August 10th, 2009
Panel: too much to lose by moving to generic services and cloud?
Do we put competitive advantage at risk when moving to generic services? Or perhaps the whole scenario of enterprise IT being edged out by the cloud is overblown? Consider the the mainframe, as Dana Gardner recently put it:
“In the early 1990s, IT pundits, and my former boss Stewart Alsop, glibly predicted at InfoWorld that the plug would be pulled on the last mainframe in 1996. It didn’t happen. Stewart apologized, sort of, and the mainframe continues to support many significant portions of corporate IT functions.”
Do we put competitive advantage at risk when moving to generic services?
Why is the mainframe still alive and well? Because it has embedded within it competitive advantage — applications and processes no one else has. In the same spirit as the mainframe’s never-ending demise, many pundits now talk about the imminent demise — or greatly diminished footprint — of the information technology department or function, as organizations turn to cloud providers.
However, do companies risk giving up too much when moving to the cloud? As my fellow analysts put it, don’t be too quick to write off enterprise IT. As Sandy Rogers, who has been closely following the SOA and services space for a number of years, first with IDC and now as an independent analyst, put it, says organizations know they need to replace legacy technology, but fear they will lose too much value-add process and code in the process.
In a newly released podcast with Dana Gardner’s Analyst Insights group (transcript available here), Sandy points out that “many organizations have avoided legacy modernization projects due to the cost of change. It’s not just about the technology replacement. It’s a loss of capabilities,” she says. “It’s the change in human workflow and knowledge base.” The risk with cloud is that companies may end up replacing specialized technologies with generic solutions.
Data warehousing is another area not ready for the cloud, as explained by Jim Koblieus. Jim says there’s some talk of moving data warehousing to the clouds, but it’s still mainly talk. Maybe in a couple of years we’ll see something, probably in the form of some sort of cloud-based staging layer. “There aren’t a substantial number of enterprises that have outsourced their data warehouse or their marts,” he says. “Probably there aren’t that many commercial options yet that are fit to do so. Only a handful of data warehousing vendors offer a hosted solution, a SaaS, or cloud solution. I’ve been telling people that 2009 is not the year of the cloud in data warehousing, nor is 2010. I think 2011 will see a substantial number of data warehouses deployed into the cloud.”
What about applications? Tony Baer sees a mixed bag as far as application development or hosting from the cloud. “There is a degree of control that you like, but there are some tactical reasons,” he says. “When you’re developing code, you don’t want to have to deal with any type of network latencies that are going to come up when you deal with cloud. No matter how good the bandwidth, there are always going to be times when there are going to be some speed bumps. But, the other part was also related to IP, which is source code before it’s compiled in the binaries. It’s basically pretty naked and it’s pretty ripe for stealing. This is your intellectual property. Today, if you’re doing development, it’s because there aren’t packages that are available to supply a generic need. It’s something that’s a process that’s unique to your organization.”
Ron Schmelzer, on the other hand, says the economy has turned this era into a major inflection point, which we will someday look back upon and recognize as the beginning of the cloud era. “If you look at when most of the major IT shifts happen, it’s almost always during period of economic recession,” he points out. “The last time was in 2000-2001, when we first started really talking about service-oriented architecture. In the mid- ’90s was when we really started pushing out the Web. In the early part of the ’80s, when recession was kind of bad, that’s when personal computers started coming about.”
A lousy economy, with tight budgets, always spurs new ways of addressing technology challenges. And I agree, and pointed out many times in this blogsite, that the economic downturn of the early 2000s — which gutted many IT departments — gave rise to interest in Web services and SOA. But note that everyone didn;t stampede to SOA all at once — it’s been a long-term, incremental evolution that continues to this day.
Given this, nobody on the Insights panel was ready to write off IT anytime soon. As Brad Shimmin put it, IT may shrink a bit in some areas, but it’s not going to diminish in value. BBrad predicts that over the coming years, IT “is going to be very much alive, but the value is going to be more of a managerial role working with partners. The role is changing to be more of business analysts, working with their end users too. Those end users are both customers and developers, in some ways, rather than these guys just running around, rebooting Exchange servers to keep the green lights blinking.”
Joe McKendrick is an author and consultant with deep knowledge and insights regarding trends and developments in the technology industry. See his full profile and disclosure of his industry affiliations.
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