  This creates huge barriers to the uptake.

In 2002 I had many long conversations with the European grid specialist for the leading vendor of grid solutions.  He was tasked with gaining traction for the grid concept with the large financial institutions and, although his company had the computational resource needed to process the transactions from many banks, his company could not convince them to make the change.

Each financial institution needed to know that the grid company understood their business, not just the portfolio of applications they ran and the infrastructure they ran upon.  This was critical to them.  They needed to know that whoever supported their systems knew exactly what the effect of any change could potentially make to their shareholders.

The other bridge that had to be crossed was that of data security and confidentiality.  For many businesses their data is the most sensitive, business critical thing they possess. To hand this over to a third party was simply not going to happen.  Banks were happy to outsource part of their services, but wanted to be in control of the hardware and software - basically using the outsourcer as an agency for staff.

Traditionally, banks do not like to take risks.  In recent years, as the market sector has consolidated and they have had to become more competitive, they have experimented outwith their usual lending practice, only to be bitten by sub-prime lending.  Would they really risk moving to a totally outsourced IT solution under today's technological conditions?

Taking grid further into the service offering, is “The Cloud”.  This takes the concepts of grid computing and wraps it up in a service offered by data centres.  The most high profile of the new “cloud” services is Amazons S3 (Simple Storage Service) third party storage solution.  Amazon's solution provides developers with a web service to store data.  Any amount of data can be read, written or deleted on a pay per use basis.

EMC plans to offer a rival data service.  EMCs solution creates a global network of data centres each with massive storage capabilities.  They take the approach that no-one can afford to place all their data in one place, so data is distributed around the globe.  Their cloud will monitor data usage, and it automatically shunts data around to load-balance data requests and internet traffic, being self tuning to automatically react to surges in demand.

However, the recent problems at Amazon S3, which suffered a “massive” outage at the end of last week, has only served to highlight the risks involved with adopting third party solutions.

So is The Cloud a reality?  In my opinion we're not yet there with the technology nor the economics required to make it all hang together. 

In 2003 the late Jim Gray published a paper on Distributed Computing Economics:

Computing economics are changing.  Today there is rough price parity between (1) one database access, (2) ten bytes of network traffic, (3) 100,000 instructions, (4) 10 bytes of disk storage, and (5) a megabyte of disk bandwidth.  This has implications for how one structures Internet-scale distributed computing:  one puts computing as close to the data as possible in order to avoid expensive network traffic.

The recurrent theme of this analysis is that “On Demand” computing is only economical for very cpu-intensive (100,000 instructions per byte or a cpu-day-per gigabyte of network traffic) applications.  Pre-provisioned computing is likely to be more economical for most applications - especially data-intensive ones.

If telecom prices drop faster than Moore's law, the analysis fails.  If telecom prices drop slower than Moore's law, the analysis becomes stronger.

When Jim published this paper the fastest Supercomputers were operating at a speed of 36 TFLOPS.  A new Blue Gene/Q is planned for 2010-2012 which will operate at 10,000 TFLOPS, out stripping Moore's law by a factor of 10.  Telecom prices have fallen and bandwidth has increased, but more slowly than processing power, leaving the economics worse than in 2003.

I'm sure that advances will appear over the coming years to bring us closer, but at the moment there are too many issues and costs with network traffic and data movements to allow it to happen for all but select processor intensive applications, such as image rendering and finite modelling.

There has been talk of a two tier internet where businesses pay for a particular Quality of Service, and this will almost certainly need to happen for The Cloud to become a reality.  Internet infrastructure will need to be upgraded, newer faster technologies will need to be created to ensure data clouds speak to supercomputer clouds with the efficiency to keep the CPUs working. This will push the telecoms costs higher rather than bringing them in line with Moore's Law, making the economics less viable.

Then comes the problem of selling to the business. Many routine tasks which are not processor intensive and time critical are the most likely candidates to be migrated to cloud computing, yet these are the least economical to be transferred to that architecture.  Recently we've seen the London Stock Exchange fail, undersea data cables cut in the Gulf, espionage in Lithuania and the failure of the most modern and well-known data farm at Amazon.

In such a climate it will require asking the business to take a leap of faith to find solid footing in the cloud for mission critical applications.

And that is never a good way to sell to the business.

[May 15, 2008] The problem with Google Apps Engine by Garett Rogers

If you are considering taking advantage of the new Google App Engine service from Google, I suggest you read this article first. There are some hidden facts that you should be aware of before making your decision to adopt this platform.

First, I’d like to thank Google for providing this service — it really is a great idea, and can be very useful for people or companies making web applications from scratch without needing to worry about infrastructure. It’s also a very smart move on Google’s part — host the world’s applications, make money off their success, even if they aren’t the owners of successful applications. Popular applications will likely exceed “free” limits, giving Google the green light to start charging money.

Another advantage for Google is the ease of acquiring companies if they are already using Google’s infrastructure — simply make a deposit into their bank account and slap the Google logo on the interface.

But everything that sounds too good to be true, usually is — right? In this case, I have to agree. When you choose to use Google App Engine, there are a couple of things you need to think long and hard about. If you go through this list and still think it will work for you, then it probably will. Go for it, it really is a great service after everything is said and done. It’s very well thought out, and as it promises, it will scale with the growth of your business.

Things you need to think about:

• You are putting your application in Google’s hands
  Think about that for a minute. You are at the mercy of Google — if disaster strikes and Google one day disappears, you are done too. Or, more realistically, if the Google App Engine goes down for an hour, you are also down for an hour — and you will have no idea what happened. Even if you try and get an answer from someone at Google, you won’t. Just like Google Apps, it will be impossible to explain things to your end users.

  What if you are violating some terms of service (which likely won’t, but theoretically could happen to people without their knowing)? You thought making your company’s revenue dependent on AdSense was risky — what if your whole application was banned because of something you didn’t know about? Like I said, this scenario isn’t likely to happen — but it’s true that it could.
   

• Once you are in, you are really in
  Using Google’s infrastructure is very tempting. But any smart company should have some sort of plan for the future. What if you realized that you didn’t want to host your application on Google App Engine anymore? Good luck, almost everything you are given access to is proprietary — that means all your data is locked into BigTable in a format that isn’t like a traditional relational database. It’s also very tempting to use the API’s Google provides to interface with things like Google accounts.

  On top of that, you will be using the “webapp” framework that Google built that makes writing Python applications real nice — but good luck porting that to another language or putting it on a machine of your own.
   

• It’s free right?
  Not only are you locked in, you are completely at the mercy of Google’s future pricing strategy for the Google App Engine. It’s true that it’s likely to be cheaper than anything else comparable, but are you willing to take that risk? Right now it’s free, so everyone and their dog wants to at least give it a try — but what if your application actually really takes off? You will one day have to pay for your success, or shut down your service.
   
• Privacy should not be taken lightly
  Google has a very strong privacy policy — and personally I trust them. However, I’m trusting them with my personal information — you will be trusting them with all of your company’s data. These are two completely different things. If you have a low trust tolerance, you may not want to risk putting everything that belongs to your company behind Google’s doors. That said, I personally would still feel comfortable putting company data on their infrastructure — simply because I know it’s proven to be secure, scalable and robust over the last several years with their own services.

Like I said, I am really glad Google has put this service out there. It’s a great tool people can and should use if they are comfortable with the risks. If you have any additional things you would like to point out for people who might be considering using Google App Engine, or if you want to debunk anything I have said in this article, please feel free to post them in the Talk Back.

Garett Rogers is employed as a programmer for iQmetrix, which specializes in retail management software for the cellular and electronics industry. See his full profile and disclosure of his industry affiliations.

Comments

RE: The problem with Google Apps Engine

UUMMM google this:

Some Canadian organizations are banning Google's Web applications because the Patriot Act allows the U.S. government to view personal data held by U.S. organizations, which violates Canada's privacy laws. When Lakehead University in Thunder Bay, Ontario, implemented some of Google's tools, it sparked a backlash among professors, who cannot transmit private data over the system.

[May 15, 2008] Internet Evolution - Tom Nolle - Is Cloud Computing a Benefit or Threat

We should care a lot about this, because the "giant cloud" vision of the Internet is probably not an alternate Internet architecture for all to play in, but rather an alternate Internet business model that favors only the giant players. It doesn't take a computer scientist and a VC to create a Website, but it darn sure takes a bunch of both to create a computing cloud. You could host your site and applications in somebody’s cloud, but how they work and what it costs you are now under their control. The notion of a cloud-computing-based Internet is the notion of an Internet that's tilting toward the very large players.

[May 14, 2008] Computing Heads for the Clouds

Which companies are at the forefront of cloud computing?

Google's search engine and productivity applications are among the early products of efforts to locate processing power on vast banks of computer servers, rather than on desktop PCs. Microsoft has released online software called Windows Live for photo-sharing, file storage, and other applications served from new data centers. Yahoo has taken similar steps. IBM has devoted 200 researchers to its cloud computing project. And Amazon.com (AMZN) recently broadened access for software developers to its "Elastic Compute Cloud" service, which lets small software companies pay for processing power streamed from Amazon's data centers.

What's the market opportunity for this technology?

While estimates are hard to find, the potential uses are widespread. Rather than serve a relatively small group of highly skilled users, cloud computing aims to make supercomputing available to the masses. Reed, who's moving to Microsoft from the University of North Carolina, says the technology could be used to analyze conversations at meetings, then anticipate what data workers might need to view next, for example. Google, Microsoft, and others are also building online services designed to give consumers greater access to information to help manage their health care.

What are the biggest challenges these companies face?

The technical standards for connecting the various computer systems and pieces of software needed to make cloud computing work still aren't completely defined. That could slow progress on new products. U.S. broadband penetration still lags that of many countries in Europe and Asia, and without high-speed connections—especially wireless ones—cloud computing services won't be widely accessible. And storing large amounts of data about users' identity and preferences is likely to raise new concerns about privacy protection.

Haven't we heard about efforts like this before?

Every decade or so, the computer industry's pendulum swings between a preference for software that's centrally located and programs that instead reside on a user's personal machine. It's always a balancing act, but today's combination of high-speed networks, sophisticated PC graphics processors, and fast, inexpensive servers and disk storage has tilted engineers toward housing more computing in data centers. In the earlier part of this decade, researchers espoused a similar, centralized approach called "grid computing." But cloud computing projects are more powerful and crash-proof than grid systems developed even in recent years.

[May 13, 2008] Holway's HotViews “I think there is a world market for maybe five computers”

Paul Wallis said...

Richard,

As you say it is difficult to make predictions that remain accurate for a reasonable length of time, especially with technology changing so rapidly.

That said, I think we are some way from businesses putting mission-critical applications on “The Cloud”.

One of the problems at the moment is economics. The late Jim Gray of Microsoft analysed “On Demand” computing a few years ago, and he pointed out that it is only economical for very CPU intensive operations.

Although telecom prices have fallen and bandwidth has increased, processing power has increased much more rapidly, which means that CPUs in the Cloud will run inefficiently at the moment except for applications like, for example, image rendering.

On my blog I’ve discussed this and some of the other issues surrounding The Cloud. I’ve tried to place it in historical context, looking at the Cloud's forerunners and the problems they encountered before being adopted.

You can find the article here.

You may also be interested reading my thoughts about how “IT exists for one reason”.

Your comments or feedback are very welcome.

A future look at data center power - Network World

Cloud computing, one approach Almaden researchers are pursuing, already has manifested itself in the Blue Cloud initiative IBM launched three months ago. Under the Blue Cloud architecture, enterprises can get Internet-like access to processing capacity from a large number of servers, physical and virtual. By not having to add machines locally, enterprises save on the cost of powering up and outfitting new computing facilities. Cloud computing also could help reduce ongoing energy consumption, as enterprises will not need to accommodate capacity they will not use all the time.

This spring IBM will take the concept further, offering BladeCenter servers with power and x86 processors, and service management software - a "'Cloud in a Box,' so to speak," says Dennis Quan, senior technical staff member at IBM's Silicon Valley Lab.

Cloud computing will mature in coming years as enterprises increasingly turn to IT to serve their markets, Quan says. Certainly Web 2.0 sites posting user-generated content will proliferate, driving the need for cloud computing. But demand will come from mainstream enterprises, too. "Financial services firms are saying, 'We've run out of space . . . so what can we do?'" he says. "They need to have a compute infrastructure that's scalable."

[May 12, 2008] Cloudy picture for cloud computing - Network World By Neal Weinberg

04/30/2008 Network World

Experts say enterprises are taking a wait-and-see approach

LAS VEGAS -- You can call it cloud computing. You can call it grid computing. You can call it on-demand computing. Just don't call it the next big thing – at least not yet.

Efforts by Web heavyweights such as Amazon and Google to entice companies into tapping into the power of their data centers are being slowed by a number of factors, according to Interop panelists.

Analyst Alistair Croll of BitCurrent said there are specific applications for which grid/cloud computing is perfect. For example, The New York Times recently rented Amazon's grid to create searchable PDFs of newspaper articles going back decades. The Times estimated that the project would have taken 14 years if the Times had used its own servers. Amazon did the entire project in one day, for $240.

But those examples are few and far between, as most companies are still in the `kicking the tires' stage when it comes to grid computing. Reuven Cohen, founder and CTO of Enomaly, said his customers are primarily using grid computing for research and development projects, rather than production applications.

Kirill Sheynkman, head of start-up Elastra, said the early adopters of grid computing are Web. 2.0 start-ups who want to get up and running quickly and without a lot of capital expenses, independent software vendors that want to offer their applications in a software-as-a-service model, and enterprises who have selected specific applications for the cloud, such as salesforce automation or human resources.

"Equipment inside the corporate data center isn't going away anytime soon," added Sheynkman. Companies remain reluctant, for a variety of reasons, to trust the cloud for their mission-critical applications. Here are some of those reasons:

1. Data privacy. Many countries have specific laws that say data on citizens of that country must be kept inside that country. That's a problem in the cloud computing model, where the data could reside anywhere and the customer might not have any idea where, in a geographical sense, the data is.
2. Security. Companies are understandably concerned about the security implications of corporate data being housed in the cloud.
3. Licensing. The typical corporate software licensing model doesn't always translate well into the world of cloud computing, where one application might be running on untold numbers of servers.
4. Applications. In order for cloud computing to work, applications need to be written so that they can be broken up and the work divided among multiple servers. Not all applications are written that way, and companies are loathe to rewrite their existing applications.
5. Interoperability. For example, Amazon has its EC2 Web service, Google has its cloud computing service for messaging and collaboration, but the two don't interoperate.
6. Compliance. What happens when the auditors want to certify that the company is complying with various regulations, and the application in question is running in the cloud? It's a problem that has yet to be addressed.
7. SLAs. It's one thing to entrust a third party to run your applications, but what happens when performance lags. The vendors offering these services need to offer service-level agreements.
8. Network monitoring. Another question that remains unanswered is how does a company instrument its network and its applications in a cloud scenario. What types of network/application monitoring tools are required.

While many of these questions don't have answers yet, the panelists did agree that there is a great deal of interest in grid computing. Conventional wisdom would say that small-to-midsize businesses (SMB) would be most interested in being able to offload applications, but, in fact, it's the larger enterprises that are showing the most interest.

As Google's Rajen Sheth pointed out, when Google started its messaging and collaboration services, it thought SMBs would be the major customers. "Lots of large enterprises are showing interest," he said, "but it will take a while."

[May 11, 2008] Q&A Author Nicholas Carr on the Terrifying Future of Computing

Carr should probably think about career of humorist...

12.20.07 | Wired

Wired: What's left for PCs?

Carr: They're turning into network terminals.

Wired: Just like Sun Microsystems' old mantra, "The network is the computer"?

Carr: It's no coincidence that Google CEO Eric Schmidt cut his teeth there. Google is fulfilling the destiny that Sun sketched out

The IT department is dead, author argues

 NetworkWorld.com

Carr is best known for a provocative Harvard Business Review article entitled "Does IT Matter?"

... ... ...

With his new book, Carr is likely to engender even more wrath among CIOs and other IT pros.

"In the long run, the IT department is unlikely to survive, at least not in its familiar form," Carr writes. "It will have little left to do once the bulk of business computing shifts out of private data centers and into the cloud. Business units and even individual employees will be able to control the processing of information directly, without the need for legions of technical people."

Carr's rationale is that utility computing companies will replace corporate IT departments much as electric utilities replaced company-run power plants in the early 1900s.

Carr explains that factory owners originally operated their own power plants. But as electric utilities became more reliable and offered better economies of scale, companies stopped running their own electric generators and instead outsourced that critical function to electric utilities.

Carr predicts that the same shift will happen with utility computing. He admits that utility computing companies need to make improvements in security, reliability and efficiency. But he argues that the Internet, combined with computer hardware and software that has become commoditized, will enable the utility computing model to replace today’s client/server model.

"It has always been understood that, in theory, computing power, like electric power, could be provided over a grid from large-scale utilities — and that such centralized dynamos would be able to operate much more efficiently and flexibly than scattered, private data centers," Carr writes.

Carr cites several drivers for the move to utility computing. One is that computers, storage systems, networking gear and most widely used applications have become commodities.

He says even IT professionals are indistinguishable from one company to the next. "Most perform routine maintenance chores — exactly the same tasks that their counterparts in other companies carry out," he says.

Carr points out that most data centers have excess capacity, with utilization ranging from 25% to 50%. Another driver to utility computing is the huge amount of electricity consumed by data centers, which can use 100 times more energy than other commercial office buildings.

"The replication of tens of thousands of independent data centers, all using similar hardware, running similar software, and employing similar kinds of workers, has imposed severe economic penalties on the economy," he writes. "It has led to the overbuilding of IT assets in every sector of the economy, dampening the productivity gains that can spring from computer automation."

Carr embraces Google as the leader in utility computing. He says Google runs the largest and most sophisticated data centers on the planet, and is using them to provide services such as Google Apps that compete directly with traditional client/server software from vendors such as Microsoft.

"If companies can rely on central stations like Google's to fulfill all or most of their computing requirements, they'll be able to slash the money they spend on their own hardware and software — and all the dollars saved are ones that would have gone into the coffers of Microsoft and the other tech giants," Carr says.

Other IT companies that Carr highlights in the book for their innovative approaches to utility computing are: Salesforce.com, which provides CRM software as a service; Amazon, which offers utility computing services called Simple Storage Solution (S3) and Elastic Compute Cloud (EC2) with its excess capacity; Savvis, which is a leader in automating the deployment of IT; and 3Tera, which sells a software program called AppLogic that automates the creation and management of complex corporate systems.

... ... ...

Carr offers a grimmer future for IT professionals. He envisions a utility computing era where "managing an entire corporate computing operation would require just one person sitting at a PC and issuing simple commands over the Internet to a distant utility."

He not only refers to the demise of the PC, which he says will be a museum piece in 20 years, but to the demise of the software programmer, whose time has come to an end.

Carr gives several examples of successful Internet companies including YouTube, Craigslist, Skype and Plenty of Fish that run their operations with minimal IT professionals. YouTube had just 60 employees when it was bought by Google in 2006 for $1.65 billion. Craigslist has a staff of 22 to run a Web site with billions of pages of content. Internet telephony vendor Skype supports 53 million customers with only 200 employees. Meanwhile, Internet dating site Plenty of Fish is a one-man shop.

"Given the economic advantages of online firms — advantages that will grow as the maturation of utility computing drives the costs of data processing and communication even lower —traditional firms may have no choice but to refashion their own businesses along similar lines, firing many millions of employees in the process," Carr says.

IT professionals aren't the only ones to suffer demise in Carr's eyes. He saves his most dire predictions for the fate of journalists.

Comments

Blending a few useful points into inflammatory utopia/dystopia

Submitted by JimB (not verified) on Mon, 01/07/2008 - 4:32pm.

 

Carr's vision is either utopian or dystopian, depending on how you look at it, but either way, it mixes a few likely trends with lots of naive wishful thinking, unsound logic, and sophomoric shock value.

The likely trends include greater commoditization and standardization, SaaS, utility computing, and the like. The IT landscape of today is already very different from the IT landscape of 20 years ago. Anyone who thinks IT won't be any different 20 years from now is being just as naive as Carr.

Yet let's look at his claims and analogies. Consider electricity. It's true that most organizations don't run their own power plants, but some still do. Light switches need no user's guides or special training, yet almost all organizations depend on having professional engineers who design the systems and trained technicians who service them -- and these specialists often don't work for the utility company. Many organizations still depend on in-house facilities people who deal with electrical systems -- as a first tier of response, as the link to whatever's been outsourced, and as the responsible party for seeing that the systems serve the organization's requirements.

Carr cites excess capacity and similarity of work as sure signs that IT departments will disappear. But think about that. (Carr hasn't, but I encourage others to.) That's true of virtually every job function you can name -- HR people, finance people, restaurant staff, teachers, scientific researchers, assembly line workers, soldiers, etc., etc., etc. If Carr's logic is sound, then virtually every job ever created is about to disappear, except at the "utility" companies that will do all the work instead.

Everybody is entitled to their opinions.

Submitted by Anonymous (not verified) on Mon, 01/07/2008 - 5:31pm.

Technology moves so fast that not one company (service providers) alone can keep up with a limited number of resources.
The outsourcing model is whats being practiced right now with large coprorations but very soon they will realize that a poor investment has been made. SLAs not being met, poor customer service and lack of resources for specialized technology.

Outsourcing

Submitted by Sergio (not verified) on Mon, 01/07/2008 - 8:34pm.

I don't know why all the fuzz around this guy... IT resources have been being outsourced from years now. I work at an IBM GDC (Global Delivery Center) and pretty much what we do is what this guy describes as the "future". We hire computing power and personnel to whomever wants to get rid of its bulked and oversized IT department. Please, somebody tell him!

RE: IBM

Submitted by Anonymous (not verified) on Mon, 01/07/2008 - 8:49pm.

 

Yea and then you screw everything up. ;-)

Former IBM customer.......

