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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.
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