Sunday, November 14, 2010

IT Extremists

The problem with any transition is that inevitably you end up with extremists, cloud computing and IT are no exception. I thought I'd say a few words on the subject.

I'll start with highlighting some points regarding the curve which I use to describe the underlying transition (evolution) behind cloud. I'm not going to simplify the graph quite as much as I normally do but then I'll assume it's not the first time readers have seen this.

Figure 1 - Lifecycle (click on image for higher resolution)

The points I'll highlight are :-
  1. IT isn't one thing it's a mass of activities (the blue crosses)
  2. All activities are undergoing evolution (commonly known as commoditisation) from innovation to commodity.
  3. As activities shift towards more of a commodity, the value is in the service and not the bits. Hence the use open source has naturally advantages particularly in provision of a marketplace of service providers.
  4. Commoditisation of an activity not only enables innovation of new activities (creative destruction), it can accelerate the rate of innovation (componentisation) of higher order systems and even accelerate the process of evolution of all activities (increase communication, participation etc).
  5. Commoditisation of an activity can result in increased consumption of that activity through price elasticity, long tail of unmet demand, increased agility and co-evolution of new industries. These are the principle causes of Jevons' paradox.
  6. As an activity evolves between different stages risks occur including disruption (including previous relationships, political capital & investment), transition (including confusion, governance & trust) and outsourcing risks (including suitability, loss of strategic control and lack of pricing competition.
  7. Benefits of the evolution of an activity are standard and include increased efficiencies (including economies of scale, balancing of heterogeneous demand etc), ability of user to focus on core activities, increased rates of agility and tighter linking between expenditure and consumption.
  8. Within a competitive ecosystem, adoption of a more evolved model creates pressure for others to adopt (Red Queen Hypothesis).
  9. The process of evolution is itself driven by end user and supplier competition.
  10. The general properties of an activity changes as it evolves from innovation (i.e. dynamic, deviates, uncertain, source of potential advantage, differential) to more of a commodity (i.e.repeated, standard, defined, operational efficiency, cost of doing business).

The above is a summary of some of the effects, however I'll use this to demonstrate the extremist views that appear in our IT field.

Private vs Public Cloud: in all other industries which have undergone this transition, a hybrid form (i.e. public + private) appeared and then the balance between the two extremes shifted towards more public provision as marketplaces developed. Whilst private provision didn't achieve (in general) the efficiencies of public provision, it can be used to mitigate transitional and outsourcing risks. Cloud computing is no exception, hybrid forms will appear purely for the reasons of balancing benefits vs risks and over time the balance between private and public will shift towards public provision as marketplaces form. Beware ideologists saying cloud will develop as just one or the other, history is not on their side

Commoditisation vs Innovation: the beauty of commoditisation is that it enables and accelerates the rate of innovation of higher order systems. The development of commodity provision of electricity resulted in an explosion of innovation in things which consumed electricity. This process is behind our amazing technological progress over the last two hundred years. Beware those who say commoditisation will stifle innovation, history says the reverse.

IT is becoming a commodity vs IT isn't becoming a commodity: IT isn't one thing, it's a mass of activities. Some of those activities are becoming a commodity and new activities (i.e. innovations) are appearing all the time. Beware those describing the future of IT as though it's one thing.

Open Source vs Proprietary : each technique has a domain in which it has certain advantages. Open source has a peculiarly powerful advantage in accelerating the evolution of an activity towards being a commodity, a domain where open source has natural strengths. The two approaches are not mutually exclusive i.e. both can be used. However, as activities become provided through utility services, the economics of the product world doesn't apply i.e. most of the wealthy service companies in the future will be primarily using open source and happily buying up open source and proprietary groups. This is diametrically opposed to the current product world where proprietary product groups buy up open source companies. Beware the open source vs proprietary viewpoint and the application of old product ideas to the future.

I could go on all night and pick on a mass of subjects including Agile vs Six Sigma, Networked vs Hiearchical, Push vs Pull, Dynamic vs Linear ... but I won't. I'll just say that in general where there exists two opposite extremes, the answer normally involves a bit of both.
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