[May 02, 2008] Rough Type Nicholas Carr's Blog Is Office the new Netscape

Another "in the cloud" dreams form the Nicholas Carr ;-). One of the few true statements "[Microsoft] it doesn't see Google Apps, or similar online offerings from other companies, as an immediate threat to its Office franchise". Carr is blatantly wrong about Netscape. IE soon became a superior browser and that was the end of the game for Netscape.  Also in order for the following statement to became true "It knows that, should traditional personal-productivity apps become commonplace features of the cloud, supplied free or at a very low price, the economic oxygen will slowly be sucked out of the Office business" you need at least to match the power of Office applications and the power of modern laptops in the cloud. The first is extremely difficult as Office applications are extremely competitive and even for Google to match them is an expensive uphill battle. As for matching power of modern laptops this is simply and a pipe dream.   Like one reader commended on Carr's blog "The irony is that compared to Google Microsoft can offer greater choice - apps running on PC's or hosted. Use whichever you want/need based on your situation. I'd like to see Google match that. "

As Microsoft and Yahoo continue with their interminable modern-dress staging of Hamlet - it's longer than Branagh's version! - the transformation of the software business goes on. We have new players with new strategies, or at least interesting new takes on old strategies.

One of the cornerstones of Microsoft's competitive strategy over the years has been to redefine competitors' products as features of its own products. Whenever some upstart PC software company started to get traction with a new application - the Netscape browser is the most famous example - Microsoft would incorporate a version of the application into its Office suite or Windows operating system, eroding the market for the application as a standalone product and starving its rival of economic oxygen (ie, cash). It was an effective strategy as well as a controversial one.

Now, though, the tables may be turning. Google is trying to pull a Microsoft on Microsoft by redefining core personal-productivity applications - calendars. word processing, spreadsheets, etc. - as features embedded in other products. There's a twist, though. Rather than just incorporating the applications as features in its own products, Google is offering them up to other companies, particularly big IT vendors, to incorporate as features in their products.

We saw this strategy at work in the recent announcement that Google Apps would be incorporated into Salesforce.com's web applications (as well as the applications being built by others on the Salesforce platform). And we see it, at least in outline, in the tightening partnership between Google and IT behemoth IBM. Eric Schmidt, Google's CEO, and Sam Palmisano, IBM's CEO, touted the partnership yesterday in a joint appearance at a big IBM event. "IBM is one of the key planks of our strategy; otherwise we couldn't reach enterprise customers," Schmidt said. Dan Farber glosses:

As more companies look for Web-based tools, mashups, and standard applications, such as word processors, Google stands to benefit ... While IBM isn't selling directly for Google in the enterprise, IBM's software division and business partners are integrating Google applications and widgets into custom software solutions based on IBM's development framework. The "business context" is the secret of the Google and IBM collaboration, Schmidt said. Embedding Google Gadgets in business applications, that can work on any device, is a common theme for both Google and IBM.

Carr is too simplistic here.  Microsoft Office is extremely well written and debugged set of applications with functionality and price that is not easy to match. Google will have difficulties attracting laptop users as price of Microsoft Office is ~ $100 for home and student edition -- that means a shareware price ($30 per application). So far Google apps were far from being  a success...  - NNB

Google's advantage here doesn't just lie in the fact that it is ahead of Microsoft in deploying Web-based substitutes for Office applications. Microsoft can - and likely will - neutralize much of that early-mover advantage by offering its own Web-based versions of its Office apps. Its slowness in rolling out full-fledged web apps is deliberate; it doesn't see Google Apps, or similar online offerings from other companies, as an immediate threat to its Office franchise, and it wants to avoid, for as long as possible, cannibalizing sales of the highly profitable installed versions of Office.

No, Google's main advantage is simply that it isn't Microsoft. Microsoft is a much bigger threat to most traditional IT vendors than is Google, so they are much more likely to incorporate Google Apps into their own products than to team up with Microsoft for that purpose. (SAP is an exception, as it has worked with Microsoft, through the Duet initiative, to blend Office applications into its enterprise systems. That program, though, lies well outside the cloud.) Undermining the hegemony of Microsoft Office is a shared goal of many IT suppliers, and they are happy to team up to further that goal. As Salesforce CEO Marc Benioff pithily put it in announcing the Google Apps tie-up, "The enemy of my enemy is my friend, so that makes Google my best friend."

Google is throwing  money out of the window. You cannot match the power of modern laptop with the "in the cloud" servers. That severely limits the attractiveness of Goggle applications. Storing your business plan and other sensitive documents at Google servers is another drawback. --NNB

Like Microsoft, Google is patient in pursuing its strategy. (That's what very high levels of profitability will do for you.) It knows that, should traditional personal-productivity apps become commonplace features of the cloud, supplied free or at a very low price, the economic oxygen will slowly be sucked out of the Office business. That doesn't necessarily mean that customers will abandon Microsoft's apps; it just means that Microsoft won't be able to make much money from them anymore. Microsoft may eventually win the battle for online Office applications, but the victory is likely to be a pyrrhic one.

Of course, there are some long-run risks for other IT vendors in promoting Google Apps, particularly for IBM. A shift to cheap Web apps for messaging and collaboration poses a threat to IBM's Notes franchise as well as to Microsoft's Office franchise. "The enemy of my enemy is my friend." If I remember correctly, that's what the US government used to say about Saddam Hussein.

Comments

Nick,

You are making a mistake that many in the tech blogosphere make: getting caught up in PR-driven spin of "David vs. Goliath" when the issue is really "Goliath vs. Himself". As Steve Gillmor has remarked (click my name for gratuitous blog post), the real issue is how Microsoft, as the owner of the enterprise productivity space, defines the future of office productivity. It's their market to lose, and this is not likely. After 10 years, IBM has negligible penetration in this space. Google teaming with an also-ran is just two also-rans running a 3-legged race to nowhere.

And as for your statement that, "Google is patient in pursuing its strategy. (That's what very high levels of profitability will do for you.)" -- I'm guessing the $40 billion takeover of Yahoo aims at reducing that profitability a more than a bit...

 

Nick,

You are making a mistake that many in the tech blogosphere make: getting caught up in PR-driven spin of "David vs. Goliath" when the issue is really "Goliath vs. Himself". As Steve Gillmor has remarked (click my name for gratuitous blog post), the real issue is how Microsoft, as the owner of the enterprise productivity space, defines the future of office productivity. It's their market to lose, and this is not likely. After 10 years, IBM has negligible penetration in this space. Google teaming with an also-ran is just two also-rans running a 3-legged race to nowhere.

And as for your statement that, "Google is patient in pursuing its strategy. (That's what very high levels of profitability will do for you.)" -- I'm guessing the $40 billion takeover of Yahoo aims at reducing that profitability a more than a bit...

Posted by: Sprague Dawley  at May 2, 2008 06:14 PM

There's one thing missing from the cloud versions of the office suite, from Google Apps & IBM's versions of OpenOffice.org (Lotus Symphony) & it has to do with -- yes, that magic word -- interoperability.

Yes, OpenOffice.org & its derivatives can open & save simple .doc files, but the 3 - 7 percent of files which are complex, or are affected by VBA scripts, or are part of even simple business processes make the Windows (XP) | Office platform impervious to alien apps & formats & intolerant of participation with non-Microsoft software within the process.

... ... ...

Posted by: Sam  at May 2, 2008 06:56 PM

... It's relatively trivial for Microsoft to create an online version of Word or Excel at least as good if not better than Google Apps. If Office is sufficiently threatened - which I don't think it will be - then they can choose to canibalize Office themselves. I think a more likely scenario is that Microsoft will offer online versions of Word and Excel as companions to the PC versions - much like they offer Outlook Web Access as a companion to Outlook. Most companies and PC users choose to use the PC version of Outlook when they can but like to have the option to use Outlook Web Access when they have need to. Google is SOL in this respect. With Google it's their hosted/run by Google or nothing. The irony is that compared to Google Microsoft can offer greater choice - apps running on PC's or hosted. Use whichever you want/need based on your situation. I'd like to see Google match that.

Posted by: markashton  at May 2, 2008 11:47 PM

I could be wrong, but I think most of Corporate America, which is the source of the cash cow profits at MS, doesn't really care about the operating system. Its Office, and more specifically, interoperability of Office documents that drives the world. Back in the late 80s, WordPerfect owned word processing, even more than Lotus 123 did.

... ... ...

I'm not sure that the idea of letting Google store all your business plans and contracts is an attractive idea...
 

Posted by: Patrick Farrell  at May 2, 2008 11:57 PM

I don't think Microsoft's core capabilities have ever been well understood. In the late 80s/early 90s conventional wisdom held that Windows would never succeed in the enterprise, or in education, or for consumers, or for games. Good reasons were proferred in each case. And yet Microsoft slowly transformed the consumer experience and at the same time built the marketing expertise to capture the enterprise.

For all its achievements, Google just doesn't have that capability, and probably never will. It's boring, for one thing. And the deal with IBM reminds me of foxes guarding the chicken coop.

For Microsoft, the Office franchise is not really just about the product, but also about reliability and assurance, which are what IT managers look for. Playing experiments with IBM consulting ware and Google's latest are not really high on the list for corporate executives.

Both companies (Microsoft and Google) will do some interesting things, but I don't think, for Google, it will be in the enterprise space.

Posted by: Tony Healy  at May 4, 2008 12:06 AM

I read cost analysis studies that show only a saving of about 10% using subscription based web apps over per seat licenses. I think the real issue is the need for local customization.
... ... ...

Posted by: Linuxguru1968  at May 9, 2008 02:19 PM

[May 8, 2008] Microsoft's Mesh Promise On The Horizon - Microsoft Blog  by J. Nicholas Hoover

Mar 10, 2008 | InformationWeek

It's becoming clear that synchronizing information across devices and services is set to become a critical part of Microsoft (NSDQ: MSFT)'s Web strategy, and Ray Ozzie made that point even clearer last week.

In his keynote address at Microsoft's Mix conference for Web developers, Microsoft's chief software architect said the word "mesh" 14 times and some variant of "synchronization" three more times.

"Just imagine the possibilities enabled by centralized configuration and personalization and remote control of all your devices from just about anywhere," Ozzie said. "Just imagine the convenience of unified data management, the transparent synchronization of files, folders, documents, and media. The bi-directional synchronization of arbitrary feeds of all kinds across your devices and the Web, a kind of universal file synch."

... ... ...

Microsoft briefed developers on the Sync Framework and FeedSync, two of the company's early synchronization technologies, as well as something new currently called Astoria Offline, which is not even yet available for testing. Another product labeled "Astoria Server" appeared on a few PowerPoint slides, but it wasn't even mentioned. Astoria was the code-name for a project that seems to be morphing into the key data storage and modeling technology for Microsoft's data services strategy.

During the session, Microsoft program manager Neil Padgett said the company would release the final version of the Sync Framework in the third quarter and put out a test release of a mobile version of the framework at the same time.

FeedSync, the Sync Framework and Astoria Offline all look to be technologies that allow developers to create and implement bits of code and applications that can sync information, though Padgett also said Microsoft will offer some code for common scenarios like unifying contact information, and hinted that it also would craft some user experiences for how sync services look and feel to end users.

[May 7, 2008] Prefabricated data centers offer modular expansion alternatives

Data center managers got a reprieve from having to expand their facility footprint in recent years as advances in the physical density of servers made it possible to stuff far more computing power into the same space. But as Michael A. Bell, research vice president for Gartner, Inc. noted last year, today a standard rack may be supporting loads up to 30,000 watts rather than the 3,000 watts the engineers of your data center probably expected. That in turn puts a major strain on your power and cooling capacity.

... ... ...

American Power Conversion Corp. (APC) has experimented with a rapid deployment data center model since late 2004, when it unveiled a prototype called the InfraStruXure Express. This self-contained facility is actually a 53-foot long trailer pulled by a big rig. It has an onboard 135 kW generator, makes its own chilled water, and offers a satellite data uplink. Inside the trailer is a small network operations center. Painted differently, it could pass as a mobile home for an espionage support crew.

"The InfraStruXure Express is the next evolution of a packaged system in the InfraStruXure category," says APC's Russel Senesac, Director of InfraStruXure Systems. "It came from the research we did in the market showing customers wanted the ability to quickly deploy [data centers], whether it's a case of disaster recovery or data centers running out of capacity. All the components are rack based—the UPS, the cooling systems—and so we could do a high-density application inside a 53-foot container."

The InfraStruXure Express is flexible—it can hook up to land-based data communications and "shore power" as well. It's unlikely that the rolling data center will leave the prototype stage in its current form; rather, it was outfitted to the gills to get reaction from potential customers for possible development of a future line of products. One problem facing APC: many of those interested in the InfraStruXure Express (which includes not only corporations but federal agencies like FEMA and the Department of Homeland Security) need heavily customized versions, a business model APC is not keen to rush into.

Sun Microsystems seems more likely to bring a mass-produced data center on wheels to market first with its Project Blackbox. The offering, also still officially in prototype stage but scheduled to be delivered to its first customers by March, is fundamentally different from InfraStruXure Express. For one thing, the only mobile aspect to Project Blackbox is that it gets delivered as a standard 20-foot shipping container on the back of a truck (or cargo ship, airplane, or railcar). Once it's dropped off at the customer site, it needs to be hooked up to external power and data lines, as well as a chilled water supply and return. Eight 19-inch racks are cleverly packaged inside, without room for much anything else other than fans and heat exchangers. Sun won't yet reveal pricing.

[May 6, 2008] sun_unveils_data_center_in_a_box

The product, dubbed Project Black Box, is housed in a standard metal shipping container -- 20 feet long, eight feet wide and eight feet tall. A fully loaded system can house about 250 single unit rack servers.

Painted black with a lime green Sun logo, the system can consist of up to seven tightly packed racks of 35 server computers based on either Sun’s Niagara Sparc processor or an Opteron chip from Advanced Micro Devices. The system includes sensors to detect tampering or movement and features a large red button to shut it down in an emergency. Once plugged in, it requires just five minutes to be ready to run applications. Sun has applied for five patents on the design of the system, including a water-cooling technique that focuses chilled air directly on hot spots within individual computing servers. The system, which Sun refers to as “cyclonic cooling,” makes it possible to create a data center that is five times as space-efficient as traditional data centers, and 10 percent to 15 percent more power-efficient, Mr. Schwartz said.

[May 5, 2008] SAP's SaaS Effort Falls Short Of Design

(Information Week Via Acquire Media NewsEdge)

SAP's decision to cut the amount it will invest this year in its midmarket ERP on-demand software service, Business ByDesign, points to obstacles the company has hit in trying to extend the SaaS model to ERP. It also raises concerns about the slowing economy's impact on the new software delivery model.

SAP is cutting its investment in Business ByDesign this year by about $156 million, company executives say, from the estimated $300 million or so it had planned to spend. SAP still intends to invest between $117 million and $195 million, with $62 million of that already accounted for in the first quarter.

At the same time, SAP has scaled back its revenue projections for Business ByDesign, estimating it will take until 2011 or 2012 to hit $1 billion in annual sales, rather than reaching that goal in 2010, as the company had hoped. The service has only 150 customers, and SAP said it expects to sign "significantly less" than 1,000 this year-the subscriber base it had projected when it launched the service last September.

And while SAP said last fall the service would be widely available this year, it's still limiting it to six countries: China, France, Germany, the United Kingdom, the United States, and, later this year, India.

PERFORMANCE PROBLEM

SAP says the retrenchment is a deliberate go-slow strategy. "There are a lot of things we feel we need to fine-tune before going into full volume," says Hans-Peter Klaey, president of SAP's small- and midsize-business division. Unfortunately, one of those is Business ByDesign's performance over the Internet, which Klaey admits needs improvement.

Another is cost. Some customers want to adopt the Business ByDesign suite piecemeal rather than all at once, while others are looking to integrate it into their existing infrastructures and require more services and customization than SAP had anticipated, says Stuart Williams, an analyst at Technology Business Research. The result is "a more expensive and less scalable business than designed," says Williams.

Pressure SAP faces to increase profit margins may play a part in its decision to scale back the on-demand service. SAP's first-quarter results, reported last week, fell short of Wall Street estimates. Net income for the quarter, ended March 31, was $376.6 million, down 22% from a year ago; revenue came in at $3.83 billion, up 14%, but still short of what Wall Street had hoped for. In a conference call with financial analysts, co-CEO Henning Kagermann cited several reasons for the subpar performance, including the slowing U.S. economy, the decline of the dollar against the euro, and the expense of integrating recently acquired Business Objects.

Kagermann said SAP is sorting through the complications of how to host ERP as a service and make a reasonable profit with it. "It's very important to adopt our plan every step of the way to ensure highest quality and maximum profitability," he said on the conference call. "Now, we are much smarter, because we have some milestones behind us." The revised strategy is a more realistic one, agrees analyst Williams, noting it "will take [SAP] more time and experience to build sales momentum" for its ERP service offering.

Difficulties in expanding the SaaS model beyond one-off applications for CRM and security may not be limited to SAP. Microsoft, NetSuite, Oracle, and Workday offer ERP suites in the SaaS model, and while all have seen growth, none is having blazing success with online ERP.

http://informationweek.com/

The Problems and Challenges with Software as a Service  Gear Diary

Posted on 09 April 2008 by Christopher Spera

I write for a couple of different sites. Including this one, I write or have written for CompuServe/AOL, Pocket PC Thoughts, Lockergnome, The Gadgeteer, CMPNet’s File Mine, WUGNET: The Windows User’s Group Network, and Gear Diary. Honestly, life is all sunshine and daisies when the site is up and your backup app is working.  However, when things go south, and you find out that your data is gone due to some sort of corruption or backup problem, life can get very complicated.

Gear Diary had a problem like this not too long ago, if you remember.  Judie, the site owner, ran around like a nut trying to work with the hosting company to get things turned around.  Some things went well, but others did not, and we had to rebuild the site from scratch.

Gear Diary is a WordPress enabled site, so many team members use the online WYSIWYG editor to create and edit content. It saves drafts, allows you to upload (and even watermark) graphics/pictures, and is, for all intent and purposes, an online word processor, much like Google Docs.  When the site went belly up, most of the content headed south the border as well.  Most team members had not saved a local copy of their work…which got me thinking…

One of the biggest and hottest trends I’ve been hearing a lot about lately is software as a service, a la Google Docs, Office Live, etc. If you take the Gear Diary site issue as a point of reference, and apply software as a service (which is basically what WordPress is acting as), you get an interesting and fairly destructive situation.  WordPress doesn’t offer any kind of method of saving its documents locally, or in a format that can be read (or edited) by any other local application. Despite the fact that WordPress creates HTML documents, all data stays on the server.

If you bump into a server issue, i.e. you go down, your data gets lost. It happened to Gear Diary. It can happen to any user that uses a software as a service app. what bothers me more, is that unless there’s a specific viewer or offline editing tool for the document type, the data is useless.  Further, if the app doesn’t allow you to save data locally, an off line viewer isn’t going to do much good anyway.

Many users here (those that wor of WordPress and saving it as a text or HTML file. That at least gets the data out and saved to your local hard drive.  However, it doesn’t address disaster recovery on the client side (which was one of the big draws, aside from cost savings and the lack of deployment problems…all you need in most cases is a compatible browser…).

Interestingly enough, Google may be planning changes to their online suite that would allow users to do just this: save data locally. As I noted above, the ability to save data to the server is nice, but if you’re on a laptop and not connected to the ‘Net, you might be out of luck if you’ve got work to do.

If Google Docs users have downloaded Google Gears, they should be able to edit a copy of a locally stored or cached version of the data, when they open a browser, and “navigate” to docs.google.com. Users will be able to transfer the updated data back to the server when the computer goes back on line, which is huge; but I don’t necessarily want to rely on data that’s still in my Internet cache.  The browser needs to save the file locally…and it would be nice to have it saved in an industry standard format.

I’d love to hear everyone’s opinion on this.  Why don’t you join us in the discussion area and give us your thoughts?  I just have one request…I’d like us to NOT get into a debate over software as a service vs. a client side app, if possible.  I’d like to hear everyone’s thoughts and ideas on getting past the problems and challenges I’ve outlined: saving data locally and to a server, local file viewing and editing and disaster recovery; but if we MUST debate the entire issue, that’s cool too!

Distributed Computing Fallacy #9 « Kevin Burton’s NEW FeedBlog

Distributed Computing Fallacy #9

September 23, 2007 in clustering, linux, open source

We know there are eight fallacies of distributed computing - but I think there’s one more.

A physical machine with multiple cores and multiple disks should not be treated as one single node.

Two main reasons.

First RAID is dying. You’re not going to get linear IO scalability by striping your disks. If you have one software component accessing the disk as a logical unit you’re going to get much better overall system performance.

Second. Locking. Multicore mutex locks are evil. While the locking primitives themselves are getting faster, if the CPU is overloaded and long critical section is acquired your other processes are going to have to wait to move forward. Running one system per core fixes this problem.

We’re seeing machines with eight cores and 32G of memory. If we were to buy eight disks for these boxes it’s really like buying 8 machines with 4G each and one disk.

This partially goes into the horizontal vs vertical scale discussion. Is it better to buy one $10k box or 10 $1k boxes? I think it’s neither. Buy 4 $2.5k boxes. The new multicore stuff is super cheap.

Update: Steve Jenson sent me an email stating that this could be rephrased to consider avoid considering physical units of computation as logical units.

Internet Time Blog A Sustainable Edge

Four Domains of Human Action What do we mean by edge? We will be focusing on the edges of four different domains of human action - social, enterprise, market and learning.

· The social domain involves the complex relationships between how we define our individual identities and the forms of social participation that we pursue to shape these identities.
· The enterprise domain looks at how we organize to create economic value and how we define the boundaries of these economic entities.
· The market domain explores how we compete and collaborate on a global scale to create, deliver and capture economic value.
· The learning domain seeks to describe how we learn, with particular emphasis on the interaction between individual learning and group learning.

Complex dynamic loops shape the evolution of each domain and the interdependencies across domains. Many analysts have described elements of each of these domains, but no one has sought to explore systematically how these domains interact with each other. We believe that the biggest opportunities will arise where the edges of these four domains interact and generate tensions that need to be resolved. It is this intersection that defines the first dimension of our research agenda.

To effectively pursue this research agenda, we will need to incorporate two other dimensions of investigation as well.

Four Global Forces
On the second dimension of our research agenda, we need to better understand four long-term global forces and how they interact with the four domains described earlier:

· Public policy - especially the broad movement to remove barriers to entry and barriers to competition
· Technological innovation at three levels:
- the continuing improvement in price/performance in digital hardware building blocks and new techniques for designing, building and delivering software
- the changing architectures for organizing these hardware and software building blocks
- the movement into new arenas of these components and architectures (e.g., the mobile Internet, smart objects, bioinformatics and telematics)
· Demographic - especially the changing age demographics around the globe
· Cultural - especially the emergence of global youth cultures, the growth of the creative class and the growing importance of religion in cultures around the world.

