Good News for Cloud Computing: Nicholas Carr is getting boring

October 14, 2008 Appirio

Ryan Nichols

We’ve always been a big fan of Nicholas Carr’s presentation on the Big Switch … he’s delivered it at several Salesforce “Tour De Force” events earlier this year, and gave it tonight before a panel in Palo Alto on whether Cloud Computing is “Ready for the Enterprise.

There’s a lot that we love in Carr’s pitch:

  • We love the stats: In the average IT organization, 80% of server capacity is wasted, 65% of storage capacity is wasted, and 70% of IT labor cost is spent on upkeep of legacy applications. Clearly a ripe opportunity to capture the benefits of centralized cloud computing.
  • We love the imagery: the image of a huge water wheel, created as a source of major competitive advantage for a steel company, abandoned to rot in the woods just 2 decades later. His message that on-premise servers are on that same path is right-on.
  • We love the scope of his talk, with the emphasis on the broader economic implications of cloud computing. Carr points out that what’s most interesting is not the new infrastructure itself, but what gets built on top. The electricity industry itself quickly became a utility… but the market for electric-powered appliances became highly innovative for decades. As a company that builds on the cloud, we love that message.

We were expecting some fireworks in last night’s talk: It was sponsored by the German American Business Association, and was hosted by SAP… not exactly the epicenter of cloud computing. And one of the panelists was Steve Lucas, the former head of On-Demand BI at SAP, who recently left to lead the business at Carr himself is a controversial figure, having gone from the IT industry’s biggest foe for suggesting that “IT Doesn’t Matter” to IT’s biggest friend by backing “The Big Switch” to cloud computing.

But there was remarkably little disagreement among the panel, composed of speakers
from SAP, Salesforce, VMWare, and T-Systems: Salesforce, of course, has built its business around the trends that Carr is talking about. VMWare loves the role that virtualization plays in enabling cloud computing providers. T-Systems positioned itself as an enabler of cloud-based applications. Even SAP acknowledged that “we believe that there will be certain edge processes that will be enabled by the cloud,” which is a bold step forward coming from SAP.

Is it just us, or has this entire conversation gotten a little boring? Where are the dissenters, aside from the attention-getting headlines from the free software federation? Carr saw nothing but nodding heads from the audience when he asserted that “the biggest question for enterprises is what do we move to the cloud and when do we move it.” Nobody argued with his assertion “we’re just at the beginning of a transition to cloud computing in the enterprise.”

My realization? “Boring” is probably a great phase for cloud computing in today’s environment. The elephant in the room was this month’s financial crisis, finally raised by the audience in Q&A. “Boring” technologies do well in the enterprise during tough economic times.

Lucas emphasized that Salesforce has a simple subscription model that is going to get more appealing to companies in a recession. When the economy is bad, the last thing a company wants to do is write a big, difficult-to-justify license check. He quoted the CIO of a financial services firm he met with in New York in the midst of last week’s financial crisis– “We’re looking at Salesforce because we need to better leverage our IT investment. We have 88,000 servers in our organization, and want to reduce that number.”

Is cutting servers boring? Maybe. But good for customers and, ultimately, the cloud computing ecosystem.

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