Need IT? Just
flip the switch or turn on the tap
August, 2008
I am usually hesitant to offer predictions about the IT industry because anyone who has been in this field for a while knows how unpredictable technology trends are. That makes our industry a fascinating one but poses a challenge to anyone making forecasts. With that said, I feel strongly about one trend that I believe has the greatest potential to reshape the IT landscape, particularly here in Colorado: utility computing.
I have heard the term "utility computing" used in a few different ways in the industry (as a descriptor for grid computing, for example), but my definition is a simple one: Computing is evolving into a service that will become a fifth major utility, alongside water, electricity, natural gas and telecom services. Companies will be able to "flip the switch" and get a full range of IT services from an IT utility rather than maintain their own infrastructure and computing systems.
This is a concept that had some buzz around it 15 years or so ago, and many of you may remember companies like Exodus that built out datacenters in anticipation of the trend. So what happened? Inadequate bandwidth, the primitive nature of the tools at that point, and market conditions were some of the main culprits. It is a different story today, however, and I see strong trends toward utility computing that are unlikely to stall or reverse course.
To be realistic, I think there will always be a segment of the market that maintains all of their own IT systems (e.g., very large corporations), and there will also be companies that embrace utility computing for most IT needs, but still retain a few select IT functions that they keep in-house (e.g., an 80 percent/20 percent split). But for medium-sized and small businesses — the vast majority of companies — the most efficient model for IT is going to be subscription services from an IT utility. In the same way that companies and people today don't generate their own power, process their own water, drill for their own natural gas and build their own telephone networks, companies will seek out "utilities" for IT services rather than build and maintain IT systems themselves.
What's driving this trend? The lower cost of connectivity and increase in bandwidth play critical roles in enabling these IT services. Powerful WAN technologies have made it possible to monitor and manage IT systems remotely. There are also robust tools that have been built specifically to support services like remote infrastructure management. And just as important is the growing acceptance of a subscription model for licensing, which supports a one-to-many model for delivering IT services.
On the demand side of the equation, there are also a number of things driving the trend: the rising cost of IT; the challenge of building and maintaining an internal IT team with the skills to support increasingly sophisticated systems; CFOs' preference for the operating expense model of IT services rather than the capital-intensive model of in-house IT; and companies' increasing acceptance of the reality that you don't need to own IT for it to be reliable, secure and effective.
We are still in the early adopter phase of the utility computing trend, but I believe it is poised to move into the growth phase of the adoption curve which will gain speed over the next few years. In the meantime, we are already seeing customers who are moving to a 100 percent utility computing model in order to stabilize IT costs, improve availability and more.
Colorado is well-positioned to benefit from this trend because of the abundance of telecommunications infrastructure and expertise, which is one of our state's biggest assets. Geography and geology are also very important because Colorado is accessible from both coasts and the Front Range is less vulnerable to natural disasters than other areas of the country. Those qualities make our region very attractive for housing business continuity systems and datacenters.
But I believe the most important asset that Colorado has for capitalizing on this trend is the high concentration of IT services companies that are either based in Colorado or have significant operations here. That has led to a high concentration of highly-skilled IT professionals, and that makes Colorado an ideal hub for providers of utility computing services.
The utility computing trend could reshape the IT industry over the next decade, and Colorado has the opportunity to stay ahead of that curve and establish itself as a major hub for computing services for the entire country. It will be an exciting period of change and opportunity for IT companies in Colorado.n