Dr. Dobb's Errant Architectures April 1, 2003 by Martin Fowler

When we let objects wander, we all pay the performance price. Here's how to avoid distributed dystopia's overhead of remote procedure calls and ignore middleware's siren song.

Objects have been around for a while, and sometimes it seems that ever since they were created, folks have wanted to distribute them. However, distribution of objects, or indeed of anything else, has a lot more pitfalls than many people realize, especially when they're under the influence of vendors' cozy brochures. This article is about some of these hard lessons-lessons I've seen many of my clients learn the hard way.

Objects have been around for a while, and sometimes it seems that ever since they were created, folks have wanted to distribute them. However, distribution of objects, or indeed of anything else, has a lot more pitfalls than many people realize, especially when they’re under the influence of vendors’ cozy brochures. This article is about some of these hard lessons—lessons I’ve seen many of my clients learn the hard way.

[click for larger image] Architect’s Dream, Developer’s Nightmare Distributing an application by putting different components on different nodes sounds like a good idea, but the performance cost is steep.

A Mysterious Allure

There’s a recurring presentation I used to see two or three times a year during design reviews. Proudly, the system architect of a new OO system lays out his plan for a new distributed object system—let’s pretend it’s some kind of ordering system. He shows me a design that looks rather like “Architect’s Dream, Developer’s Nightmare” with separate remote objects for customers, orders, products and deliveries. Each one is a separate component that can be placed in a separate processing node.

I ask, “Why do you do this?”

“Performance, of course,” the architect replies, looking at me a little oddly. “We can run each component on a separate box. If one component gets too busy, we add extra boxes for it so we can load-balance our application.” The look is now curious, as if he wonders if I really know anything about real distributed object stuff at all.

Meanwhile, I’m faced with an interesting dilemma. Do I just say out and out that this design sucks like an inverted hurricane and get shown the door immediately? Or do I slowly try to show my client the light? The latter is more remunerative, but much tougher, since the client is usually very pleased with his architecture, and it takes a lot to give up on a fond dream.

So, assuming you haven’t shown my article the door, I suppose you’ll want to know why this distributed architecture sucks. After all, many tool vendors will tell you that the whole point of distributed objects is that you can take a bunch of objects and position them as you like on processing nodes. Also, their powerful middleware provides transparency. Transparency allows objects to call each other within or between a process without having to know if the callee is in the same process, in another process or on another machine.

Transparency is valuable, but while many things can be made transparent in distributed objects, performance isn’t usually one of them. Although our prototypical architect was distributing objects the way he was for performance reasons, in fact, his design will usually cripple performance, make the system much harder to build and deploy—or both.

Remote and Local Interfaces

The primary reason that the distribution by class model doesn’t work has to do with a fundamental fact of computers. A procedure call within a process is extremely fast. A procedure call between two separate processes is orders of magnitude slower. Make that a process running on another machine, and you can add another order of magnitude or two, depending on the network topography involved.As a result, the interface for an object to be used remotely must be different from that for an object used locally within the same process.

A local interface is best as a fine-grained interface. Thus, if I have an address class, a good interface will have separate methods for getting the city, getting the state, setting the city, setting the state and so forth. A fine-grained interface is good because it follows the general OO principle of lots of little pieces that can be combined and overridden in various ways to extend the design into the future.

A fine-grained interface doesn’t work well when it’s remote. When method calls are slow, you want to obtain or update the city, state and zip in one call rather than three. The resulting interface is coarse-grained, designed not for flexibility and extendibility but for minimizing calls. Here you’ll see an interface along the lines of get-address details and update-address details. It’s much more awkward to program to, but for performance, you need to have it.

Of course, what vendors will tell you is that there’s no overhead to using their middleware for remote and local calls. If it’s a local call, it’s done with the speed of a local call. If it’s a remote call, it’s done more slowly. Thus, you pay the price of a remote call only when you need one. This much is, to some extent, true, but it doesn’t avoid the essential point that any object that may be used remotely should have a coarse-grained interface, while every object that isn’t used remotely should have a fine-grained interface. Whenever two objects communicate, you have to choose which to use. If the object could ever be in separate processes, you have to use the coarse-grained interface and pay the cost of the harder programming model. Obviously, it only makes sense to pay that cost when you need to, and so you need to minimize the number of interprocess collaborations.

For these reasons, you can’t just take a group of classes that you design in the world of a single process, throw CORBA or some such at them and come up with a distributed model. Distribution design is more than that. If you base your distribution strategy on classes, you’ll end up with a system that does a lot of remote calls and thus needs awkward, coarse-grained interfaces. In the end, even with coarse-grained interfaces on every remotable class, you’ll still end up with too many remote calls and a system that’s awkward to modify as a bonus.

[click for larger image] A Better Way Clustering involves putting several copies of the same application on different nodes. If you must distribute, this approach eliminates the latency problems.

Laying Down the Law
Hence, we get to my First Law of Distributed Object Design: Don’t distribute your objects!

How, then, do you effectively use multiple processors? In most cases, the way to go is clustering (see “A Better Way”). Put all the classes into a single process and then run multiple copies of that process on the various nodes. That way, each process uses local calls to get the job done and thus does things faster. You can also use fine-grained interfaces for all the classes within the process and thus get better maintainability with a simpler programming model.

Where You Have to Distribute
So you want to minimize distribution boundaries and utilize your nodes through clustering as much as possible. The rub is that there are limits to that approach—that is, places where you need to separate the processes. If you’re sensible, you’ll fight like a cornered rat to eliminate as many of them as you can, but you won’t eradicate them all.

• One obvious separation is between the traditional clients and servers of business software. PCs on users’ desktops are different nodes to shared repositories of data. Since they are different machines, you need separate processes that communicate. The client/server divide is a typical interprocess divide.
• A second divide often occurs between server-based application software (the application server) and the database. Of course, you can run all your application software in the database process itself, using such things as stored procedures. But often that’s not practical, so you must have separate processes. They may run on the same machine, but once you have separate processes, you immediately have to pay most of the costs in remote calls. Fortunately, SQL is designed as a remote interface, so you can usually arrange things to minimize that cost.
• Another separation in process may occur in a Web system between the Web server and the application server. All things being equal, it’s best to run the Web and application servers in a single process—but all things aren’t always equal.
• You may have to separate processes because of vendor differences. If you’re using a software package, it will often run in its own process, so again, you’re distributing. At least a good package will have a coarse-grained interface.
• Finally, there may be some genuine reason that you have to split your application server software. You should sell any grandparent that you can get your hands on to avoid this, but cases do come up. Then you just have to hold your nose and divide your software into remote, coarse-grained components.

The overriding theme, in OO expert Colleen Roe’s memorable phrase, is to be “parsimonious with object distribution.” Sell your favorite grandma first if you possibly can.

Working with the Distribution Boundary Remote Façade and Data Transfer Object are concepts to make remote architectures work. As you design your system, you need to limit your distribution boundaries as much as possible, but where you have them, you need to take them into account. Every remote call travels on the cyber equivalent of a horse and carriage. All sorts of places in the system will change shape to minimize remote calls. That’s pretty much the expected price. However, you can still design within a single process using fine-grained objects. The key is to use them internally and place coarse-grained objects at the distribution boundaries, whose sole role is to provide a remote interface to the fine-grained objects. The coarse-grained objects don’t really do anything, but they act as a façade for the fine-grained objects. This façade is there only for distribution purposes—hence the name Remote Façade. Using a Remote Façade helps minimize the difficulties that the coarse-grained interface introduces. This way, only the objects that really need a remote service get the coarse-grained method, and it’s obvious to the developers that they are paying that cost. Transparency may have its virtues, but you don’t want to be transparent about a potential remote call. By keeping the coarse-grained interfaces as mere façades, however, you allow people to use the fine-grained objects whenever they know they’re running in the same process. This makes the whole distribution policy much more explicit. Hand in hand with Remote Façade is Data Transfer Object. Not only do you need coarse-grained methods, you also need to transfer coarse-grained objects. When you ask for an address, you need to send that information in one block. You usually can’t send the domain object itself, because it’s tied in a web of fine-grained local inter-object references. So you take all the data that the client needs and bundle it in a particular object for the transfer—hence the term. (Many people in the enterprise Java community use the term Value Object for Data Transfer Object, but this causes a clash with other meanings of the term Value Object.) Data Transfer Objects appear on both sides of the wire, so it’s important that it not reference anything that isn’t shared over the wire. This boils down to the fact that Data Transfer Objects usually reference only other Data Transfer Objects and fundamental objects such as strings. —M. Fowler

 

Interfaces for Distribution Use Web services only when a more direct approach isn’t possible. Traditionally, the interfaces for distributed components have been based on remote procedure calls, either with global procedures or as methods on objects. In the last couple of years, however, we’ve begun to see interfaces based on XML over HTTP. SOAP is probably going to be the most common form of this interface, but many people have experimented with it for some years. XML-based HTTP communication is handy for several reasons. It easily allows a lot of data to be sent, in structured form, in a single round-trip. Since remote calls need to be minimized, that’s a good thing. The fact that XML is a common format with parsers available in many platforms allows systems built on very different platforms to communicate, as does the fact that HTTP is pretty universal these days. The fact that XML is textual makes it easy to see what’s going across the wire. HTTP is also easy to get through firewalls when security and political reasons often make it difficult to open up other ports. Even so, an object-oriented interface of classes and methods has value, too. Moving all the transferred data into XML structures and strings can add a considerable burden to the remote call. Certainly, applications have seen a significant performance improvement by replacing an XML-based interface with a remote call. If both sides of the wire use the same binary mechanism, an XML interface doesn’t buy you much other than a jazzier set of acronyms. If you have two systems built with the same platform, you’re better off using the remote call mechanism built into that platform. Web services become handy when you want different platforms to talk to each other. My attitude is to use XML Web services only when a more direct approach isn’t possible. Of course, you can have the best of both worlds by layering an HTTP interface over an object-oriented interface. All calls to the Web server are translated by it into calls on an underlying object-oriented interface. To an extent, this gives you the best of both worlds, but it does add complexity, since you’ll need both the Web server and the machinery for a remote OO interface. Therefore, you should do this only if you need an HTTP as well as a remote OO API, or if the facilities of the remote OO API for security and transaction handling make it easier to deal with these issues than using non-remote objects. In this discussion, I’ve assumed a synchronous, RPC-based interface. However, although that’s what I’ve described, I actually don’t think it’s always the best way of handling a distributed system. Increasingly, my preference is for a message-based approach that’s inherently asynchronous. In particular, I think they’re the best use of Web services, even though most of the examples published so far are synchronous. For patterns on asynchronous messaging take a look at www.enterpriseIntegrationPatterns.com. —M. Fowler

 

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Martin Fowler is Chief Scientist at ThoughtWorks and a frequent speaker at Software Development conferences. This article is adapted from Patterns of Enterprise Application Architecture, Chapter 7 (Addison-Wesley, 2003). Reprinted with permission.

[May 3, 2008]  Carr refines IT does not matter argument

May 12, 2006  | KiteBlue

At the recent Effective IT conference in London, industry sceptic Nicholas Carr kicked off proceedings with a modified version of the attack on IT in his book, IT does not matter. Jyoti Banerjee assesses whether the new version stacks up in the light of current IT experience.

It was the Nobel Prize-winning economist from MIT, Robert Solow, who quipped that you could see computers everywhere except in the productivity statistics. In writing his book, Nicholas Carr was simply following in Solow's distinguished footsteps by attacking the value business has got from the massive investments it has made in IT. His argument was that IT does not provide competitive advantage to a business as there is little or no differentiation in the bulk of the technologies used by modern businesses.

Those for and against the argument have had a field day in the IT press, with both sides claiming victory through case studies and stats that prove their point and disprove the opposition. With Carr given the opportunity to rehearse his arguments in front of an audience of IT professionals in London, it was clear that the heat has not gone out of the debate, though one wishes for a little more light all around.

To differentiate or not

Let's explore the debate a little further. One could ask whether it matters that 70-80% of all IT is undifferentiated. After all, the implication could well be that at least 20-30% of all IT is strongly differentiated. Although the two statements are two sides of the same coin, they actually present quite different arguments.

Take the example of the car industry. Its products are largely undifferentiated (they have four wheels, four brakes, a steering wheel, a roof, an engine, etc) but the industry has created huge brand differentiation by focusing on the bits that are different (front-wheel versus rear-wheel versus all wheel drive, for example, or 50mpg versus 35 mpg, and so on). Although 70-80% of two cars may be undifferentiated in terms of the raw materials, there is no question that the buyer can distinguish a Ford from a BMW, a Hyundai from a Honda. is there really a difference between those cars that would justify their different brand strengths or company profitability? How is it that a company like BMW can go to the same suppliers as everybody else and yet deliver unmistakeably different brand performance in the marketplace? Maybe the differentiation is all done in the few percent of components that are actually different from one car to the next.

To me that would make sense in computing terms, as well. We might all use the same computers (undifferentiated) but the few that do smart things with their computers, or build smart processes around them (differentiation), could perform vastly better than the others. So to me, the case of differentiated or undifferentiated infrastructure, as presented by Carr, is not one that makes me say anything but "so what."

Hagel and Brown in their book The Only Sustainable Edge offer an interesting argument that the secret to competitive advantage is the relentless building of distinctive capability, within an organisation, plus in the networks it operates in. The implication of offering distinctive internal capabilities is that organisations have to choose what they are going to excel in, as it is not possible for any single organisation to excel in everything. By choosing to focus on what the organisation does best, it becomes mandatory for the organisation to then seek external partners who can provide world-class capability in those areas the organisation is not distinctive in. Clearly, the outsourcing impetus comes from those organisations that audit what they do and decide that in a number of areas they cannot compete with those that offer world-class capability. Instead, they join together in networks with those who can plug their gaps.

In effect, the Hagel / Brown argument would support Carr's position that a company should focus on what it is good at, and leave the rest to others who are better equipped to deal with those issues. Outsourcing started with infrastructural issues, such as IT and facilities. It has since progressed to cover horizontal activities such as accounting and payroll. Today, companies outsource things that a few years ago would have been regarded as core to their operating processes. Why should IT be any different? Why should IT professionals hang on to processes or skills within the organisation when their own competences are best employed elsewhere? In this sense, Carr is absolutely right: why should IT see itself as something special when it probably isn't, and should be handed over to a partner more competent in delivery.

Where I hesitate to hang my hat on the Carr coat-rack is in the area of utility computing. In becoming an advocate of utility computing, Carr is making it difficult for others to buy into his argument. The reality is that utility computing is still too new and too immature to be the mechanism by which enterprises can exploit quality world-class IT infrastructure. While many of the products already exist to enable utility computing, the two big gaps right now are in hardware and in process management.

Hardware

There are just not enough server farms around right now to allow utility computing to fly, despite huge attempts by all and sundry to build them fast. This is obviously a big enough gap that Microsoft has decided to spend a large part of its $35 billion cash pile on server farms in every location around the world they can find a big enough source of electricity. As these server farms come online, the hardware argument against utility computing will go away. Till then, there are no enough utility computing providers who have world-class capability to deliver the sort of infrastructure that tens of thousands of enterprises will need.

Processes

Of course, any new product can introduce change, even revolutionary change. More importantly, it takes time to deliver widespread change. It takes time to configure processes, enterprises, and now networks of enterprises together in such a way that the resultant meld of processes delivers competitive advantage of the sort that shows up in an economist’s productivity statistics. It took about thirty years before the impact of electricity could be measured across an economy because it took that long to figure out the best way to re-configure businesses in such a way that they could exploit electric machines, electric processes, etc.

We are seeing the same kind of reconfiguration taking place around digital processes. Eventually, that reconfiguration may well encompass utility computing as well. Till then, I can live with largely undifferentiated IT infrastructure if it allows us just a tiny room for innovation. Because that little margin of differentiation is often enough for people, smart people, to build competitive advantage.

That’s what the entire discussion about IT and its impact on business boils down to: People. Preferably, smart people. Now there’s an idea with legs….

In the fall of 1991, when mobile computing involved a hand truck and an extension cord, the idea of an everything-connected world was a leap of faith to some and a really crazy idea to most. But Sun's engineers were already working on notebook computers, and Peter Deutsch, one of Sun's original "Fellows," was heading up a task force to advise Sun on its mobile strategy.

Deutsch just called 'em like he saw 'em. When he got to Sun he began to consider some of the existing notions some engineers had about network computing, some of which were downright foolish.

Coming off a stint as chief scientist at Park Place Systems, Deutsch was looking to hang out and cogitate with and bask in Sun's intense engineering culture. He was a key designer and implementer of the Interlisp-D system and a significant contributor to the design of the Cedar Mesa language and the Smalltalk-80 programming environment. But he hadn't gotten into networking. It might have been some sort of intellectual hazing ritual that made Deutsch co-chair of a mobile computing task force. Or it might have been brilliance.

Bill Joy and Dave Lyon had already formulated a list of flawed assumptions about distributed computing that were guaranteed to cause problems down the road: the network is reliable; latency is zero; bandwidth is infinite; and the network is secure. James Gosling, Sun Fellow, Chief Technology Officer for Java Developer Platforms, and inventor of Java, had actually codified these four, calling them "The Fallacies of Networked Computing."

"It's a sort of funny thing," he says, "that in the large-scale world, networking didn't really exist in 1995. But since Sun was founded in 1982, networking has been at the core of what we do. We cut ourselves on all these problems pretty early on."

What Deutsch saw with fresh eyes was that, despite Gosling's warning, as engineers - inside and outside Sun - designed and built network infrastructure, they kept making the same mistakes, based largely on the same basic yet false assumptions about the nature of the network.

"The more I looked around at networking inside and outside Sun," Deutsch says, "the more I thought I could see instances where making these assumptions got people into trouble." For example, Deutsch could see Gosling's Fallacies coming into play as Sun moved its operations from downtown to its glamorous new campus near the San Francisco Bay.

"There was a lot of thrashing around about the topology of the network for the corporate intranet, where routers should be, etc.," Deutsch recalls. "Things broke all the time. My recollection is that it was watching all that thrashing around that led me to numbers five and six - that there's a single administrator and that the topology won't change." Number seven, that transport cost is zero, coalesced as Sun discussed creating a wide area network to connect the Mountain View campus with a new lab on the East coast.

When Deutsch wrote the list, by this time seven items strong, into a slide presentation, "It was no big deal," he says. Neither was there a roar of acclamation. Rob Gingell, Sun vice president, chief engineer, and Fellow, remembers it as an mmm-hmm moment rather than an ah-ha moment.

But putting it down on paper, codifying it, made all the difference. "The list Peter wrote down was a very pithy summary of the pitfalls people typically fall into," Gosling says. "We had many conversations about it. There would be a presentation where somebody would be proposing some design, and somebody would point out, 'You know, that kind of depends on the network being reliable. And that's false.'"

Gosling added the Eighth Fallacy - the assumption that the network is homogeneous - in 1997 or so. "It reflected a mismatch between our perception and others' perceptions of the network. That the network is homogeneous is never a mistake we've made. But it was clear that lots of people on the outside had a tendency to fall into this."

If the Fallacies pervade networking, Sun was perhaps ideally placed to identify and surmount them, says Gosling. "We have a very strong engineering culture," he says. "A lot of our work is about building solid reliable systems."

Beginning with Java, Sun has explicitly grappled with the Fallacies. Java's "write once, run anywhere" approach celebrates heterogeneity, according to Gosling. While nobody exactly tacked the Fallacies up on the wall when Jini was designed, says Gingell, "If you look at Jini, it's apparent that what it's trying to do is confront some of the Fallacies, because the Jini team and Peter shared a view of those problems." Jini lets diverse devices discover and interact with each other without any administrator at all; it also can deal with multiple administrators acting divergently.

Indeed. "Almost everything in Jini is about dealing with that list," Gosling says. "It's all about the dynamic, spontaneous reconfiguration of networks in the face of a dynamic environment. Things getting plugged in, things getting broken."

The Liberty Project is another example of Sun engineering's acknowledgment of the single administrator fallacy, according to Juan Carlos Soto, product marketing group manager for Project JXTA and the jxta.org open source community manager. "Liberty provides a federated identity mechanism that makes it convenient for businesses to interact while still respecting privacy, because there's no single point of control," he says.

JXTA goes perhaps furthest in turning all of the Fallacies into truths. It creates an ad hoc virtual private network among peer devices that aren't always at stable addresses, Soto says, so it solves the problems of multiple administrators, changing topology, and heterogeneous networks. Moreover, because JXTA makes it easy to create multiple instances of a service, and peers cooperate to move messages through the network, it creates great resiliency that counteracts the inherent unreliability of networks. It's designed to be efficient and conserve bandwidth as much as possible, reducing the impact of Fallacies Two and Three, and it accepts every authentication method for flexible and tight security.

"P2P is turning the computer into both a server and a client," Soto says. "It's way beyond a single administrator and a homogenous network. It abstracts a lot of those issues away."

The Sun days are a long time ago for Deutsch, who now, as president of Aladdin Enterprises, consults for technology and venture capital companies. He's a bit bemused that his short list of big goofs has become institutionalized as Deutsch's Fallacies. "If you had told me when I was at Sun that 10 years later, this one page of maxims was going to be one of the things I was best known for," he says, "I would have been floored."

Although networking has changed plenty since 1991, and some of the Fallacies, such as betting on a secure network, are more obvious, they are all still as applicable, Gingell says, and they continue to be driven into the hearts and minds of Sun's engineers. "Cultural reeducation is more important than any one product," he says. "If all our engineers understand networking at a very large scale... the products will take care of themselves."

Published Jan. 8, 2004 — Reads 24,289
Copyright © 2008 SYS-CON Media. All Rights Reserved.

The future of IT It's not all bad news, Nicholas Carr says - Network World

Two weak books later the author has some doubts ;-)

But will service provider really be cheaper of local model remains to be seen. Rip-offs in outsourcing are too common to ignore and I do not see why they should be less common in service provide world --NNB .

