“A hundred years ago, companies stopped generating their own power with steam engines and dynamos and plugged into the newly built electric grid. … Today, a similar revolution is under way. This time, it’s computing that’s turning into a utility.” Nicholas Carr
At one of the sessions of the TechnoSecurity 2008 conference last week, I mentioned reading The Big Switch by Nicholas Carr (W. W. Norton, 2008). The person with whom I was speaking said, “That’s the 3rd slide in my presentation for this session!” I haven’t done a ‘book report’ since, well, a long time but this book nails some of the important changes going on in the IT industry.
Mr. Carr starts his book with the analogy of power generation. In the 1840s Henry Burden built a huge water wheel to power the belt-driven machines in his factory thus raising productivity and his profits. Then came electricity and like all supplanted technology, Burden’s wheel became an anachronism and a rusting relic.
Mr. Carr then takes the reader through the typical development and selection process all species go through:
- Individual power sources for local needs
- Economies of scale giving rise to larger and larger power generation and distribution
- Development of standards for ubiquitous power usage
- Power available through huge grids with power outlets conveniently located on every wall
The comparison to IT services development and selection holds well:
- Individual computers providing services
- Economies of scale giving rise to more powerful servers in data centers
- Development of standards of security and data exchange
- Processing power available across the Internet accessible to any browser
So, is computing power the same as electricity? No, it is all that and more. While a vacuum cleaner at a power plant does nothing for your office floors, the computers at a Managed Service can run your payroll, handle email security or manage your inventory. However, the fact that computing can be done across the web by computer utilities such as Salesforce.com or Amazon’s data center, means that a company’s data center (and the internal IT staff) becomes less necessary.
Carr makes this last point in his book Does IT Matter? In it he posits that, with the coming of Managed Services, disparate silos of individual corporate data centers will become less necessary.
In an interview with Edward Cone of CIO Insights, Carr said, “In the end, the savings offered by utilities become too compelling to resist, even for the largest enterprises. The grid wins.
“The shift to SaaS seems to be proceeding quickly. Companies are more open to using software-as-a-service offerings and other Web-based computing services than they were a year ago. Smaller and mid-sized companies have the most to gain since they have the needs of the larger organizations but do not have the capital to build out the IT infrastructure.”
What about security?
In many cases, it takes a while for governments and their regulatory frameworks to catch up with new technological capabilities. Ultimately the utility model will provide greater data security than we have in today’s fragmented model. But companies are often nervous, and for good reason, about where their data is stored.
However, companies give access to third-party suppliers access to sensitive information all the time. While it will take some time for the security concern to lessen, it comes down to a matter of building trust between supplier and buyer.
As an example, email security through a good managed service provides more security than does any appliance or software solution. Why? Because the managed service provides TLS encryption between the Internet and the client’s email server. Even if the sender’s email server does not provide TLS security, the email stream is encrypted this last leg of it’s journey.
What happens to proprietary systems that provide competitive advantage?
Carr explains there’s nothing in the utility model that says all software has to go to the shared utility model. We can see in the early stage with something like Amazon Web services the ability to write your own code but use utility suppliers to run it and to store it. Companies will continue to have the ability to write proprietary code and to run it as a service to get the efficiencies and the flexibility it provides.
One of the great advantages of IT is its modularity. Companies should not think of this as some all-or-nothing choice. You can tailor your systems and your use of utility suppliers to do anything you need to do with IT. You shouldn’t think your choices are going to be constrained through this transformation; it’s going to give companies more choices in the end.
Our take on Managed Services
On the front page of our website , we say that we believe in three things:
- Services are more important than servers
- Every organization has a set of foundation services on which they build their uniqueness
- Change in inevitable
The 1st bullet point is critical here. Who cares where the server is as long as the services provided are effective and secure? The IT department does. However, the 3rd bullet point is always operational. The IT department’s work must change once again. Only this time, it will not be a question of which operating system or virtual machine host to install. Those that can change with the industry will succeed. Those that can’t will go the way of Burden’s wheel.
Will all internal data centers go away? No. Will most of them? Yes, although it will take 40-50 years.
So, what should a business do?
- Figure out where managed services make sense for you. It will surprise you at the scope of services available.
- Ask the right questions. We’ll give you a list of questions to ask your MSP in an upcoming post.
- Evaluate before you commit. You want to be sure it will fit your needs.
- Want to talk about it? Give us a call at 1-877-603-0301.
Next Post: 10 Questions to Ask Your Managed Service Provider
What do you think? Have you read Carr’s book? Agree with him? Disagree with him?