In 2008 Nicolar Carr published a bestseller called “The Big Switch: from Edison to Google,” it's central thesis being the strong correlation between the electrification of industry, a hundred years ago and the cloud computing industry today.
As electricity became available via power lines, industry abandoned costly in-house infrastructure such as waterwheels and coal furnaces.
Nicolas Carr sees the same thing happening with the trillion dollar information technology industry “switching” to the cloud computing grid and ridding itself of costly in-house servers, on premise software and in-house IT labor to maintain it all.
Conceptually, I think Carr is on the right track. The internet is becoming technical electricity. Applications and massive virtualized server farms are far more efficient and less expensive to maintain. The IT industry will go through a dramatic transformation (again) over the next 10 years with plenty of business “disruption.” Industry titans will become obsolete and new upstarts will transform into industry titans.
Perhaps what is most exciting is the availability of a wave of valuable software applications, information and computing power at a fraction of the cost. In other words, a lot more people/businesses will benefit from technology, have more access to valuable information, be more knowledgeable, perform fewer manual tasks and be more productive. And in the long term, keep our affluent society, affluent!
I still see organizations spending six and even seven figures customizing and implementing on-premise software. Why are these companies still implementing expensive in-house infrastructure? My answer: they budgeted for it years ago, the capital expense has been approved and its part of the 3-5 year “technology strategy.” This approach will change.
Just as Software as a Service vendors have had to change from long development cycles to short iterative cycles that take months instead of years, businesses will also learn that there is a rapidly changing supermarket of inexpensive cloud computing technology available for them to “plug into” at anytime, for a fraction of the cost.