Bret: In your book, Does IT Matter?, your premise is that IT (narrowly defined as the plumbing and pathways through which data is passed and or processed) no longer provides a competitive advantage and that IT will become a commodity provided by service providers. We are seeing the beginnings of this in my company. We have outsourced device monitoring and we are planning to contract device installation and wiring in our new data center. That said, over what period of time would you expect to see utility computing becoming the norm in industry? 

Nick Carr: I think the shift will occur over the next decade or two. The speed will depend on who you are. Consumers are well on their way to relying on Web apps. Smaller companies will also likely move quickly to the utility model, as it allows them to avoid the big capital and labor costs of internal IT. Big companies will be the slowest to move - they'll pursue a hybrid model for many years.

JoeB: Who will be the first to adopt such a business model? Who will experience the most difficulty?

Nick Carr: On the business side, it will be small companies with fairly routine IT requirements. Large companies who face tight regulations on data and privacy - like those in the healthcare industry - face some of the biggest barriers.

Barmijo: Nick, many reviews of your book take issue with the idea of utility computing. They note that the big vendors don't offer anything approaching your vision. You, however, focus on Internet operators like Google and Amazon. Do you believe this shift has to start in the Internet, and if so why? 

Nick Carr: Like other disruptive innovations, utility computing is beginning with entrepreneurial vendors and smaller customers. But we can already see big vendors - Microsoft, SAP, IBM, HP etc - moving toward the utility model. I think they see which way the wind's blowing. 

JeffB: Although Microsoft, Google and other major computer companies are building massive data center facilities in specific areas, do you believe there will also be a need for distributed server farms in high population areas throughout U.S. cities?

Nick Carr: I think we'll see a very broad distribution of server farms, and some will be in or near cities. Microsoft, for example, is building its largest utility data center - and it may be the largest data center ever - just outside of Chicago. One of the big constraints on locating centers in urban areas is the constraint on the electric grid's ability to handle the power requirements.

Tagamichi: While it makes sense to aggregate computing power, there is a big difference between computers and electrical utilities in that the devices that needed electrical power are dumb in many ways. Take a typical small appliance - it just connects, powers on, and you use it. Computing resources require more technical know-how to manage and operate. Compare appliances with even the most basic use of a computer for Web browsing and e-mail. When something goes wrong, the user will not know if it is something as simple as a loose cable connection. You would still need IT to fix that. How do you account for such needs in your vision of the future? 

Nick Carr: That's a good point. I'm not suggesting that companies won't have to hire, or at least contract for, technical support people - just that the requirements will likely be reduced over time. One trend that's just beginning is the virtualization of the desktop, which will reduce the maintenance requirements. What companies may end up doing, for knowledge workers at least, is let employees buy their own machines, and then serve up the "business desktop" virtually - as a separate, secure window on the screen. 

Jwff: I agree with moving work that doesn't add value to outside the IT organization. Once that systems maintenance work is removed, the focus of IT departments can be more appropriately turned to activities that add value, such as mining end-user data for business value. So isn't a move to consume commodity IT services from the cloud merely an evolutionary (not revolutionary) way to away from the 70% sustainment effort that dominates many IT shops today? 

Nick Carr: Absolutely. Most companies' IT budgets and labor requirements are dominated by the need to build and run private systems. As more and more of those requirements are taken over by utility suppliers, the nature of the IT departments will shift toward information management and analysis activities. A big question, though, is whether those skills will need to stay in an "IT department" or whether they'll flow naturally into the business.
Mbaum: The IT department is dead. Long live IT. How then will corporations determine which "cloud services" to adopt, which providers to select, and how to provide oversight in determining compliance, effectiveness, and productivity?

Nick Carr: The IT department is far from dead yet - don't believe everything you read in Network World :-) - and will play the central role in managing the shift to the utility model and the coordination between Web-based services and those supplied locally.

TechnoSteve: A lot of companies may be turned of by utility computing because they do not want their data in the hands of a third-party. How does this and other privacy concerns play into the future you're describing?

Nick Carr: That's a great question - and one I hear often. The control and security of corporate information is, of course, an extremely important one for companies. But, as we've long seen with payroll data and more recently seen with customer relationship data, companies are willing to put sensitive information in the hands of trusted suppliers. Indeed, I think there's a good case to be made that outside utility suppliers, whose entire business hinges on their ability to keep data protected, may ultimately prove more secure than the current, fragmented model of data processing, which as we know has many vulnerabilities. So while I think data security is a crucial concern (and the onus is on the suppliers to prove their trustworthiness), I don't think it's ultimately a deal-breaker. You can be sure we will also see continued rapid advances in encryption and other technologies that will enhance the security of data in multi-tenant systems.

Brian: In "The Big Switch," you talk about the idea of computing power as a utility. Doesn't this model rely on a neutral Internet? Could non-neutrality force people back to a client-server model if backbone providers (such as AT&T which has announced its intention to do so) start shaping traffic to degrade certain competitive SaaS applications?

Nick Carr: That could be a concern, but my guess is that if we move away from net neutrality it will be to give preference and priority to business and commercial information (over more personal information flows, like P2P trading). The net has become so important to the economy that I doubt that business and government will allow service to degrade for crucial business functions.

AroundOmaha: Do you see this affecting the model for how offices are structure? By that I mean, will we see companies with virtual employees all over the country and even the planet? If the application isn't tied to any particular place it would seem to free the workers up also.

Nick Carr: To some degree I think we'll see that - and are in fact already seeing greater mobility. But we also know that people like to work in close proximity to their colleagues - conversations in hallways will always be important - so I don't think we'll see the end of good-sized physical offices.

Vcleniuk: Even if IT departments and jobs move from corporations into the "cloud," this cloud will still run on something, somewhere, right? Won't IT jobs move into those areas? Wouldn't there still be a need for a few large data centers, or even several smaller data centers in various countries?

Nick Carr: Yes, I think we'll see many of the technical jobs shift from the users to the suppliers. At the same time, though, we're also seeing a great deal of progress in the automation of IT work, through virtualization, for instance. So we can anticipate that certain kinds of IT jobs will probably diminish. It's also important to recognize that as the 'Net becomes our universal medium, software capabilities will increasingly be built into a whole range of consumer products - which will increase demand for talented computing professionals. It's not all bad news.

Jim: I have not read "The Big Switch" yet, but from the excerpts you seem to be on the right track. I am an old-timer IT director and I can see the writing on the wall. Question, what would you suggest a smaller organization IT person should be doing to prepare for the "switch"? I am personally thinking about retirement, but I have many colleagues who are part of the conventional IT world who are much younger.

Nick Carr: Retirement's probably a good option. (Just kidding.) I think IT professionals, particularly younger ones, need to take a close look at the trends in IT - utility computing, virtualization, consolidation, automation - and anticipate how these trends will reshape the labor force. You want to position yourself to be in the employment areas that have the best job prospects, which may mean seeking out additional training or different experiences.

Undecided: As the shift occurs, what would be some ways IT professionals can shift as well, re-tool/re-train, where should they focus their efforts?

Nick Carr: I touched on this in the previous answer. To be more concrete, you probably should be wary of setting a career path focused on administrative and maintenance jobs that can be automated and thus require much lower labor requirements in the future. And you should also look at the new big server farms and how they operate - skills related to large-scale parallel processing, grid computing and hardware virtualization will likely be in very high demand.

Paul: Do you see a market for consultants that specialize in helping small and medium businesses move to utility computing?

Nick Carr: I do - even though I would hope that in the long run the greater simplicity of the utility model will mean that companies should be able to operate with fewer consultants and outside advisors. For the foreseeable future, consultants and other vendors focused on smaller and mid-sized business will likely have greater service opportunities related to the transition to Web apps and other utility services.

AroundOmaha: In this model how does the future look for corporate application developers? How will this affect them and what steps should they be taking for their future?

Nick Carr: The need to keep existing custom apps running, and to write new ones, is going to be around for quite a while. Software-as-a-service is not the only software model for utility computing. Running custom apps on utility grids - like that being pioneered by Amazon Web Services - is another important facet to the shift. In the long run, the demand for internal app developers will probably diminish, as the SaaS market expands and matures.

ITAntiMatter: I should have become a plumber. :-)

Moderator-Keith: Nick, ITAntiMatter is joking, but that brings up a good point. Can you give the audience some good news regarding their careers and jobs?

Nick Carr: I need to be honest: We're going to see a great deal of disruption in the IT job market over the coming years. But the good news is that IT is becoming more, not less, important to the global economy, and that means if you have the right set of skills you're likely to have rich opportunities - not just as an employee but as a potential entrepreneur, too.

littleone: When the power goes out, the systems go down causing the business to go down. In most cases do you think that any company is willing to risk their entire system with continual power outages? How do you think the upcoming utility computing companies are going to account for that when they can only generate power for what they control?

Nick Carr: It's ironic that an old utility - electric power - is proving to be one of the weak links in building a new utility. What I think we're seeing from utility giants like Google is an extremely sophisticated approach to managing power and to ensuring redundancy in their systems. But you're right that in the short run, at least, the grid is very vulnerable to disruptions - from power shortages to botnet attacks.

MJ: How does this shift fit with end user devices? There are massive amounts of computing power now showing up in all sorts of end devices. Are we just revisiting an old question -- kind of the mainframe-versus-distributed-computing debate repackaged?

Nick Carr: Great question. It's wrong to think of the utility model as a 100% centralization model. In fact, one of the things that fosters the efficient use of centralized computing and data-storage resources is the availability of powerful processors and data stores in local devices. The central services can make use of those local assets. Think of how World of Warcraft works - using code and data on both central servers and local devices. That's an important part of deploying Web-based services effectively.

JeffB: The fiber to the curb initiatives of Verizon and AT&T will provide bandwidth capable of true utility computing - do you agree that communication speed is necessary for the true revolution?

Nick Carr: Yes. It's the fiber-optic net that makes this all possible. As we see network capacity, particularly at the last mile, continue to expand, the applications will proliferate. People have been talking about utility computing for 50 years, but it isn't until recently that we've had the high-capacity transmission network that is making it a reality.

Moderator-Keith: A theme to many of the questions we're receiving is security. How does this shift affect security issues, both on the security of data (private credit-card numbers), as well as privacy and compliance issues -- and will botnet attacks will ever go away?

Nick Carr: As for botnet attacks and other malicious behavior, I think they're likely to intensify rather than diminish. (The bad guys can also reap the benefits of the utility model.) So there's not going to any end to the cat-and-mouse game. But I think the technologies for protecting data, such as encryption, are also going to advance rapidly - and that the utility system will ultimately prove more secure than the existing system of fragmented but networked systems.

Barmijo: A lot of folks are focusing on the first half of your book (and frankly on Does IT Matter), but the second part of "The Big Switch" seems almost like a cautionary note about the dangers of sharing too much data. I think we can already see the start of this with Google's selective enforcement of their own version of English grammar and spelling in Adwords and also in the way Google presents ads that link to content in e-mail. Do you believe we will have to regulate who can own and process some of these huge data stores the way we used to regulate how many newspapers or TV stations a company could own?

Nick Carr: Much hinges on how much control and power ends up being consolidated in the hands of big companies like Google. I have no doubt that Google is sincere in trying to be a good corporate citizens, but as you point out it also has commercial and even ideological interests in how it presents and filters information. And that doesn't even touch on the potential for using the vast stores of personal and behavioral data to actively manipulate people. So my guess is that if Google and others continue to consolidate power and control, they will face governmental regulation - perhaps most heavily in countries outside the U.S., who will not want their economic and cultural infrastructure to be controlled by big U.S. companies.

[Apr 27, 2008] Wired Campus Nicholas Carr Was Right IBM's Project Kittyhawk Unifies the Internet - Chronicle.com

Nicholas Carr, a notorious writer in the technology world for his brazen views about the future of the IT industry, writes about an IBM white paper describing Project Kittyhawk.
 

The white paper, uncovered by The Register, a Britain-based technology Web site, describes the project as an earnest attempt to build a “global-scale shared computer capable of hosting the entire Internet as an application.”

Comments

We already had computing as a public utility in the IBM 360 generation and that produced a revenge of the little people in the form of PCs which upended IBM big time. If we get computing as a public utility again we will get another reaction from the little people breaking free of the dumbing down, the mass audience stupidity of editor and viewer, the crass worship of leaders and celebrities, that constitute the vilest parts of American and most other cultures.

— Richard Tabor Greene    Feb 8, 12:16 AM 

[Apr 27, 2008] Q&A with Nicholas Carr, author, The Big Switch -  By Kevin Ryan,

Mar 18, 2008 | Search Engine Watch

Just as cheap power delivered over a universal grid revolutionized the processing of physical materials, cheap computing delivered over a universal grid is revolutionizing the processing of informational or intellectual goods. That's the premise of The Big Switch: Rewiring the World, from Edison to Google, the latest book by Nicholas Carr, former executive editor of the Harvard Business Review.

Carr believes that ubiquitous computing is leading to an upheaval in traditional media businesses, which will spread to other sectors of the economy as more products and processes are digitized. He'll share his thoughts on why we're entering a new and even more disruptive era of computerization today, when he delivers the opening keynote at Search Engine Strategies New York.

Kevin Ryan, VP of global content for SES, recently interviewed Carr about the forces driving the adoption of cloud computing, the dangers of Big Brother, and the ethics of search engine optimization.

Kevin Ryan: Your 2004 book, Does IT Matter? Information Technology and the Corrosion of Competitive Advantage, described the plug-in IT world. Now we are looking at a plug-in computing world. What factors do you think will force this change?

Nicholas Carr: I think it's a combination of technical and economic factors. On the technology side, advances in networking, virtualization, parallel processing, and software are combining to make it possible to deliver rich applications over the Net in a way that is often superior to running similar applications on local machines.

Shared software makes collaboration much easier – for instance, as we see in social networks and other Web 2.0 sites. Consolidating apps in central data centers also provides big economic benefits through scale economies in hardware, software, labor, and other resources like electricity. So that combination of ongoing technological advances and growing economic benefits are going to continue to push computing functions out into the so-called cloud.

KR: The central data and application central warehousing issue is interesting, and we have already seen some applications go virtual from Google. Do you think consumers will adopt this en masse, or are we looking at a slow adoption process over a period of many years?

NC: What we've seen with the Internet from the very start is that people draw little distinction between applications installed on their hard drives and applications running over the Net – they just go with whichever option provides the greatest convenience, the best features, and the lowest cost.

As web apps continue to improve, in terms of features and speed, I think we'll see consumers accelerate their shift from private to public apps, and they'll store more and more of their data online. The shift will proceed over many years, but if you look at how young people in particular are using their computers, you could argue that they're already mainly operating in the cloud. The idea of buying, installing, and maintaining packaged software is becoming foreign to them.

[Apr 26, 2008] Q&A Author Nicholas Carr on the Terrifying Future of Computing

12.20.07

Carr: Most people are already there. Young people in particular spend way more time using so-called cloud apps — MySpace, Flickr, Gmail — than running old-fashioned programs on their hard drives. What's amazing is that this shift from private to public software has happened without us even noticing it.

Wired: What happened to privacy worries?

Carr: People say they're nervous about storing personal info online, but they do it all the time, sacrificing privacy to save time and money. Companies are no different. The two most popular Web-based business applications right now are for managing payroll and customer accounts — some of the most sensitive information companies have.

Wired: What's left for PCs?

Carr: They're turning into network terminals.

Wired: Just like Sun Microsystems' old mantra, "The network is the computer"?

Carr: It's no coincidence that Google CEO Eric Schmidt cut his teeth there. Google is fulfilling the destiny that Sun sketched out.

Wired: But a single global system?

Carr: I used to think we'd end up with something dynamic and heterogeneous — many companies loosely joined. But we're already seeing a great deal of consolidation by companies like Google and Microsoft. We'll probably see some kind of oligopoly, with standards that allow the movement of data among the utilities similar to the way current moves through the electric grid.

Comments

Posted by: RichPletcher

109 days ago0 Points

You know .... it never fails to amaze me for as smart some people are they are capable of uttering such total gibberish. This smacks of the Larry Ellison proclamation of 1996 that the only thing you need is the "internet appliance"

Posted by: ka1axy

110 days ago1 Point

The only problem with PC as network terminal is the same one that's been dogging that paradigm since the Sun X-terminal concept...link bandwidth and latency. Neither then nor now, will users be willing to put up with slow refreshes. I'll keep my co...

Posted by: jgeada

110 days ago1 Point

I

Posted by: eliatic

110 days ago1 Point

"Nicholas Carr is high tech's Captain Buzzkill — the go-to guy for bad news." Buzzkill. Now there's a word that sums up the western tendency to see things as either/or dualities. As echoed in the word manic. Only, there's a choice, a reality, that l...

[Apr 26, 2008] AT&T Denies Resetting P2P Connections

Posted by Soulskill on Saturday April 26, @08:14AM
from the it-was-the-one-armed-isp dept.

betaville points out comments AT&T filed with the FCC in which they denied throttling traffic by resetting P2P file-sharing connections. Earlier this week, a study published by the Vuze team found AT&T to have the 25th highest (13th highest if extra Comcast networks are excluded) median reset rate among the sampled networks. In the past, AT&T has defended Comcast's throttling practices, and said it wants to monitor its network traffic for IP violations. "AT&T vice president of Internet and network systems research Charles Kalmanek, in a letter addressed to Vuze CEO Gilles BianRosa, said that peer-to-peer resets can arise from numerous local network events, including outages, attacks, reconfigurations or overall trends in Internet usage. 'AT&T does not use "false reset messages" to manage its network,' Kalmanek said in the letter. Kalmanek noted that Vuze's analysis said the test 'cannot conclude definitively that any particular network operator is engaging in artificial or false [reset] packet behavior.'"

Re:Confirmed? (Score:5, Informative)

by budgenator (254554) on Saturday April 26, @09:19AM (#23206838) Journal

No and Vuze was quite up-front about the study, they basically measured the number of RST messages and divided by the number of network connections. The numbers weren't intended to be accurate but rather to give an indication of realevive trends.
For example,
37 users on Telecom Italia France using ASN 12876 experienced a median of 2.53% RST messages;
27 users on AT&T WorldNet Services using ASN 6478 experienced 13.97% RST messages;
24 users on AT&T WorldNet Services using ASN 7018 experienced 5.35% RST measages;
40 users on Comcast Cable using ASN 33668 experienced 23.72% RST messages.
One thing you have to remember is the forged RST packets is a man-in-the-middle-attack, the Vuze plugin connected on a AT&T connection doesn' know if the RST came from AT&T at ASN 6478 , AT&T at ASN 7018, Comcast or Telecom Italia France.

[Apr 26, 2008] IT Commandment Leave the ideology to someone else Rational rants ZDNet.com by Paul Murphy

February 21st, 2006  | Managing L'unix

About two o’clock in the morning, I heard Bukowski’s publisher talking about the New Formalists, a group of poets that wanted to take poetry back to the strict forms, such as sonnets and metered verse, alledgedly because they were offended by the likes of Bukowski’s rude honesty in free verse.

... ... ...

"As the spirit wanes, the form appears," Bukowski had written...

Our IT Commandments:

1. Thou shalt not outsource mission critical functions
2. Thou shalt not pretend
3. Thou shalt honor and empower thy (Unix) sysadmins
4. Thou shalt leave the ideology to someone else
5. Thou shalt not condemn departments doing their own IT
6. Thou shalt put thy users first, above all else
7. Thou shalt give something back to the community
8. Thou shalt not use nonsecure protocols on thy network
9. Thou shalt free thy content
10. Thou shalt not ignore security risks when choosing platforms
11. Thou shalt not fear change
12. Thou shalt document all thy works
13. Thou shalt loosely couple

The Big Switch – It Sucks.

The Big Switch by Nicholas Carr is a new book about how the IT department does not matter. What the book really represents is hunk of wasted paper chalked full of inaccuracies without any real backing. To be honest I’ve only read the first chapter and cannot read any further.

The book starts out with a story in the prologue about how the author met with some people in Boston who showed him that IT could be a utility. It asserted that this was his idea from some previous book he wrote. The story itself was boring and meaningless. It didn’t grab my attention nor was there any good information to keep me reading.

Hoping that the prologue was just something that would not give a grasp on the rest of the book I continued reading to see where this was going. The author asserts that there is this new there is a new technology that would allow the entire IT department to be outsourced. I don’t understand, how this is a new technology? Companies have been outsourcing this department for over ten years now. The Carr does not explain himself in any fashion to prove his theory.

The next problem I saw was the order in which content was presented. For example, the author mentions placing an order on Amazon’s site and doing so on dial up services. The very next paragraph it talks about the spread of broadband and how it has changed everything. Amazon did not become popular until broadband was in use. Most people did not order anything online until after they had broadband. People would go into work and order items online due to the fact they had broadband at work.

The final straw for me was when the author mentioned Napster. The book states that Napster was created by a college dropout and that it started Web 2.0. Napster was started by Shawn Fanning while he was attending college. He later dropped out after the success of this software. The software was still in the first dotcom bubble. The technology might have shown people how to create the services we use today; but it did not start web 2.0.

The author clearly does not know technology and should not be writing about it. I’ve only read the first chapter of this book and will not read any more; it’s worthless to me. The book first section of this book is boring and filled with inaccuracies, it is like a bad business blog trying to write about technology – so bad its almost humorous.

The Big Switch by Nicholas Carr

The Critical Blind Spots

I’ll finish up with the critical blind spots I mentioned. So long as you are aware of these, the book is a safe and useful read:

• Not a Done Deal: Carr seems to think utility/service based computing models are a done deal, and only the engineering detail and economic logic needs to be worked out; that we soon won’t need anything more than browsers on our PCs. Far from true (though I wish it were). The fundamental science is far from mature and several pieces of the puzzle are very dubious indeed. Further breakthroughs are clearly necessary. But that’s a more geeky discussion that I can take offline with those of you who are interested.
• Centralized vs. P2P: Carr also lightly glosses over the distinction between centralized and peer-to-peer aspects of the vision (huge earthquake resistant compute clouds on the one hand, and Napsterish P2P ideas on the other). He dismisses the distinction as irrelevant, saying that it is the ‘centralized coordination’ that is the key feature, whatever the physical morphology. Again, not true. The distinction might well end up being critical and substantively change the story the evolves.
• It ain’t Electricity: Finally, the electricity analogy. Carr smartly covers himself by noting that the electricity analogy is limited. Yet, he doesn’t spend too much time exploring the ways in which it is limited. Information is a fundamentally different beast from energy, and the fact that bits can be delivered remotely as easily as watts is not sufficient to anchor an argument for utility-based computing. Portability is not the only (or even most salient) feature of bits.

Not that I have better treatments of these problem areas to offer, but for now, I’ll satisfy myself with pointing out that they are problem areas.

Cloud computing - in your dreams Storage Bits ZDNet.com

A particularly odd bit of goofiness has hit the infosphere: cloud/utility computing mania. Nick Carr has written a book. IBM has announced, for the umpteenth time, a variation on utility computing, now called cloud computing. Somebody at Sun is claiming they’ll get rid of all their data centers by 2015.

R-i-i-i-ght.

You know the flying car in your garage?
The syllogism is:

1. Google-style web-scale computing is really cheap
2. Networks are cheap and getting cheaper fast
3. Therefore we’re going to use really cheap computing over really cheap networks Real Soon Now

Can you spot the fallacies?

Fallacy #1: Google is Magick
The world’s largest Internet advertising agency does have the cheapest compute cycles and storage (see my StorageMojo article Killing With Kindness: Death By Big Iron for a comparison of Yahoo and Google’s computing costs). But they do nothing that the average enterprise data center couldn’t do if active cluster storage were productized.

Google built their infrastructure because they couldn’t buy it. They couldn’t buy it because no one had built it. But all Google did was package up ideas that academics had been working on, sometimes for decades. Google even hired many of the researchers to build the production systems. Happy multi-millionaire academics!

Blame vendor marketing myopia for missing that opportunity. But their eyes are wide open now. If your enterprise wants cluster computes or storage you can buy it. From Dell.

Fallacy #2: Networks are cheap
Or they will be Real Soon Now.

10 Mbit Ethernet from Intel, DEC and Xerox came out in 1983. A mere 25 years later we have 1000x Ethernet - 10 GigE - starting down the cost curve.

About the same time a first generation 5 MB Seagate disk cost $800. Today a 200,000x disk - 1 TB - costs 300 vastly cheaper dollars.

Also in 1983 the “hot box” - a VAX 11-780 - with a 5 MHz 32-bit processor and a honking 13.3 MByte/sec internal bus cost $150,000. Today a 64-bit, 3 GHz quad-core server - with specs too fabulous to compare - is $1300. Call it 1,000,000x.

Networks are the bottleneck, not the solution. Hey, Cisco! Get the lead out!

What’s really going on?
There are - currently - economies of scale, which Google is exploiting and MSN and Yahoo! aren’t. So the latter two are going out of business.

But when you look at the cost of going across the network compared to the rest of infrastructure you realize that local - what we used to call distributed - computing is the only way to go.

Ergo, cloud computing will remain in the clouds and real computing will remain local. Where you can kick the hardware and savor fan hum and blue LEDs.

Sure, some low data rate apps - like searching - can move to the web. But if you want a lot of data and you want it now, keep your processor close and your data closer.

Comments

"Cloud Computing" is nothing but a high tech perpetual motion machine
I see that Donnieboy is all fired up in sales to give us the latest BS of how wonderful central control is. He tells us that it is cheaper to let someone else do it for us and save the money. Problem is someone else has to do it and pass the costs on to us and charge us extra for the profit margin. Anyone can run their own data center and the retail customer is starting now with home servers. We also give up all control to let someone else do it. This is lost data, slow speeds, ransom, loss of service, theft and lower productivity that makes distributed systems quite attractive. We got away from this octopus 20 years ago because distributed computing lead to the PC instead of the IBM lock step total control. Can't wait for these IBM road kill to finally die off so we can move on to the next phase instead of hearing all this distraction of ancient technology, the ultimate rental ware with a price to match.
2. You left out the most important reason.

   Companies providing a service must make a significant profit, or it's a self-indulgence. Because of its inflated stock price and advertising revenues, Google can allow some employees to pursue their hobbies.

   When cloud computing is considered in future, the topic will be why people in the press allowed themselves to be persuaded that internet computing was significant. The chapter heading will be: Deluded hopes to reduce Microsoft dominance
    

3. Steve Jones said,
   on January 30th, 2008 at 2:27 am

   I’m always a bit concerned when cost-curves for different product groups are combined as it depends on what factors you choose. Yes the cost per MB of disk storage has reduced several orders of magnitude faster than networks (although comparing a 10Gbe switched network vs a 10Mbps shared bus topology isn’t quite right; there’s far more that 1,000 x the data carrying capacity in a 10Gbe switch than a (what was very expensive) coax LAN.

   However, if we look at a different performance metric - IOPs and MBps on the hard disk market then you get a very different picture. Today’s 15K hard drive can do maybe 180 random IOs per second and perhaps 80MBps. Those are respectively around 5 and 100 times better than what was available 25 years ago. Given that many applications are limited by storage performance this is a real issue.

   So when you make you comparison, be careful over the choice of metrics. You get wholly different answers depending on what you chose. Many of the reasons are governed by physics and geometry. Disk storage capacity increases to the square of density (as, famously does semi conductor capacity). However, sequential read speed only goes up linearly with bit density when constrained by the physical limits of moving parts. What governs basic network speed for a single serial links will be constrained by all sorts of things including transistor switching speeds (which have increased by maybe 1,000 in the 25 years). That’s another of those linear relationships.

   So, square relationships (storage capacity, RAM, aggregate switching capacity etc.) proceed at a different rate to linear relationships (like sequential read speeds) with mechanical ones far behind those two.

4. Gavin said,

   on January 29th, 2008 at 2:13 am

   Also none of this is really new even conceptually. The grid folks have been pushing the ‘compute-anywhere’ vision for years.

   The issues that limit grid aren’t being solved by calling it ‘cloud’. Data is valuable - companies need to control where it is, who gets access. Algorithms being executed can also be extremely valuable and are trade secrets in many industries. Moving data is slow and expensive and the trend isn’t for this to improve (data sets are doubling per year in many industries). However CPU cycles are cheap and getting cheaper.

   Google is a very special case with many advantages when it comes to ‘cloud’ type computing - however even they are secretive about algorithms used, and I doubt they’d be interested in letting their computes be shared by just anyone.
    

5. nyrinwi said,

   on January 28th, 2008 at 11:36 am

   And what about the security implications of “cloud computing?”

   Security has been an afterthought in so much of technology history, it’s embarrassing. We’ve got computer viruses on picture frames now for god’s sake! When we can make appliances that are virus-free, then I’ll trust my data the the clouds.

   Cloud computing? I can’t get the visions of Skynet and the terminator out of my head.

Bill St. Arnaud The IT department is dead - Nicholas Carr

The IT department is dead - Nicholas Carr

[Another provocative book by Nicholas Carr. But in general I agree with him, except I think his vision is too limited to utility computing. Web 2.0, SOA, IaaS (Infrastructure as a web service) will be additional services that will be offered by clouds operated by Google, Amazon and so forth. And as I have often stated in this blog, I believe elimination or reduction of CO2 emissions may also be the critical enabler, as opposed to the putative business case benefits of virtualization and web services. The classic example is cyber-infrastructure applications where take up by university researchers has been disappointing (and is one of the themes at the upcoming MardiGras conference on distributed applications).

http://www.mardigrasconference.org/

Carr uses analogy of how companies moved from owning and operating their own generating equipment to purchasing power off the grid. This was only possible once a robust and widescale transmission grid was deployed by utilities. However, this is the component that is missing in Carr's vision with respect to utility computing and virtualization - we do not yet have the communications networks especially in the last mile, to realize this vision.

And finally while the traditional IT techie may disappear I can see a new class of skills being required of "orchestration engineers" to help users and researchers build solutions, APNs and workflows from the variety of virtual services available from companies like Google, Amazon, IBM etc. Some excerpts from Network world article
-- BSA]

Dell's Kevin Rollins vs. business guru Nicholas Carr - February 01, 2006 by Richard McGill Murphy

"When you take those standard components, which are now low cost, the question becomes, Which technology do you implement? and then, What you do with it? So IT does matter. But now what counts most is the execution and implementation of all the standard pieces. And you can do that poorly. You can buy the wrong pieces, or you can buy the right pieces and do it well."

January 31, 2006 | money.cnn.com

(FORTUNE Small Business) - Ever since tech pundit Nicholas Carr published a provocative Harvard Business Review article titled "IT Doesn't Matter," business leaders have been debating Carr's thesis that information technology is becoming a commodity input like water or electricity. Although tech vendors tend to bridle at this assertion, nearly all firms run Office applications on Intel and Windows-based machines. Hardware is now so cheap that just about everyone can afford it. Your competitors have access to the same online information you do. It's not clear that ubiquitous, standardized technology can help any particular firm stand out. In short, where's the competitive advantage? For two very different takes on those weighty issues, we checked in with Carr (http://www.nicholasgcarr.com), a sought-after writer and speaker on technology issues, and Kevin Rollins, CEO of Dell.

CARR: Over the years, modern computing has become more accessible, more standardized, more homogenized. It is getting cheaper and cheaper all the time. And that just means that it's harder for companies to sustain an advantage by being a technology leader. As these trends play out, it becomes easier and easier for other companies to catch up. So as we move to this next stage, we're going to see even smaller companies being able to catch up. This, I think, will further neutralize any advantage that IT provides.

ROLLINS: That's absolutely wrong. If that's true, then why don't all companies perform the same way? They've all got access to this standard technology! When you take those standard components, which are now low cost, the question becomes, Which technology do you implement? and then, What you do with it? So IT does matter. But now what counts most is the execution and implementation of all the standard pieces. And you can do that poorly. You can buy the wrong pieces, or you can buy the right pieces and do it well.

You could make a similar argument for your telephone system. Clearly, telephones matter--you can't run a business without them ...

ROLLINS: No, you can't, but telephones are all exactly the same, essentially.

And what matters is whom you call and what you say to them?

ROLLINS: I think that's probably true. But IT is a little different still, because you can take the components and put them together a little differently. You can use a website or not. You can use standard servers, or you can use proprietary technologies, which is very expensive. And you can also buy your computer system from a reseller, or you can buy directly from a company like Dell. So [it matters] how you put these things together and whether you use the full benefits of standardized products or not.

CARR: Companies can outperform their rivals for all sorts of reasons. So variations in performance among firms with access to the same technology can probably be traced to factors other than technology, such as superior products or better customer service or an outstanding reputation. It's a fallacy to assume that IT is the only source of differentiation. But I agree with Mr. Rollins that companies can gain an advantage by managing information technology better than others. It's important to remember, though, that that's a management advantage, not a technology advantage.

[Mar 21, 2008] IT Department Dead Hardly. Why Nicholas Carr is (mostly) wrong about SAAS.Network Performance Blog, Network Performance Management News, Tutorials, Resources - Network Performance Blog by By Brian Boyko
 

January 08, 2008  | www.networkperformancedaily.com

...SAAS is a wonderful development, and apps like SalesForce are, to the people that use them, godsends. However, unique company problems require unique solutions - SAAS services are looking to appeal to the largest common denominator. For that reason alone, IT will always have a place in the enterprise.

Additionally, if you want to connect to the network, which you most certainly will have to do to access your SAAS applications, you need network engineers to build and maintain the network - even if it's just for Internet connectivity. And what about application performance?

Google or other SAAS providers will not design your WAN to deliver large backups during off-peak hours, won't get your VoIP service to work with your data applications without clogging the lines, and won't help maintain your company's computer security. (Heck, if nothing else, when a key Ethernet cable gets unplugged, you need at least a sysadmin to find out which cable was unplugged and to physically run down there and plug it back in.)

Relying solely on SAAS is problematic at best. You're at the mercy of another company's quality control - and if the site goes down, so does your business. Your company's data - important and confidential data - resides on another company's servers. Finally, what about capacity planning?

That last one is crucial. You are usually not privy to the capacity of third parties. Larger SAAS services like SalesForce probably scale well and overprovision. But if Carr's thesis - that eventually most enterprise software will be SAAS - holds true, there will be some applications that are further down the long tail and service a much more limited number of customers.

ifbook nicholas carr on the amorality of web 2.0

Carr is skeptical that the collectivist paradigms of the web can lead to the creation of high-quality, authoritative work (encyclopedias, journalism etc.). Forced to choose, he'd take the professionals over the amateurs. But put this way it's a Hobson's choice. Flawed as it is, Wikipedia is in its infancy and is probably not going away. Whereas the future of Britannica is less sure. And it's not just amateurs that are participating in new forms of discourse (take as an example the new law faculty blog at U. Chicago). Anyway, here's Carr:

The Internet is changing the economics of creative work - or, to put it more broadly, the economics of culture - and it's doing it in a way that may well restrict rather than expand our choices. Wikipedia might be a pale shadow of the Britannica, but because it's created by amateurs rather than professionals, it's free. And free trumps quality all the time. So what happens to those poor saps who write encyclopedias for a living? They wither and die. The same thing happens when blogs and other free on-line content go up against old-fashioned newspapers and magazines. Of course the mainstream media sees the blogosphere as a competitor. It is a competitor. And, given the economics of the competition, it may well turn out to be a superior competitor. The layoffs we've recently seen at major newspapers may just be the beginning, and those layoffs should be cause not for self-satisfied snickering but for despair. Implicit in the ecstatic visions of Web 2.0 is the hegemony of the amateur. I for one can't imagine anything more frightening.

He then has a nice follow-up in which he republishes a letter from an administrator at Wikipedia, which responds to the above.

Encyclopedia Britannica is an amazing work. It's of consistent high quality, it's one of the great books in the English language and it's doomed. Brilliant but pricey has difficulty competing economically with free and apparently adequate....

...So if we want a good encyclopedia in ten years, it's going to have to be a good Wikipedia. So those who care about getting a good encyclopedia are going to have to work out how to make Wikipedia better, or there won't be anything.

CEM9616

This article argues that the principal forces driving the new economics of information technology are:

(1) it is steadily increasing in value,

(2) academic demand for information technology and computing power is virtually unlimited;

(3) the per unit price of information technology is declining rapidly; and

(4) the total cost of owning and maintaining these systems is steadily rising. In other words, the potential benefits are truly revolutionary and the demand is insatiable -- but the falling prices mislead many to expect cost savings that will never materialize.

These forces, combined with the breathtaking rate of change inherent in IT, produce a unique economic environment that seems to breed financial paradoxes. The new economics are formidable. Shortening life cycles will force fundamental changes in how institutions manage these assets; the increasing value of IT and the pressure to spend more on it will make the financial crisis facing many institutions worse; and the ability of new technologies to transcend time and distance will intensify competition among institutions. Information technology will represent the single biggest opportunity to either enhance or damage an institution's competitive standing. Academic, technology, and financial leaders will have to come together as never before to address these issues.
 

New Statesman - Minds over matter

Terry Eagleton's The Function of Criticism (first published in 1984) is perhaps the best, and certainly the most accessible, of the 12. Where Eagleton explains why criticism is so essential, Raymond Williams, one of the founders of cultural studies, shows in Culture and Materialism how cultural criticism should be carried out. But not all the texts are as readable as these. Louis Althusser's love letter to Marx, For Marx (1965), would test the patience of even the most ardent admirer of dialectical materialism. None the less, it is a decisive book - and it is probably easier to read this than to plough through the work of the master him- self. Despite its age, it retains a degree of contemporary relevance. Similarly, Signs Taken for Wonders, Franco Moretti's superb take on the sociology of literary forms, is as enlightening to read now as it was when first published in 1983. For good measure, we have two of the most influential postmodern philosophers of the 20th century, Jacques Derrida and Jean Baudrillard, vying with each other in intellectual acumen and impenetrability in The Politics of Friendship (1994) and The System of Objects (1968).

Taken together, the works selected by Verso embody the creation and development of a dissenting tradition that set out to question and subvert the established order. Yet while this was once the prin-cipal strength of these thinkers, it has become something of an Achilles heel. A collective reading exposes all that has gone wrong with radical thought in the 20th century. Traditions, and intellectual traditions in particular, rapidly ossify and degenerate into obscurantism. They have to be constantly refreshed, renovated and reinvented. It is time that radical thought broke out of its confining structures. It is time to put Adorno's anxieties about mass culture and media to rest; to move forward from Baudrillard's and Derrida's postmodern relativism to some notion of viable social truth; and for criticism to stop messing about with signs and signifiers, and instead confront the increasing tendency of power towards absolutism.

Radical thought, as exemplified by this list, suffers from three fundamental problems. First, jargon. These thinkers have developed a rarefied terminology that they employ to talk among themselves to the exclusion of the majority - on whose behalf they presume to speak. This tendency has been directly responsible for the intellectual decline of the left. Obnoxious right-wing thinkers such as Francis Fukuyama and Michael Ignatieff command worldwide audiences because their message, whatever its political connotations, is clear and accessible. By contrast, jargon-ridden radicals are confined to the backwaters of academia, quoted and promoted only by like-minded academics in an ever-decreasing circle of influence.

The Sokal hoax shows just how ridiculous the situation has become. In 1994 Alan Sokal, a physicist, submitted a paper to the highly respected journal Social Text. He used modish jargon to talk nonsense - for instance, he claimed that gravity was culturally determined - and his bibliography comprised a Who's Who of radical scientists, even though the content of his paper bore little relationship to their work. The editors of Social Text believed the jargon and published the paper.

The second problem is theory. The function of theory is to predict and to provide a framework for analysis. In radical circles, theory started out as an expression of dissent, a mechanism for exposing and predicting the uses and abuses of power. A system of thought that tells you what to expect and how to react can itself become a substitute for genuine thought and analysis, however. At its worst, theory becomes little more than a tool of tyranny. Paul Virilio's The Information Bomb (2000) provides a good example. Virilio's analysis of information technology and the relationship between science, automation and war is knee-deep in theory but perilously short on insight, offering hardly any advance on Jerry Ravetz's 1971 classic Scientific Knowledge and its Social Problems.

The third problem that radical thought faces is irrelevance - which brings me to Slavoj Zizek. Much of what thinkers of this sort have to say has little relevance to the non-western world: that is to say, the vast majority of humanity. While they pay much lip-service to the "voiceless" and the "marginalised", they rarely consider the perspectives of these groups. Zizek, whom Eagleton describes as "the most formidably brilliant exponent of psychoanalysis, indeed of cultural theory in general, to have emerged in Europe in some decades", is a good illustration of this. In The Metastases of Enjoyment (1994), perhaps his best book, he argues brilliantly that even though Nazi racism focused on subordinating most other non-Aryan races and nationalities, its main concern was the annihilation of the Jews. This focus on annihilation, he says, is now a characteristic of all racism: the logic of anti-Semitism has been universalised. In which case, why doesn't Zizek draw any parallels between anti-Semitism and Islamophobia? Why is he silent about the racism inherent in Serbian nationalism? Instead, he offers an absurdly down-and-dirty reading of western popular culture, women, sexuality and violence - the kind of thing all too familiar from cultural studies courses.

The work of radical thinkers has played an invaluable role in dethroning western civilisation and decentring its "natural and superior" narratives. But yesterday's dissent easily becomes today's tyranny. We urgently need new ideas and new tools for reconstructing thought. That cannot be done by preserving and worshipping the ashes of the fire ignited by yesterday's radicals. We need to transmit its flame.

Ziauddin Sardar's What Do Muslims Believe? is out in paperback from Granta Books

Does Nick Carr matter CNET News.com

No he doesn't, but thanks for asking :-)

By strategy+business
Special to CNET News.com
August 21, 2004, 6:00 AM PDT

When the Harvard Business Review published "IT Doesn't Matter" in May 2003, the point was to start an argument, or, as they say in the more genteel world of academia, a debate.

The provocative title of the article, as well as its timing--it was published at the tail end of a long slump in technology spending--ensured that a dustup would ensue. The resulting debate has been impassioned and often revealing. And it's still going on.

The essay was written by Nicholas G. Carr, then editor at large of HBR and now a consultant and author. The central theme: There is nothing all that special about information technology.

Carr declared that information technology is inevitably going the way of the railroads, the telegraph and electricity, which all became, in economic terms, just ordinary factors of production, or "commodity inputs." "From a strategic standpoint, they became invisible; they no longer mattered," Carr wrote. "That is exactly what is happening to information technology today."

The reaction was swift. Within weeks, Carr was branded a heretic by many technologists, consultants and--especially--computer industry executives. Intel's Craig Barrett, Microsoft's Steve Ballmer, IBM's Sam Palmisano and others felt compelled to weigh in with varying degrees of fervor to reassure corporate customers. Their message: Don't listen to this guy. Keep the faith in IT's power to deliver productivity gains, cost savings and competitive advantage.

And the reaction continued. HBR got so many responses that it set aside a portion of its Web site to accommodate them, and Carr kept the controversy bubbling on his own Web site. He became a traveling celebrity of sorts, defending his stance in forums across the country, from the Harvard Club in New York City to the Moscone Convention Center in San Francisco, where he traded verbal jabs with Sun Microsystems' Scott McNealy. The article became fodder for countless columns in newspapers, business magazines and trade journals.

When "IT Doesn't Matter" was published in HBR, I thought Carr had delivered an important, thought-provoking reconsideration of the role of IT in the economy and inside companies. Now that his analysis has been expanded to book length, I still do. This time, his ideas are packaged with a less incendiary title, "Does IT Matter? Information Technology and the Corrosion of Competitive Advantage." His message is unchanged, though more fleshed out and nuanced.

Carr's thinking, in my view, is flawed -- at times seriously flawed -- but not necessarily in ways that undermine his essential thesis. So let's first examine what his fundamental point is, and what it is not.

The title of the original article was misleading. Carr is not arguing that information technology doesn't matter. Of course it does.

The title of the original article was misleading. Carr is not arguing that information technology doesn't matter. Of course it does. Among other things, IT improves productivity by reducing communications, search and transaction costs, and by automating all sorts of tasks previously done by humans. 

But Carr asserts that as IT matures, spreads and becomes more standardized, the strategic advantage any individual company can gain from technology diminishes. Paradoxically, the more the economy gains from technology, the narrower the window of opportunity for the competitive advantage of individual companies.

This was the pattern for railroads, electricity and highways, which all became utilities. In the IT world, Carr sees evidence of mature standardization all around him. The strategic implication, according to Carr, is clear. "Today, most IT-based competitive advantages simply vanish too quickly to be meaningful," he writes.

Thus, IT strategy for most companies should become a game of defense. The shrewd executive, Carr writes, will not, in most cases, keep his or her company focused on the trailing, rather than the leading, edge of technology. He offers four guidelines for IT strategy: "Spend less; follow, don't lead; innovate when risks are low; and focus more on vulnerabilities than opportunities."

In Carr's view, there are two kinds of technologies: "proprietary technologies" and "infrastructural technologies." The first yields competitive gain, whereas the second is just plumbing, at least from a strategic standpoint. Technologies shift from proprietary to infrastructure as they mature. When a technology is young, companies can gain a big strategic advantage, and Carr deftly describes how companies like Macy's, Sears Roebuck and Woolworths exploited the new economics of retailing made possible by rapid, long-distance shipments by rail, and how a new breed of national high-volume manufacturers like American Tobacco, Heinz, Kodak, Pillsbury and Procter & Gamble sprang up by gaining advantage from modern transportation, the telegraph and electricity.

Once a technology moves into the infrastructure category, however, corporate opportunity wanes. In IT these days, Carr sees just about everything being folded into the infrastructure, including the Internet, Web services, Linux and Windows. Carr is particularly insightful on the subject of enterprise software, such as SAP's enterprise resource planning offerings and Siebel's customer relationship management programs. As he does throughout the book, he succinctly draws an analogy between technologies of the present and those of the past. In this case, enterprise software is depicted as the modern version of machine tools.

Before the 20th century, machine tools were gadgets made by each factory to suit its own requirements. But then machine-tool vendors emerged. Their economies of scale brought standardization and lower costs to the machine-tool industry. Innovation continued, but it was the vendors who developed and distributed those innovations for all manufacturers--and thus no competitive advantage accrued to any individual manufacturer. Carr sees a similar "vendorization" in enterprise software, where core business processes like supply chain management and customer relationship management are handled by standard software packages. The result is a straitjacket of standardization, leaving little room for a company to distinguish itself. Small wonder, Carr writes, that in the late 1990s enterprise systems came to be called "companies in a box."

Even the companies that seem to be IT-based success stories, notably Dell and Wal-Mart, are not, Carr tells us.

Even the companies that seem to be IT-based success stories--notably Dell and Wal-Mart--are not, Carr tells us. Yes, Wal-Mart was a leader in using advanced computing and private networks to link sales, inventory and supply information. But Wal-Mart's real edge today, Carr says, is the scale of its operation, which enables it to strong-arm suppliers and zealously pursue efficiencies everywhere. And Dell, he contends, has an edge over rivals because of its direct marketing and build-to-order strategy. "It's true that IT has buttressed Dell's advantage, but it is by no means the source of that advantage," Carr writes.

More generally, Carr observes, strategic advantage derives not from technology itself but from "broad and tightly integrated combinations of processes, capabilities, and, yes, technologies." Translation: How you use technology, not the technology itself, is the crucial variable. "Indeed," Carr writes in his preface, "as the strategic value of the technology fades, the skill with which it is used on a day-to-day basis may well become even more important to a company's success."

It has the ring of innocuous truism, but wait a moment: Does that statement really apply to a utility-like infrastructure technology? Does the skill with which we use electricity, commuter rail service or the telephone have anything to do with corporate success or failure? No one seeks insights from research companies like Gartner or advice from consultants, now including Carr, on how to use real infrastructure technologies. This suggests that information technology may be a bit different after all.

The main difference between computing and the industrial technologies Carr cites is that the stored-program computer is a "universal" tool, which can be programmed to do all manner of tasks. The general-purpose nature of computing--especially software, a medium without material constraints--makes it more like biology than like railroads or electricity. It has the ability to evolve and take new forms. Speech recognition, natural language processing and self-healing systems are just three of the next evolutionary steps on the computing horizon.

Carr might dismiss such comments as romanticized nonsense--and he certainly could be right. Yet understanding the nature of the technology is crucial to determining whether computing is truly graying or, more likely, whether some parts of the industry are maturing while new forms emerge further up the food chain. Are we seeing old age, or merely the end of one stage in a continuing cycle of renewal?

Carr notes that the technology bubble of the 1990s resembled the booms and busts of railway and telegraph investment, which marked the passing of youthful exuberance in those industries. In the computer industry, however, there already had been two previous boom-and-bust cycles--in the late 1960s, when mainframe time-sharing services appeared to be the computing utilities of their day, and in the mid-1980s, when legions of PC companies were founded and soon perished. Again, the pattern seems to be cyclical and evolutionary, as innovations accumulate and eventually cross a threshold, opening doors to broader market opportunities.

Let's take one potential example, Web services. The nerdy term refers to the software protocols that could allow a new stage of automation as data and applications become able to communicate with one another over the Internet. More broadly, Web services are seen as the building blocks of a new "services-based architecture" for computing. Carr briskly brushes Web services into his "vendorization" bucket. He writes, "Here, too, however, the technical innovations are coming from vendors, not users." The vendors, IBM, Microsoft, Sun Microsystems and others, are working jointly only on the alphabet soup of software protocols: XML, UDDI, WSDL and so on.

Yet when technologists talk of a services-based architecture, they are speaking of a new computing platform that they see as the next big evolutionary step in decentralizing the means and tools of innovation--much as the minicomputer was a new platform that decentralized computing away from the mainframe, and then the PC put power in many more users' hands. Computer scientists regard the Web as a "dumb" medium, in a sense. It is, to be sure, a truly remarkable low-cost communications tool for search, discovery and transactions, but the Web is mostly raw infrastructure, because it is not very programmable. Web services hold the promise of making the Internet a programmable computing platform, which is where differentiation and potentially strategic advantage lie.

Carr approvingly cites studies showing a random relationship between total IT spending and corporate profits.

I cite this as only one example of where Carr's desire to fit everything neatly into his thesis leads him astray. There are others. He mentions Linux, and its adoption by Internet pacesetters such as Google and Amazon, as proof that commodity technology is plenty good enough for almost any need. Linux, the open-source operating system, does allow those companies to build vast computing power plants on low-cost hardware from the PC industry. But the other great appeal of Linux--and open-source software in general--is that it also frees those companies from the vendors. The rocket scientists at Google and Amazon can tweak the software and change it without seeking permission from Microsoft or Sun Microsystems or anyone else. Today, Google is both a brand name and verb. But technological differentiation has been the bedrock of its comparative advantage. It is the better mousetrap in Internet search. As an example, Google undermines, rather than supports, Carr's point. 

His thesis is often the same kind of straitjacket of standardization that packaged software, as he says, is for companies. Carr approvingly cites studies showing a random relationship between total IT spending and corporate profits. But these merely demonstrate that aggregate technology spending is not the only, nor even the crucial variable in determining corporate profitability. That is hardly surprising. Again, it is how companies use the technology--integrating the tools with people and processes--that counts the most. And Carr can be quite selective in citing the work of others. He points to research from Paul Strassmann, an industry consultant, that supports his case while gliding over the fact that Strassmann was a prominent critic of Carr's original HBR article.

Still, these can all be seen as quibbles. They do not necessarily shake the accuracy of Carr's central point--that the period of sustainable advantage a company can derive from technology is diminishing. But is that really surprising? Everything, it seems, moves faster than it did 10, 20 or 30 years ago, including technology. To say that the advantages technology gives a business are more fleeting than they once were is not to say those advantages aren't worth pursuing. Dawn Lepore, vice chairman in charge of technology at Charles Schwab, estimates that a lead in new IT-based financial products lasts from one to 18 months. "You still get competitive advantage from IT, but there is no silver bullet," she observes.

Carr's book is a thoughtful, if at times overstated, critique of faith-based investment in technology, and it makes a real contribution to the field of technology strategy. But Carr understates the strategic importance of defense. The old adage in baseball is that defense and pitching win championships; in basketball it is defense and rebounding. In business, if you don't make the defensive technology investments to keep up with the productivity and efficiency gains of your industry peers, you simply lose.

The drift toward more-standardized technology that Carr describes also points to a different kind of pursuit of strategic advantage. It may not be IT-based, but it is certainly dependent on technology. This is what Irving Wladawsky-Berger, a strategy executive at IBM, calls the "post-technology era." The technology still matters, but the steady advances in chips, storage and software mean that the focus is less on the technology itself than on what people and companies can do with it.

The trend is already evident in companies and in universities. The elite business schools and computer science programs are increasingly emphasizing multidisciplinary approaches, educating students not only to be fluent in technology, but also in how to apply it. In companies, the same is true. The value is not in the bits and bytes, but up a few levels in the minds of the skilled businesspeople using the tools. Large chunks of the technology may be commoditizing, but how you use it isn't. That is where competitive advantage resides.

To read more articles like this one, visit http://www.strategy-business.com/.

Copyright © 2004 Booz Allen Hamilton Inc.

Reprinted with permission from strategy+business, a quarterly management magazine published by Booz Allen Hamilton.

Nicholas Carr - IT Doesn't Matter - Summary by Yann Gourvennec

IT  doesn't  matter  or  does  IT, really? 

If there is one article worth reading at the moment it must be Nicholas Carr's "IT doesn't matter" which was published by the Harvard Business Review in May 2003. Its sharp criticism of today's IT worship is devastating and it echoes greatly the sweeping changes that are currently imposing themselves on the IT world, especially in Europe.

Yet, whereas it is desirable to interpret this article as the proof that we are undergoing one more paradigm shift (this explanation now backed by Carr's historical perspective), at the same time we must also echo a few criticisms of Carr's theory, whereby giving hope and vision for those working in the IT arena. Jean Mounet, President of Syntec (the French IT industry association) reminded us in a recent article that one in three graduates from French engineering schools are recruited by the IT industry in France. One can therefore imagine what such an industry represents in the lives of so many people and the future of our modern economies.

Many in the industry have interpreted this article as a manner of threat on the efforts that are made to convince businesses that they should invest more on IT. However, French economist and IT industry expert Michel Volle has developed some very interesting counter-arguments to Carr's theory which are available in French at Volle.com. I wish to draw your attention too to the other string of articles entitled "Does IT matter" available from HBR.

A summary of Carr's "IT Doesn't matter" article By Yann Gourvennec

I. Ubiquitous computing reinforces the triviality of IT

IT has deeply transformed today's business world and all businesses use information technology on a large scale. As a consequence, capital expenditure devoted to IT has increased dramatically over the years and is still tremendous in spite of the current economic situation. Besides IT tools are no longer considered for low-level employees, but are used intensively by top managers who openly value the supposed competitive edge that they can derive from its usage. Behind all that lies the thought that the pervasiveness of IT usage has led to its becoming more strategic.

On the contrary, Nicholas Carr shows us that IT has in fact become the latest item in a list of commodities that helped shape business and industries as we know them. Being a commodity, IT also becomes transparent to its users.

II. Proprietary vs infrastructural technologies

Proprietary technologies, may generate a competitive advantage to their owners provided adequate protection of their investors' rights. Conversely, Nicholas Carr proves that Infrastrutural technologies are more productive when they are shared, although owning them may prove more cost-effective at the beginning of their existence. Once standards are in place, that type of infrastructural technologies is more effective when shared.

Nicholas Carr uses the striking examples of electric power production or trains to prove his point, showing that no company would benefit today in purchasing and maintaining its own railway network.

Also, one of the major pitfalls that managers fall into is the belief that competitive advantages brought by infrastructural innovations will last forever. At the end of the buildout phase of a new infrastructural technology, new standards will emerge, competition will rise dramatically and prices will fall. Even the usage of the new technology will become standardised. Therefore, the advantage of infrastructural technologies will shift from the micro to the macro-economical level for when they become pervasive, only countries and regions benefit from their presence, whereas individual companies are all competing on the same level.

Likewise, infrastructural technologies are often subject to overinvestment therefore causing sweeping economic trouble. What we have witnessed with the 'Internet Bubble' happened in a similar fashion with the overinvestment in railroads in the 1860s. The analogy shows that there is a risk for deflation to settle on our 21st century economies as in 1860. N Carr would like the analogy to end here but the risk cannot, in his mind, be overlooked.

III. Information Technology: this new commodity

Despite appearances, IT is truly an infrastrural technology and according to Nicholas Carr, it is particularly prone to commoditisation due to the following characteristics:

• IT is a Transport vehicle for information and is greatly standardised. Software customisation is therefore fast becoming a non-starter for cost-effective IT implementations,
• IT is highly replicable, not just in terms of software (reusable objects) but also in terms of business processes. The Internet has acted as an accelarator upon this standardisation and Web-based services will impact this trend even more, therefore turning application software into a commodity too (See EDS announcement of Desktop Utility Service on Aug 22, 2003),
• IT prices are subject to sharp deflation. As more computing power and more network infrastructure are made available, more servers are being connected to the Internet, and this technology is sold at more and more ridiculous prices (See Dell price-war announcement on Aug 21, 2003).

Throughout the buildout of the IT infrastructure, a myriad of companies have been able to derive significant competitive advantages from IT. Some have been able to establish a durable competitive edge (e.g. Dell Computers, Wal-Mart, ...) whereas others have only been able to generate a temporary advantage. But the ability to generate a competitive advantage from IT is becoming very rare nowadays, as is always the case with infrastructural technologies according to Mr Carr.

Whereas it is not possible to predict the end of the buildout of an infrastructural technology, there are many signs that the ramp-up of IT infrastructure is nearing its completion:

• IT is now delivering more power than is required for business,
• IT prices are so low that they have almost become affordable to all,
• There is (far) more network capacity available than is required,
• IT vendors are now positioned as utilities (as shown in EDS announcement again), mainly with their plans for selling web-based services,
• The Internet bubble has burst.

The incentive for customisation will now be marginal and reserved to a few niche vendors which offer some highly specialised software.

IV. What should companies do?

According to Mr Carr, the more an infrastructure becomes pervasive, the more it emphasises risk as opposed to generating competitive advantages. As soon as an infrastructure is shared and open, its non-availability is more crucial than its intrinsic value. As a consequence, all organisations should focus on trying to avoid the risk of the non-availability of this infrastructure, according to Mr Carr. Yet, very few have analysed the threats that could paralyse their whole businesses.

IT managers, according to Mr Carr, should focus on:

1. Spending less: This is made necessary by the fact that IT is no longer considered strategic and because overspending is the biggest threat to companies. Apart from the requirement to look for cheaper alternatives, it is also necessary that IT managers cut out waste, mainly with regards to personal computing which is mostly used for standard tasks and do not require much computing power. Should vendors balk at reducing costs, Mr Carr suggests that IT managers resort to Opensource software packages and bare-bone network computers,
2. Following vs innovating: It should no longer be necessary to be on the cutting edge of technology, most requirements being fulfilled by existing software and equipment,
3. Focus on risks because IT is mostly judged on what does not work as opposed to its vanishing competitive advantage.

Mr Carr goes on with a study of the 25 companies with the highest economic returns and shows that they are spending far less on IT than the average. He therefore encourages managers to focus on costs and get back to basics, however boring it may prove.    

Follow up to Nicholas Carr's article:

• CGE&Y Warns Against Grid and Utility Hype (Aug 11, 2003)
• Does IT matter? an HBR debate (June 2003)
• Is IT still strategic? (French) by Michel Volle (July 21, 2003)

The IT department is dead, author argues - Network World by By Carolyn Duffy Marsan,

01/07/08 | Network World,

New Nicholas Carr book predicts utility computing will replace internal IT shops. The IT department is dead, and it is a shift to utility computing that will kill this corporate career path. So predicts Nicholas Carr in his new book, The Big Switch: Rewiring the World from Edison to Google.

Carr is best known for a provocative Harvard Business Review article entitled "Does IT Matter?" Published in 2003, the article asserted that IT investments didn't provide companies with strategic advantages because when one company adopted a new technology, its competitors did the same.

The Harvard Business Review article made Carr the sworn enemy of hardware and software vendors including Microsoft, Intel and HP, as well as of CIOs and other IT professionals.

With his new book, Carr is likely to engender even more wrath among CIOs and other IT pros.

"In the long run, the IT department is unlikely to survive, at least not in its familiar form," Carr writes. "It will have little left to do once the bulk of business computing shifts out of private data centers and into the cloud. Business units and even individual employees will be able to control the processing of information directly, without the need for legions of technical people."

Carr's rationale is that utility computing companies will replace corporate IT departments much as electric utilities replaced company-run power plants in the early 1900s.

Carr explains that factory owners originally operated their own power plants. But as electric utilities became more reliable and offered better economies of scale, companies stopped running their own electric generators and instead outsourced that critical function to electric utilities.

Carr predicts that the same shift will happen with utility computing. He admits that utility computing companies need to make improvements in security, reliability and efficiency. But he argues that the Internet, combined with computer hardware and software that has become commoditized, will enable the utility computing model to replace today’s client/server model.

"It has always been understood that, in theory, computing power, like electric power, could be provided over a grid from large-scale utilities — and that such centralized dynamos would be able to operate much more efficiently and flexibly than scattered, private data centers," Carr writes.

Carr cites several drivers for the move to utility computing. One is that computers, storage systems, networking gear and most widely used applications have become commodities.

He says even IT professionals are indistinguishable from one company to the next. "Most perform routine maintenance chores — exactly the same tasks that their counterparts in other companies carry out," he says.

Carr points out that most data centers have excess capacity, with utilization ranging from 25% to 50%. Another driver to utility computing is the huge amount of electricity consumed by data centers, which can use 100 times more energy than other commercial office buildings.

"The replication of tens of thousands of independent data centers, all using similar hardware, running similar software, and employing similar kinds of workers, has imposed severe economic penalties on the economy," he writes. "It has led to the overbuilding of IT assets in every sector of the economy, dampening the productivity gains that can spring from computer automation."

Carr embraces Google as the leader in utility computing. He says Google runs the largest and most sophisticated data centers on the planet, and is using them to provide services such as Google Apps that compete directly with traditional client/server software from vendors such as Microsoft.

"If companies can rely on central stations like Google's to fulfill all or most of their computing requirements, they'll be able to slash the money they spend on their own hardware and software — and all the dollars saved are ones that would have gone into the coffers of Microsoft and the other tech giants," Carr says.

Other IT companies that Carr highlights in the book for their innovative approaches to utility computing are: Salesforce.com, which provides CRM software as a service; Amazon, which offers utility computing services called Simple Storage Solution (S3) and Elastic Compute Cloud (EC2) with its excess capacity; Savvis, which is a leader in automating the deployment of IT and 3Tera, which sells a software program called AppLogic that automates the creation and management of complex corporate systems.

Carr points out that many leading software and hardware companies — Microsoft, Oracle, SAP, IBM, HP, Sun and EMC — are adapting their client/server products to the utility age.

"Some of the old-line companies will succeed in making the switch to the new model of computing; others will fail," Carr writes. "But all of them would be wise to study the examples of General Electric and Westinghouse. A hundred years ago, both these companies were making a lot of money selling electricity-production components and systems to individual companies. That business disappeared as big utilities took over electricity supply. But GE and Westinghouse were able to reinvent themselves."

Carr offers a grimmer future for IT professionals. He envisions a utility computing era where "managing an entire corporate computing operation would require just one person sitting at a PC and issuing simple commands over the Internet to a distant utility."

He not only refers to the demise of the PC, which he says will be a museum piece in 20 years, but to the demise of the software programmer, whose time has come to an end.

Carr gives several examples of successful Internet companies including YouTube, Craigslist, Skype and Plenty of Fish that run their operations with minimal IT professionals. YouTube had just 60 employees when it was bought by Google in 2006 for $1.65 billion. Craigslist has a staff of 22 to run a Web site with billions of pages of content. Internet telephony vendor Skype supports 53 million customers with only 200 employees. Meanwhile, Internet dating site Plenty of Fish is a one-man shop.

"Given the economic advantages of online firms — advantages that will grow as the maturation of utility computing drives the costs of data processing and communication even lower —traditional firms may have no choice but to refashion their own businesses along similar lines, firing many millions of employees in the process," Carr says.

IT professionals aren't the only ones to suffer demise in Carr's eyes. He saves his most dire predictions for the fate of journalists.

"As user-generated content continues to be commercialized, it seems likely that the largest threat posed by social production won't be to big corporations but to individual professionals — to the journalists, editors, photographers, researchers, analysts, librarians and other information workers who can be replaced by . . . people not on the payroll."

Carr's argument about the future of utility computing is logical and well written. He offers a solid comparison between the evolution of electrical utilities in the early 1900s and the development of utility computing that's happening today.

Carr's later chapters — about the future of artificial intelligence and the many downsides of the Internet — seem less integral to his utility computing argument. And his discussion of Google's vision of a direct link between the brain and the Internet seems far-fetched.

Nonetheless, The Big Switch is a recommended read for any up-and-coming IT professional looking to make a career out of providing computing services to corporations. If Carr's predictions come true, strong technical skills will still be valued by service providers.

All contents copyright 1995-2008 Network World, Inc. http://www.networkworld.com

Pretending to know the area while in reality he is limited in its understanding  he managed to provide  the most dangerous advice to CEOs has come from people who either had no idea of what they didn't know, or from those who pretended to know what they didn't. 

Amazon.com Customer Reviews Does IT Matter Information Technology and the Corrosion of Competitive Advantage

A look in the mirror, May 29, 2004

By	Mike Tarrani "www.tarrani.com" (Deltona, FL USA) -

Carr does not diminish the value of technology in this book, but instead shows how it is improperly acquired and managed by most IT departments. As such, this book's central message is an indictment of how [all too common] IT mismanagement erodes business profits, shareholder value, and business operational efficiency.

The key question is, "is it as bad as Carr reports?" I can share my experience as a consultant who has worked some of the largest US and global corporations by answering "unfortunately, yes". I've seen the symptoms Carr cites in one engagement after another. It is not the fault of technology. I've witnessed the implementation of technical solutions that should have added value to business operations, yet were so mismanaged by IT that the solutions never came close to the projected ROI that justified their acquisition and implementation. Indeed, this book is similar to a collection of anti-patterns - common bad practices - which, sadly, reflect a typical IT department.

Although this book is short on solutions (which accounts for the lower rating I gave it), it does provide a conceptual framework from which to derive solutions. For example, much of what IT does can be classified as commodities - services such as desktop support, development (especially for web services), system administration, etc. These activities do not represent intellectual capital within IT in the same manner as architecture, business systems analysis, and service level management, all of which require an in-depth knowledge of technology and business requirements, and are not commodities.

Who will get the most value from this book? CIOs and IT managers who recognize there is a disconnect between IT and business operations, and who have the courage to look in the mirror that Carr provides will benefit. Executives at the COO, CFO and CEO level, or members of corporate governance will also benefit because they will be able to spot common problems in their own organizations that are so clearly reported in this book. The gap Carr leaves between symptoms and problems, and solutions to those can be filled in part by other books that are more solution-oriented (I recommend "RoadMap: how to understand, diagnose, and fix your organization" ASIN 0964163527; and "Connecting the Dots: Aligning Projects with Objectives in Unpredictable Times" ASIN 1578518776

IT departments focus myopically on , August 1, 2005

By Michael Davis "www.byvation.com" (Arlington, TX) -

I fully concur that Information Technology (IT) is too technology focused. As a former IT Manager at Metlife, and Allstate Insurance, I attest to the fact that the IT department focuses myopically on solving (and sometimes even creating more) computer problems. Therefore, as Carr illustrates, technology offers no competitive advantage - only the prospect of avoiding competitive disadvantage.

Without differentiation, organizations will do well to cut off IT from the rest of the organization and outsource it as a commodity. Carr's premise is that IT is undergoing commoditization and may cease to provide a sustainable competitive advantage. Hardware is already a commodity. Software is quickly becoming commodity like. What Carr illustrates is a clear and compelling reason to step up our efforts to use technology strategically to support the core business. After all, technology exists to serve the business, not the other way around.

Nothing new & no clear prescription, June 1, 2004

By	Linda Zarate "IT Ops Consultant" (Azusa, CA United States) - See all my reviews

If possible I'd award 3.5 stars. There is value in the book, which has two main levels:
(1) makes a case for the deplorable state of IT as a business enabler
(2) claims IT is now viewed as a commodity

In (1) what Carr has to say is true and has been for as long as I've been in the profession, which is over 25 years. Carr's contentions parallel my experience on this level. When I started out we "MIS" professionals were the priests and priestesses who worked our magic in glass rooms. We were merely arrogant then. Life was simpler and some vendors worked closely with us. IBM, which is my main background, had a reputation for never letting their customers fail. That is not to say that their recommendations and solutions always translated into business value for their customers, but rarely did they result in disasters either. As time went on though MIS became IS, then IT. Systems grew more complex, proprietary systems gave way to interoperability, then open systems, and new vendors started arriving in droves. Innovation fanned the flames of complexity, and IT remained arrogant, but began focusing so much on the technology (and trying to keep up with it) that they lost sight of business needs. Methods devolved into chaos and the chasm between IT and the business widened to the point where IT was in some cases counter-productive to business needs.

On the second level, where Carr claims that IT is now viewed as a commodity, is where this book gets interesting. In many areas that has been going on for over a decade. Mass storage systems are measured in pennies per MB, powerful desktop systems are priced in the same range as consumer entertainment electronics, and certain classes of applications software are bargains. Further, the open source movement is changing the dynamics as I write this review, which may one day render much software as a commodity.

What Carr does not do is give clear advice about how to deal with problems and new dynamics that have roots in the distant past. The status quo is clearly and accurately documented in this book, but the prescription is vague. That is where this book falls short.

The main value of this book is as stated by others: use it as a mirror if you work in IT. Perhaps a few brave souls with leadership skills will start changes in the profession that will have a ripple effect. Especially if those brave souls work for large enterprises and get sufficient press for their successes. At the very least the CxOs who may stumble across this book may see their own IT organization in the descriptions Carr gives and decide to do something about it. I would also hope that those who work on the vendor and product development side take a few hints from this book and craft their technology innovations into actionable solutions that will get IT back on track. It can be done, especially if the ingenuity those vendors exhibit in technology innovation can be extended to bundled products that also contain innovative solutions and consulting.

One final comment: a colleague distinguished between intellectual capital and task-oriented work performed by IT. Obviously the task-oriented work is a commodity, and with some analysis can be identified and outsourced. That is a step towards getting IT back on track and delivering value to business. There are other such ideas hiding in this book if one reads it with an open and inquiring mind.

Useless except as a catalyst to get you to do your own thinking, July 5, 2005 By Anonymous Reader (USA) - See all my reviews This book, as Nicholas Carr has claimed about IT, "doesn't matter". As one reviewer stated, Carr is a good writer but should have kept his assertion to a short article. Carr claims that IT (hardware and software technologies) is becoming a commodity and therefore that by itself it does not provide competitive advantage. This is eye-opening and insightful only if one believes all the claims of the dot-com era (some of which are still turning out to be true after all) and if one does not understand that the economy is getting more competitive all the time. So what? Isn't everything becoming commoditized? What is left after the Information Age and outsourcing of everything? Some say it is the Creative Age, in which creativity and innovation are what confer true advantage - human mental processes, some of which have to do with using or applying technology differently. Carr readily admits good USE of IT does confer an advantage - but again, isn't this true with any input or tool? It is management and innovative use of the input rather than the input itself that confers some advantage. One needs a much more sophisticated hands-on understanding of IT besides the superficial observation that hardware and software technologies are becoming commodities available to all -- besides, this argument is only true in a 30,000 foot view of the world. When one looks closer, in most cases the "free" open source software that is theoretically available to all is not truly available to all because the expertise needed to use it is very limited. Can all organizations use Linux, Perl, MySQL, etc. equally well? If not, are they really "available to all", or only to those who can actually use them? That everyone can "buy" them does not equate with them being "commodity inputs" -- they are just "technologies" not actual "INPUTS" if they are bought and not used. These questions are intertwined and more complex than they at first seem. For better or worse, one needs an experiential, not an academic or theoretical understanding, of IT in order to arrive at an answer. In the last chapter, Carr backs off somewhat, saying it is too early to tell the impact of IT - but if it is too early to tell the impact, how can he already conclude it doesn't matter? I suppose that is why he modified his title from the article title of "IT Doesn't Matter" to the book title of "Does IT Matter?". This question seems to be unanswered despite agreement that many information technologies (just as other technologies, products, inputs, processes, and so on) become commodities very quickly, and at an ever increasing rate. Bottom line: you do not need to bother reading the book. If you wish to understand Carr's argument, read his original article. As with so many popular "management books", Peter Drucker had already summed up what a manager should know and think about in a more concise way -- for example, that it is the "I" in "IT", not the "T", that matters. Organizations need INFORMATION not TECHNOLOGY and in particular INFORMATION about the OUTSIDE. For better guidance on strategy and IT, see Drucker's Management Challenges of the 21st Century.

Yes, technology does matter., May 16, 2004 By Gaetan Lion Carr makes a thought provoking but flawed case that technology does not matter all that much. According to him, competitive advantages of companies do not depend on technology. He does point out that many segments of information technology are mature, and have become low return commodities. He also points out that companies are better off not buying the overpriced state of the art technology, but instead should wait till prices come down. Thus, Carr makes many relevant and somewhat self-evident points. Nevertheless, his overall case that technology does not matter falls apart. Contrary to what Carr suggests, the technological race is endless. There is no finish line. We are in a 24/7 society hooked on perpetual improvement. Whatever gismo you come up with, people are going to imitate it and better it very quickly. Thus, no one can rest on their laurels for long. By the same token, you can't afford to run a business that is not up to date technologically. Technology is both the right of entry, and the key to success for almost any business you can think off. Also, innovation is the U.S. raison d'etre. You figure everything that can be commoditized is going to be either offshored to China or outsourced to India by American companies themselves as pressured by American stockholders. If the U.S. stops to innovate proprietary technology, our labor force will not remain internationally competitive. We have to add value to our products. We have to constantly innovate and create new markets. If we do, as we have done so far, we will remain the most advanced and productive society. If we don't, we will fall behind just as many high cost Western European countries already have. If you interested in this subject, here is a couple of books I recommend: "Rational Exuberance" by Michael Mandel. He makes a convincing case that technology does matter, and that the U.S. remains the undisputed leader in innovation, and more importantly in implementing innovation. Another good book is Roger Alcaly's "The New Economy." This is an excellent analysis on the history and prospect of technological innovation. Both these authors get that technology is crucial to the present and future of the U.S. Carr does not [get it].

Don't waste your time, June 24, 2004 By A Customer   I started this book with an open mind and read it in about 2 days. It is an easy read but delivers little. The Cliff Notes version, if there was one, could be summarized in 2 or 3 paragraphs. Many of the authors predictions are based on silly analogies. In the book he compares electricity to information technology. He mentions a few electrical related job titles that are no longer part of corporate America but fails to mention that there are still plenty of Electrical Engineers, Electricians, Electrical Contractors, etc. still employed in our economy. He takes a small segment of technology and predicts it's commoditization. Big Deal! Technology is ever-evolving and his predicitions are not that revolutionary. What makes this book ridiculous is his prediction that all of information technology will eventually be a commodity. This book is an obvious attempt to create a controversy to sell books. Don't fall for it. Save your money and look elsewhere.

Urge all your competitors to read this book!, May 28, 2004 By A Customer   Two Harvard professors summarized Carr's ideas ... the most dangerous advice to CEOs has come from people who either had no idea of what they didn't know, or from those who pretended to know what they didn't. What you want is for your competitors to read this book, hoping they will buy into Carr's misconceptions and dangerous recommendations... so rate it 5 stars for them, while your company pursues IT that does matter. If any of your technology-challenged board members are reading this book, be sure to point them to Don Tapscott's May article in CIO magazine so they will quickly understand Carr's Blueprint for Failure, and to Smith and Fingar's book, IT Doesn't Matter--Business Processes Do, for a complete critical analysis of Carr's superficial premises and misguided recommendations. You may also want to google: Does IT Matter, An HBR Debate, whence the opening comments of this review came. Meanwhile, be sure all your competitors know how wonderful and meaningful this book is. ;-) Dr. Martin Bushton, former CEO, consumer products company

Opinion No End in Sight Frank Hayes

May 16, 2005 (Computerworld) The last time we heard from Nicholas Carr, in 2003, he was pitching the idea that IT doesn't matter . Now he's back with an article in the spring MIT Sloan Management Review called "The End of Corporate Computing." Carr seems to have learned something in two years: You don't get high-dollar consulting gigs by telling potential clients that their products and job functions don't matter. So now he's taking a 100-year view, saying the end of corporate computing could take a lonnnng time. He's also getting behind vendor pitches for grid, on-demand and utility computing.

Trouble is, he still doesn't understand much about IT.

In "End," Carr compares IT to electrical generation 100 years ago. He lovingly details how individual companies once generated 60% of all electricity in the U.S. and how that changed when Sam Insull created Chicago's Commonwealth Edison, the first big electric utility. Insull used economies of scale to drive down costs, worked out metering and pricing, then rolled out sophisticated marketing to convince manufacturers to shut down their generators and buy juice from him.

IT, Carr says, can be outsourced in much the same way. Corporate IT is scattered and wasteful, with miserably low capacity utilization. Centralizing IT is an irresistible trend, and supercentralizing it in outside utilities is inevitable. We're just waiting for a new Sam Insull to create the vision and define the utility computing industry.

Well ... no. High-capacity utilization is important when a production resource is expensive. Thanks to Moore's Law, computing gets so much cheaper so fast that economies of scale are trivial. That's why spreadsheets run on PCs, not mainframes.

And centralization isn't so much a trend as a cycle. Users decide central IT's prices are too high, so they buy their own servers or Web sites or network gear. Then the cost of managing decentralized IT gets too high, so it's recentralized into the data center. Then the cycle starts again. Takes about 10 years to go around. Watch, and you'll see it.

And utility computing has its own Sam Insull -- Ross Perot, who realized in 1962 that he could sell computing instead of computers and left IBM to found EDS. (The idea wasn't even new then; ADP had been a payroll data-processing utility for five years.) Utility computing is mature. And it works. But it hasn't replaced corporate computing the way Commonwealth Edison replaced private generators.

Why not? Because corporate computing is no longer about big data-processing generators. Hasn't been for years. IT shops still process data, but the real action comes from business people who use computers to communicate, to monitor current business processes and to simulate new business scenarios.
Users are the ones who experiment and create business innovation. So the most important place to put computing, and control of that computing, is in users' hands. Everything else -- networks, data, back-end applications -- is there to support those users. They do corporate computing. We in IT just help.
And if we replace their flexible, too-cheap-to-meter computing with thin clients and a fixed-cost, fixed-services utility, as Carr recommends? IT gains manageability, centralization and higher utilization. Business users lose the ability to innovate.

Yeah, that would sure align IT with business needs, wouldn't it? Will Carr ever understand corporate computing? Probably not. He's got a vested interest in his Industrial Age utility model and the end of IT -- his best shot at the big time.

But corporate IT's interests had better remain with the users -- whose scattered, wasteful computing is the best generator of business advantage we've got.

Frank Hayes, Computerworld's senior news columnist, has covered IT for more than 20 years. Contact him at frank_hayes@computerworld.com.

My response can be found at my blog.

Rough Type Nicholas Carr's Blog IT doesn't matter, part 1

IT doesn't matter

In 1968, a young Intel engineer named Ted Hoff found a way to put the circuits necessary for computer processing onto a tiny piece of silicon. His invention of the microprocessor spurred a series of technological breakthroughs – desktop computers, local and wide area networks, enterprise software, and the Internet – that have transformed the business world. Today, no one would dispute that information technology has become the backbone of commerce. It underpins the operations of individual companies, ties together far-flung supply chains, and, increasingly, links businesses to the customers they serve. Hardly a dollar or a euro changes hands anymore without the aid of computer systems.

As IT’s power and presence have expanded, companies have come to view it as a resource ever more critical to their success, a fact clearly reflected in their spending habits. In 1965, according to a study by the U.S. Department of Commerce’s Bureau of Economic Analysis, less than 5% of the capital expenditures of American companies went to information technology. After the introduction of the personal computer in the early 1980s, that percentage rose to 15%. By the early 1990s, it had reached more than 30%, and by the end of the decade it had hit nearly 50%. Even with the recent sluggishness in technology spending, businesses around the world continue to spend well over $2 trillion a year on IT.

But the veneration of IT goes much deeper than dollars. It is evident as well in the shifting attitudes of top managers. Twenty years ago, most executives looked down on computers as proletarian tools – glorified typewriters and calculators – best relegated to low-level employees like secretaries, analysts, and technicians. It was the rare executive who would let his fingers touch a keyboard, much less incorporate information technology into his strategic thinking. Today, that has changed completely. Chief executives now routinely talk about the strategic value of information technology, about how they can use IT to gain a competitive edge, about the “digitization” of their business models. Most have appointed chief information officers to their senior management teams, and many have hired strategy consulting firms to provide fresh ideas on how to leverage their IT investments for differentiation and advantage.

Behind the change in thinking lies a simple assumption: that as IT’s potency and ubiquity have increased, so too has its strategic value. It’s a reasonable assumption, even an intuitive one. But it’s mistaken. What makes a resource truly strategic – what gives it the capacity to be the basis for a sustained competitive advantage – is not ubiquity but scarcity. You only gain an edge over rivals by having or doing something that they can’t have or do. By now, the core functions of IT – data storage, data processing, and data transport – have become available and affordable to all. Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production. They are becoming costs of doing business that must be paid by all but provide distinction to none.

IT is best seen as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries – from the steam engine and the railroad to the telegraph and the telephone to the electric generator and the internal combustion engine. For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages. But as their availability increased and their cost decreased – as they became ubiquitous – they became commodity inputs. From a strategic standpoint, they became invisible; they no longer mattered. That is exactly what is happening to information technology today, and the implications for corporate IT management are profound.

Nicholas Carr IT still doesn't matter Tech News on ZDNet

Nicholas Carr, a perennial thorn in the side of the IT industry and author of the 2003 Harvard Business Review article "IT doesn't matter," looks set on stirring fresh controversy in the industry, telling companies to stop spending on technology.

Last week, Carr told an audience in London that companies have been misled to believe buying technology can make them more productive.

He said: "Smaller firms are more productive than large firms and yet they have less technology." And though he conceded it would be naïve to assume that represents the grounds for a hard and fast rule, he added it should at least "lead anybody to question the importance of IT."

Carr said: "Companies should spend less on IT." "But when I say spend less I don't mean use less or get less," he added, saying companies need to reduce their vulnerabilities when buying IT - such as over-spending or buying into expensive projects that ultimately fail to deliver.

He said: "Successful IT management comes down to successful management and not just those who are more innovative or take more chances."

As such he said companies should resist the urge to buy new technologies and should discard any notion of the cutting edge, saying there are few companies likely to see competitive advantage by being an early adopter.

He added: "The vast majority of companies should be IT followers not IT leaders. The innovator is going to pay a lot more than those who follow in the innovator's wake."

Though one might expect Microsoft to wholly reject Carr's ideas, Bob McDowell, VP of information worker business value at Microsoft, admitted the industry and business customers haven't always done themselves any favors.

He said: "There was over-hype in the 90s and there was overspend." And he added that the IT industry is "still paying the price now".

James Governor, analyst at Red Monk, said Carr's comments are welcome in an industry that is short on "comedians". But he said there is also a greater relevance to some of Carr's words. Governor said: "Frankly we should all be shifting uncomfortably in our seats," adding Carr's words should ring true with many people who may rather forget past over-spend or poor buying decisions.

While he said it's unlikely any CIO "will stand up at the end of the year and say 'please reduce my budget'", Governor said businesses should be savvier.

He said: "A" href

Ted Leung points me to TechDirt and an editorial by Hal Varian who rebuts Nicholas Carr's thesis titled "IT Doesn't Matter".

Hal Varian makes an observation that we all too often forget: "Profit comes from scarcity". He then argues that well all have to agree with Carr's main thesis, that it is not information technology itself that matters, but it is how you use it. Although, its quite an obvious statement however is surprising how many MIS departments fall into this trap. This fact points out the scarcity that prevails in the industry, most MIS departments don't know how to use IT technology. I personally have been in 3 companies in the last year and I've got to admit, none of them seem to understand how to exploit IT.

Varian's main arguments focus on the higher value activity of component integration:

In my view, companies cannot afford to ignore information technology, or relegate it to the back burner. Commoditizing it does not necessarily mean innovation slows. If anything, it could accelerate as more and more innovators experiment and tinker with those cheap, ubiquitous information technology commodities.

How you integrate functionality so that its useful for the corporation is today the high margin business of IT, just ask IBM. IBM's largest growing revenue stream has been in its Global Services division (i.e. consulting). However, if you think about it, isn't consulting just another commodity? In short, I think Varian's arguments are pretty weak.

However, I can think of two better arguments against Carr's thesis. The first is that commoditization of the hasn't truly happened yet. After all, why do we still have applications that are built in a stove pipe manner? That is, despite all the componentization of various technologies, IT continues to build monoltithic applications. The monolithic applications continue to be extremely inflexible and lack the agility to integrate with other corporate functions in a rapid way. This is the crux of my argument in a piece I wrote last June.

The second argument is one I a law that I had recently stumbled on. That is Christensen's Law, "the conservation of attractive profits". Christiansen theory is about the migration of value of time, high margins move up and down the value chain over time. It doesn't move always in the direction of going up the food chain, it can go the other way too! What has become commodities, may become profit centers in the future.

In summary, today's high margin business will be based on the Manageability of our software. However, that doesn't mean it will always stay that way, that'll be a commodity some day. When that happens, the higher margins will belong to those specialists in component development. Look at it this way, if complete systems becomes a commodity, parties will attempt to derive differentiation from its various components. It's just the natural flow of things.

[May 12, 2003] Business Technology IT Doesn't Matter - News by InformationWeek by Bob Evans

May 12, 2003 | InformationWeek

Whichever ancient sage who first divined that the gods do not always smile upon us surely knew of which he spoketh. I need to cut my shaggy grass, but it keeps raining; my beloved but bungling Pittsburgh Pirates have lost six in a row; the drain trap below my shower is leaking; and on top of all that comes word that the Harvard Business Review has decided that IT doesn't matter.

Yep, that's what they say in the table of contents, in the headline, and at the top of each page in the lengthy article: "IT Doesn't Matter" (HBR, May 2003, p. 41). And here I was, fussing about leaks and losing streaks when IT was just stopping mattering. Can it be so?

The article is thoughtful and sweeping and quite interesting to read. I'd heartily recommend it. But that doesn't make it either accurate in its conclusions or even properly focused, and that's the problem I have with it. Written by HBR editor-at-large Nicholas Carr, the article is intent on proving the thesis that because IT has become widespread, then it must perforce become a commodity, as happened to other one-time breakthrough and industry-jarring innovations, such as steam engines and railroads, telephones and telegraphs, electric generators and internal-combustion engines. And Carr's unshakable belief in that inevitability leads him to a conclusion that's no doubt provocative, which I think was his primary intent, but also profoundly shortsighted and dangerous.

Now, please allow me a brief digression to the Full Disclosure Department: I will certainly admit that given my position with a publication like InformationWeek, I have a vested interest in the ongoing relevance, growth, and vitality of what I believe Carr is referring to as the IT industry. And I can certainly say that my view of the future that lies ahead for you readers could not possibly be in more extreme opposition to what Carr forecasts in the final paragraph of his article: "IT management should, frankly, become boring. The key to success, for the vast majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously." So, yes, I am a bit subjective on this topic, but I also feel that while the jobs of Randy Mott and Ralph Szygenda and Rob Carter and many tens of thousands of others in top IT management positions will be many things, one thing they will must assuredly not be is boring.

Where the article should have gone, I think, is outside the realm of embedded infrastructure and applications and into some attempts to look at what the future might look like. Instead, it assumes that the futures that befell railroads and steam engines will, inexorably and inevitably, be the future of IT. And I think that's astonishingly shortsighted. Only 10 years ago, how many of you had heard of the World Wide Web? And today, we've all heard of Web services--heard too much and seen too little, some would say--but can any of us really imagine what business will be like when the potential of those new technologies begins to be expressed? Or when global and mobile get more stable, and true collaboration becomes less psychology and more process and software, and the recent focus on internal technology becomes redirected on customer-centered possibilities? If we've learned anything in the last several years, it's that the balance of power in the world of business has tipped to the buyer and they will continue to get more demanding, more fickle, more selective, and more willing to spend their bucks elsewhere unless businesses mold their efforts around those customers.

Will that be done with people? With paper? With singing telegrams? I don't think so; the key will continue to be technology.

IT doesn't matter. Or does it?

Bob Evans
Editor in Chief
bevans@cmp.com

Tom Huber, CEO of Collegis, took issue with my May 5 column about two IT workers who found child porn on a New York Law School professor's computer. His response can be found at: informationweek.com/938/collegis.htm.

Bill Gates' Web Site - Speech Transcript, CEO Summit 2003

Remarks by Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation
CEO Summit 2003
Redmond, Washington
May 21, 2003

BILL GATES: Good morning. I hope the Tablets are working, but I also hope they won't be too distracting.

We're going to start out with a topic that we've touched on at every CEO conference going back to the very first one in 1987, and this is talking about IT and its role in corporate competitiveness: What are some of the key issues, and what are some of the key opportunities?

Microsoft's view on this has been pretty constant throughout. When it became over-hyped, we were a little concerned about the promises that were being made during those times. At this stage, in a sense, you could say it's almost under-hyped, and a good example of that is that there are various articles that have come out. The Economist said "Paradise Lost." Even IBM, the other largest company in our industry, talks about the post-technological period. The most extreme was probably the Harvard Business Review sort of suggesting that railroads and IT had a certain similarity, and now that the tracks have been laid, there was no competitive advantage to be had from having better IT systems. The New York Times said, "Has technology lost its special status?"

Well, our view on this is that IT long ago moved away from being simply about back-office activities, simply about printing checks and keeping the account books. And, over these last seven years, it's moved to become the tool that determines whether your information workers can do their job effectively. Do they know what's going on with customer satisfaction? Are they engineering new models in a very effective way? Are they finding partners to work with in a strong fashion?

And, although a lot of that is very difficult to measure, it has been a very big challenge for IT departments to step up to these new things. Historically, the IT department knew that its equipment was all in the glass house, and understood how to deal with that. Today, it's cell phones that people are carrying around and downloading information to. It's portable devices, it's spreadsheets that people have on different desktops, and in a sense, the scope of their responsibility, and how much they should invest in making those people more effective, is something that a lot of companies have had a hard time seeing exactly what that level should look like.

I think the good news is that the advances in the technology are strong enough that, literally for the kind of investment people have been making, they can get best-in-class, very exciting advances. And so, we don't need to be even at the peak levels that existed during some of the more ebullient years, and yet, cleverly applied - being on the forefront and getting a lot more out of the very substantial investment that's made in the workers themselves - then that's achievable.

Our industry, of course, benefits from the so-called Moore's Law, the doubling of power every two years. The key investments that drive that forward have not slowed down, despite what's going on with the economy or IT spending. If you ask how fast will the chips be over the next six or seven years, it's that same exponential increase. How large will the disk be that's connected up to these machines that are now typically 20 or 40 gigabytes? Those will continue to grow in size, at the same time that, actually, the cost of those are coming down.

There's been an interesting crossover point that we've been looking forward to for quite some time, and that's the point at which the high-volume, so-called industry standard, machines that use Intel or Intel-compatible chips: When will they have the performance of the more expensive, proprietary type systems, which have been lower volume? Classic mainframes are very high-end UNIX type systems.

We've passed that in terms of price performance a long, long time ago. In fact, that's sort of the business model of the industry standard offering has implicitly because the R&D cost is spread across so many units, millions of servers and over 100 million desktop machines. Whether it's chip R&D or software R&D, it's really a very different world.

The one footnote to that, though, is that if you wanted the absolute highest levels of performance, there were still some things that these devices couldn't do. A few years ago, for all but the applications that had to run on a single system, we reached the crossover. That is, in any application, like a Web front-end where you could use multiple machines and split the task up, the industry standard price performance and absolute performance was in the lead.

More recently, as part of the launch of our new Windows Server 2003 product, we - together with HP - showed through a wide range of industry benchmarks, transaction type benchmarks that actually, even in the most demanding case where the database or another application has to run on a single system, we have passed over.

So, this intersection point that I'm showing here on this timeline - we are now just past that crossover. That's a nice thing, because it means in terms of simplicity, what you have to have - development models, development tools and just plain the price of the equipment involved - now, it's not just some applications that can ride this curve, but it's everything that you're doing.

So, that's a very interesting milestone. In fact, one of our top researchers, Jim Gray, who writes about transaction systems and the great things we're doing, wrote a paper saying that it's a zero-dollar business over time, because as the hardware gets more powerful, the hardware prices go down. It is a true map mathematically that at least the hardware piece, that the price approaches zero. It's not at zero yet, but that kind of performance really opens your mind to thinking about using these transactions and using these rich systems -- that the trade-offs will be very different than they've ever been.

Let's look at the different eras that we been through, going back really to the Internet explosion. By the time of the Internet explosion, which was '97 - '98, PCs were in place by and large, but they weren't all that well connected together. It was really this period, '98 to 2000, where we saw the explosion of a number of things, and, coupled with this, of course, we saw IT spending in absolute, as a percentage of capital spending, achieve record levels.

The Internet came along, and there was a lot of discussion of what that meant, some of it in retrospect overly optimistic, but it did mean information accessibility. It did mean that companies needed to drive to have Web sites to do things very rapidly. It meant that some of the ways business relationships were handled were becoming very different.

It was during this era that the number of devices, PCs and servers really exploded, and it was just necessary that if you had a PC for every information worker, if you had servers for all these tasks, you were going to have these large numbers. E-mail exploded, almost became for most companies the standard way that people share information. The number of vendors of software was very large, and because people were in a rush to get the best pieces put together, they often found themselves with literally dozens of software suppliers. And integrating those things together, understanding how to work across those different things, this was the era where it became common sense that enterprise applications - particularly SAP's R3, but also some of the others - that everyone would move to use those as the foundation piece, instead of writing in-house software to do those things.

And so, there were huge benefits. This was an era where people were moving very rapidly, and certainly well over half of what people expected to get out of these things came to pass.

We've gone through a period that I'd say started March 2001, if you use stock price as a nice demarcation, to when the mentality kind of shifted. We've gone through a period where the view of looking at this, the glass that's half full, and seeing what are the harsh realities of what's really not there, and what should be done better: that's been the dominant theme.

So the Internet bust, you can measure that not only in financial terms, but think about what people said about B2B exchanges, where there'd be these middlemen organizations, and all the business would flow through those things. I think of the several hundred of those that were put together, only two or three have found enough value-add that they still exist today.

That vision of e-commerce is still very important, but it will be done without hubs. It will be done with each business essentially being its own hub, and being able to reach out to its suppliers and customers using software to get all the benefits that the hub was supposed to provide - the ability to find everybody out there, the ability to map their data formats into your data formats - and so there really doesn't have to be any friction, any middlemen, in that.

But those dreams were strong. People have looked at the complexity of IT management, all these different packages. You know, do they know if their systems are up to date? Do they know that they can say there won't be any security problems that come along in the systems? Even e-mail, as wonderful as it is, some of these things like spam are now at pretty unbelievable levels. And it's not just spam against consumer e-mail accounts like Hotmail or AOL. I'm sure many of you have noticed that spam has come into corporate e-mail domains as well. And e-mail can often be a distraction unless the tool is very good, and people are smart about using it. In some ways, the time benefits you get, a lot of that can be thrown back away unless it's done in a very clever way.

And finally, the idea of those enterprise applications, as good as they've been: the panacea that you'd be able to really dive into data in a way that's meaningful to manage, or get down to any level of information and run complex processes like sales analysis and forecasting in the most effective fashion. That dream has not been realized.

And so, many people looking at these harsh realities sometimes say, well, this IT stuff, it's messy. Let's outsource all of this. Let's get somebody else to do it. They can get the benefit of Moore's Law, and we'll just sign a five-year or 10-year contract that drives that outside.

Certainly, for some parts of IT, which are very measurable, repeatable type things, there is validity in that. But we're from the camp that says when it comes to defining new applications and thinking about business processes, IT is so central to the way work gets done and the quality of that work, and there are so many opportunities to do that better, that staying in control of this to have it as part of the overall business strategy is very, very important.

Now, the industry saw these harsh realities not just in these last few months. The issues of reliability, cost of ownership, security - those go back three or four years. And so, what we're seeing in the products that are coming out this year and next year is how the industry has responded by making investments to deal with those things. And this is where I think in some ways people are really underestimating what can be done. It's kind of natural if you overestimate what an industry can deliver, and then that you cycle back to where you underestimate those things. But I think we're on the verge of particular software advances that really address these harsh realities.

For example, e-commerce. Many of you have heard about XML Web services, and although that's a fairly technical thing, it's a fundamental thing, because it's the infrastructure that allows companies to exchange information for buying and selling and collaborating without the two IT departments having to build special applications that only relate to that one particular relationship. It's a general way that no matter whose software you use - whether you use IBM's or Microsoft's or someone else's - as long as that software adheres to these Web services standards, that ability to buy, sell, collaborate is available. And not just in the trivial sense of taking the paper invoice and sticking it in e-mail, but in the deepest sense of how you find those partners, how you do secure exchanges with them, how you track the workflows, so that if something is delayed or something comes in that's not right, the electronic path is the effective way of dealing with those issues.

As people move to partially do e-commerce, in some ways it was even more complex because you had the straightforward information passing electronically, but all the exceptions would result in phone calls and faxes and e-mail, and having the understandings that were created in parallel in that knowledge worker side, and getting the backend systems to understand that sometimes the impedance and the mismatch there even took away the benefit of having a piece of it be electronic.

The idea that when you have these Web services, that you can capture the full richness of what's going on with complete visibility to the knowledge workers, to update those things and be notified appropriately of things, that is where you get real benefit of saying that the paper approach really is completely obsolete.

Web services are something the industry started on several years ago. We bet our company on it in the year 2000, calling it our .NET strategy, and there's been great progress on that, in fact, lots of interoperability between the different software stacks, the key specifications all put together, and now we have pioneering customers doing very well with that.

The second issue is about managing all these things. The IT department generally measures its difficulty in handling things as proportional to the number of servers or proportional to the number of desktops. That really shouldn't be the case. I mean, the software should automatically keep things up-to-date, and if you say apply this new version for all of these workers the software, the network should make that happen. So things shouldn't be proportional to those large numbers.

Well, that takes a new generation of software. It didn't exist on those earlier systems because the numbers just weren't large, and so having manual involvement was not impossible. Here, it is impossible. The vision has been articulated by many companies in the industry. Sun talks about M1. IBM talks about autonomous computing. Microsoft calls it the Dynamic Data Center. And it's really the same thing; it's software tracking the system, and IT only having to see the exceptional cases that can't be solved through that software intervention, so none of the efforts having to be proportional to the large number of systems out there.

Another key thing is this idea of Trustworthy Computing. How can we make these systems so that virus attacks or software holes are extremely rare, and that recovering from those things, even when they do happen, is very straightforward, where you understand exactly what needs to be done to reset so those aren't a problem. This has required a lot of invention by the industry. It's required a new way of doing software development, new testing tools, and the progress here has been even faster than I would have expected.

This is not a completely solved problem, but the rate of improvement, the degree of improvement, the monitoring tools, the ability to audit and say, is somebody following the best practices on these things, has improved very dramatically in the last few years, partly because this became the top priority for the industry. We took products like the Windows Server I mentioned earlier and we actually stuck an extra six months in the schedule because we knew this was such an important thing.

E-mail: People love to complain about e-mail, but if you say to them, OK, we're going to take your e-mail away, then they'll complain even more, so it's that love-hate relationship, and the key is how do you take and do things that get the love part to be preserved and take away all those things about the distraction. And I'm going to show you in this next generation of e-mail products how we think that's been achieved.

Another big advance is the understanding what's going on with these systems. Microsoft four years ago had no visibility when people were using PCs and things wouldn't fit together. If a device driver didn't work, if it was hard to install, if software conflicted with each other, we didn't have a real picture of where those mismatches were.

Now the software has built into it reporting-back facilities, and so for anybody who's willing to let those reports flow back, which 70 percent do, we see those things, and that drives our priorities in terms of who's got to work with these driver makers, who's got to work to make these systems more resilient, having a total picture of what people are frustrated about, what's not working for them, which we call our Watson Initiative. It's been night and day in terms of being able to understand exactly how engineering resources should be applied, and being very numerical about what the PC experience or PC server experience is like.

And finally this issue with these silos of information, serendipitously it turned out that the architecture, this Web services approach that is necessary for e-commerce, also is necessary for moving information even within the company, and so that one approach, we're getting massive payoff for that. In fact, we're using it for systems management, we're using it as the basic connecting architecture for everything that goes on. And so the leverage there, because now we have tools there, we have broad industry understanding, it means information flow within a company, across company boundaries, and then the specific IT issues are dramatically advanced because of that one architecture.

So for any company, our view is you have to think about how software, the software strategy, information sharing, the rich applications that you license and that you create, how those affect the four things I'm showing here: How the people work together, how the processes work, and even simple processes like expense report management or the human resources review type process, is all the information really there in the simplest, most effective form? As you talk to somebody about their headcount budget, is it easy for them to immediately go and see how that's changed and where things are versus forecast? Very basic processes that, I'd say, the state of achievement in most companies is way, way less than even commonsense would dictate that it should be. Information about the market and what's going on; there also people who haven't gotten things that really would help them drive their processes.

Web sites today, although they have lots of information, they're not gathering as much customer information as they should, and that information, the way it flows inside the company, is not a simple as it should be.

Creating relationships where you think about key partners and how you do work with them, that's another thing where partly because the security infrastructure hasn't been in place, partly because the Web services things weren't there, people are only getting a little bit of benefit once you've crossed that corporate boundary.

So all of these things tie back into whatever the core business goals are, and really require a strategy focus.

One of the accounts I work with set goals for their IT budget, and unfortunately it was decoupled from the idea -- this is an auto company -- was decoupled from the key initiatives in their engineering group to get the design cycles down to be 30 percent shorter than they were. And when you get that kind of decoupling, of course the IT people aren't going to do the things, some of which are very modest in expense, you know, the basic expense of the PCs and the network are there, the idea of building these sharing Web sites and getting people able to use them, it's about a 5 percent increment on top of just keeping that normal infrastructure in place. And yet, because the investment decision and that strategic goal were not tied together, the engineering initiative thing was delayed, and may not happen in the timeframe that it should.

Jack Welch talked when he was at the CEO conference about how do you get competitive advantage. The people you're hiring come out of the same pool, the techniques that you're using are not that proprietary, and so he talked about this information advantage being the key thing: understanding customers, understanding competition, moving at a speed that you take that information and translate it into action.

And so every software system should be benchmarked by exactly that kind of criteria. And so when somebody says, to take the extreme quote from the Harvard Business Review article, they say IT doesn't matter, they must be saying that with all this information flow, we've either achieved a limit where it's just perfect, everybody sees exactly what they want, or we've gotten to a point where it simply can't be improved -- and that's where we'd object very strenuously.

We have seen in terms of new technology a lot of waves come along: the original PC, where you had the development and you had big adoption; then we had Windows, which was a wave like that. I talked about the Internet wave; really it was the biggest, because it moved out from just the individual to the way that organizations worked. And we have some of these waves that we're just at the early cusp on, things like wireless networks. Of course, these Tablets are connected up to a wireless network. Everywhere at Microsoft, that wireless network is in place. And so when people go to meetings they take their PC, they have the latest information, they can write their notes, share those with other people, check information, so we just kind of take it for granted. Wireless networking: one of the beauties of this Wi-Fi is that it doesn't have any ongoing costs. Once you get it into place, other than maintaining it, it's there, it's simply using spectrum that's available to everyone, and so as an increment to the base network cost that you have it's not that significant.

So that's just catching on, catching on in the home, catching on in the places that people travel, so-called hot spots, catching on inside corporations. I'd say about 20 percent of corporations have done what we've done and made it something that's pervasive in terms of what they do.

If you look at the investments that are made in IT, of course it breaks down into some very significant buckets. Licensed software tends to be, even if you take all the different applications, on the order of 5 percent or so. The biggest expense -- and the ones that really new software advances will be measured against how well they do -- is how they can help with these other pieces, letting you take advantage of low-cost hardware. I'd give the industry a very high grade for doing that. Letting you rationalize your network cost so that you can benefit from the price declines that are taking place there; a good example of that is that now we allow people to take their mail servers and put them all in one place, you only have the mail servers in one location for a global enterprise. That makes it a lot easier to pool those things and to have the IT expertise, as opposed to before where, because of network delays and sometimes reliability issues, the software didn't get around those problems, so you had to have the e-mail servers out on a very distributed basis.

Making the IT staff not having to visit desktops so that, as they diagnose issues, they come to them in a very high-level form, and making sure whatever IT services get used are not applied to writing essentially glue code that just connects applications together. I think that we'll see very substantial changes in how these investments are made, but the enabling factor is the advances that come in that platform and application software.

Because of the volume economics, literally billions, if you take the aggregate R&D of these things together, it's about $40 billion, of which Microsoft would be about $6 billion of that. The advances will come very rapidly here and allow for either cost reductions or more effective use of the other parts of those investments.

Well, let me now switch and talk about some of the particular things that drive our excitement and optimism about how people are going to work, and how that's going to change information flow inside a company.

Communications today is nowhere near the ideal. Your multiple mailboxes and phone numbers, and the different devices and people trying to get a hold of you, a lot of integration could be done here, and that means integration across the different devices, integration between the PC and the phone and allowing the PC to be more than just e-mail, letting you communicate in real time and share and do things together. We're investing very heavily in this because any improvement to communications has this very dramatic effect. Knowledge workers spend most of their time in communication activities.

The idea of collaboration, sharing information, this is another area where the choices have been pretty limited. Web sites are very hard to build. If somebody in the office says, OK, I want to make a new Web site, they have to go to IT and get it approved, they have to use complex tools, so they're not likely to share that way. Sharing files -- all you get is a list of files up there. And the final way of sharing, that's the most common right now, is just doing enclosures in e-mail, but that doesn't let people see the different versions, your e-mail gets flooded, you have different people working in parallel with documents that may be out of date. Really what you want is that Web site, but you want the Web site so that anybody can just sit down and create one without having to go to IT, without writing a line of code, and pick a template to choose for the Web site, and then easily customize what they want to create on that. This kind of sharing and collaborating is a big step forward for us. We call it using SharePoint.

So, just to give you an example of some of these communications tools, and how the PC will be viewed in a different way in this, I would like to ask one of the people who has really driven some of these products, JJ Cadiz, to come out and show us real time collaboration.

Good morning.

JJ CADIZ: Good morning. Thanks very much.

It's my pleasure today to be able to show you PlaceWare, which is a technology that you can get in your company today to drive a lot of improved productivity by enhancing telephone conference calls you may have in your company, but also to reduce costs by reducing the amount of travel that happens in your company to talk between distributed team members.

So, let's go and take a look at PlaceWare. What is PlaceWare? PlaceWare is a Web-conferencing application being used to basically take any Web browser and telephone to have meetings online. And when we talk about meetings online, we're talking about meetings with remote colleagues, with customers, and also with partners. And when I say meetings, I'm not talking about just the small one-on-one group meetings that are out there, but also huge group meetings. So we're talking about meetings of up to 2,000 people. So a lot of times those would be meetings of a whole division.

Now, I'm actually using PlaceWare to talk about PlaceWare here. So in the main screen, what you see here is PlaceWare, and we're actually logging into a room that I've created for this demo, and in the lower right hand corner you should see Bill is actually logged into the same room. That way we can give you the sense of the two different rooms, and how they look, and also how quickly things update.

Let's talk about the basics of PlaceWare. Now, as you think about meetings, there are kind of three major stages of meetings. There's the before-meeting, the during-meeting, and also the after-meeting. Now, the way that you can schedule meetings is very simple. You just need to go to a Web portal and schedule meeting, a PlaceWare meeting, when you schedule a meeting with Outlook, or you can also go and use the Outlook client to do that as well.

Now, when it's actually time to enter the meeting, you can do things with Messenger, you can click a link within Messenger to go in there, you can go into the same Web portal to do it, or you can just go to an e-mail invitation, which is probably the major way that most people get into PlaceWare meetings. Let me show you an example of one of those e-mail invitations. I have the ones here for the demo that I'm showing you here. And all any employee would have to do with a Web browser is just click this link, and they'd be able to get into that meeting.

Now, if I actually wanted to show someone an example of this e-mail, you'll notice that in the lower right-hand corner there, you aren't actually able to see this e-mail, all I would have to do is hit the snapshot tool here in PlaceWare, position it over the e-mail, and then just take a picture. Let's go ahead and do that here. Now, so we have that within the PlaceWare client, and then all we have to do is say, here's the link you need to click. You can just kind of ignore these other links down here. So you can do things like that.

Now if I actually wanted to show someone a live demo of something going on, let's say we want to have an Excel spreadsheet that we're working with, OK, I can actually just bring it up here, and then do an application-sharing slide that we can do with PlaceWare. I'm going to do that. So, I just position the frame, and then press Play, and this entire anything that's in the frame -- will be shown up in the lower left-hand corner. Now, the cool thing about that is that I can, of course, have my e-mail client over to the side here and be doing things, knowing that it's not actually being shared with anyone else.

I can also show live technology demos, saying here's the way you can modify Excel pie charts and such.

The other thing is, I can also give other people control of this spreadsheet. So, if I wanted to, and someone else had newer numbers up here, they could go there and I could give them control to modify the numbers within here.

Now, PlaceWare also has a bunch of other tools. And one of the kind of most fun tools we can do is ask questions of people who are in the room. So, let's say that I have all of you in this PlaceWare room here, and I went to ask you a question. All I have to do is press the polling slide, and I could ask you a question like, how about, what should Microsoft's next dividend be? So, I could say zero, I could say the same thing it was last time, or a little wild thing, what you do think, $1.50. You can vote here, and you get a live update of how people are voting. We can look at that person's vote, so we can see how people are voting from the presenter's view over here. So, polls are very easy to create. And the other cool thing is that all of these poll answers are kept for me later on. So, actually the presenter will get all the poll answers later on. So, you can imagine even being able to use this to grade students if you had them in a class in PlaceWare.

And I also get a list of all the attendees who showed up. So that way, if I knew 100 people were supposed to show up, and only 95 did, I could actually go back to those five people and say, hey, if you want to look at the recording, it would be great if you could do that, because with PlaceWare that's as easy as bringing up the recording