12/10/10

The End of Corporate IT

[Guest Blogger - Ryan McClead


I have seen the future and there is no IT. Oh, there will be people called IT personnel and there will be external IT corporations, but the corporate IT operations and development departments as we know them today, will cease to exist...and soon. A few wise souls may realize that the end is out there in some amorphous distant future, but in the meantime they slog away at the daily minutiae, oblivious to the quickly approaching cliff off of which they are about to plummet. I predict it will happen suddenly and within the next few years.

There are a number of factors leading to this inevitable demise of corporate IT, but three in particular will be sufficient to bring on the end:
•             The corporate acceptance of SaaS.
•             The explosion of consumer technology.
•             The US economy.

Software as a Service, or SaaS, is software made available through the web for which corporations or individuals contract with an outside provider. The benefits of this are ease of use, ubiquitous access, continual maintenance and backup, and single, budget-able cost of “ownership”. Most of the concerns against using SaaS can be summed up as Security Fears. Many companies are not ready to put their proprietary data up in the cloud for fear that others will be able to access it. Most SaaS data is fully encrypted and unavailable to anyone other than the contracted company. Encryption schemes are only getting stronger and the security argument will largely fade within a few years. I believe SaaS is now where online banking was in 1995. A few people were starting to do it, but it was not widely adopted due to security fears. Eventually, the cost of not doing it will greatly outweigh the security concerns. Today online banking is a necessity because the cost of not doing it is significantly greater than the risk. This is true to the point that even after a major financial security breach occurs, corporations and consumers might change their methods, but they would never consider discontinuing their usage of online banking altogether.

Consumer technology and services have exploded in recent years. With the development of powerful smart phones and the ubiquity of network access, consumers are now connected to the internet all the time, in a way that they used to be connected only at work. This has given rise to all kinds of tools and services designed for consumers to make their lives easier. Social networking, knowledge transfer, contact management, document management, storage, and backup, are all services that corporations provide to their employees at work, but that employees use for themselves at home without the need of an IT department. Consumer services provide all of these services faster, better and cheaper than corporate IT, meanwhile, corporate IT stands in the way of employees adopting consumer technologies in the enterprise, ostensibly to protect the corporation, but the perception is quickly emerging, that we’re actually protecting ourselves. We are becoming obstructionists, preventing people from using the tools that they are familiar with, and forcing them to use outdated tools that we can control. Furthermore, as the older generation of employees retire, the younger employees will require less assistance with technology, and will insist on using the newer technologies that they already use for their personal information management.

The two factors above will continue apace and eventually lead to the downfall of corporate IT on their own, however, they are being helped along by an increasingly poor US economy, in which corporations are cutting back on every conceivable extraneous expense. Many SaaS providers are currently perceived to be more expensive than their internally hosted counterparts. However, that is only because IT personnel and internal infrastructure are still considered requirements. If you remove those requirements, suddenly SaaS is a bargain. As prices of SaaS come down, this will only become more apparent. Economic pressures also come to bear on the enterprise adoption of consumer technologies. Consumer services like social networking (LinkedIn) are free to use and provide much greater functionality than many similar internal services like contact and relationship management applications (InterAction).

Today the office building pays an electrician to walk around changing light bulbs. That is the future of corporate IT. Gone are the sys admins, help desk personnel, and developers. They will all work for external companies. In the future, the corporate IT department is a guy who unwraps a new interface module when one breaks and plugs it into the network conduit, and if the network goes down, he places the emergency call to the ISP. If he’s lucky he will also serve as an integrator for the corporation, a go-between who can speak techno-babble with the companies who provide the actual services, but eventually even that function will go away, as Google and Amazon and Microsoft all provide their one stop plug-n-play IT solutions for enterprise, fully accessible via consumer devices and integrated with consumer services and all available for the price of a handful of IT personnel.  

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9 comments:

Ron Friedmann said...

In this world, what happens to custom applications development?

I agree with the vision but wonder what organizations that want customized apps will do. Do you foresee the architecture (hardware or software) of the cloud becoming rich enough to support the types of customization possible today behind the firewall?

Ryan said...

I think platforms will arise to allow the creation of custom cloud apps. There will probably be several levels of complexity, from wizard driven customizations to full blown application development, but it's unlikely that the programmers will work for your company unless you are in the business of application development.

Val C.P said...

Google Apps is already promoting Ryan's answer to your question Ron. Google is constantly releasing API's to allow programmers make custom apps with their services. Allowing ambitious programmers free rain to create a market place for their products.

Steven B. Levy, author of Legal Project Management said...

Nick Carr has been making this argument for almost a decade in his books Does IT Matter and The Big Switch and in his column Rough Type.

I don't think it's all or none. It's reasonable for much of apps-IT (as opposed to infrastructure-IT, which is a different story) to become commodity and largely cloud-based. There will continue to be custom apps where there is a competitive advantage, but that window is shrinking -- or rather, the increasing cost of opening that window is outrunning the competitive gain in more and more cases.

There will also be, for the foreseeable future, a few mission-critical apps where the cloud isn't yet thought to be reliable or secure enough. (I'm not arguing that it is or isn't, only that corporations believe it isn't. Yet.)

That said, I think there is a lot to be gained by moving 80% of apps-IT to the commoditized cloud.

Anonymous said...

I often wondered why any developer worth their salt would want to work within the confines of a law firm.

Law firms focus on providing legal services not software. Developers working for law firms would be treated as third class citizens at best.

With that mind, if law firms think they are getting a large ROI from the development talent they have in house, I suggest they take hard look at the systems that have been created by far superior development teams.

Companies turn to the best law firms because those firms deliver superior legal services. Shouldn't the best law firms turn to the best development teams for their software needs?

Anonymous said...

Yup, I work in IT for one of the top 5 law firms in the world and I have to say this is pretty much the case with one tiny wrinkle. Security is always going to be an issue with law firms and the large amounts of privileged data they handle. This seems to be the only real hurdle for firms making the move to the cloud. I figure if you are a network security person you probably have a good future in law IT. If you are however a serious tech that craves exciting complex problems. I'm not sure law firms are where you want to be looking.

Steven Savage said...

I entirely agree - and I think you make a good point that this trend is faster than people realize.

After reading your article, I think there's another factor driving this - tablets and mobile devices. Simple, fast, effective tools like this, untied to any IT department. We're getting used to "computing" (even if its tablets and smartphones) thats simple, supported, and fast.

And that's what you get with a lot of outsourced IT.

Scott Preston said...

The change in software development will be from in-house developers to business analysts. We are seeing this transition now. The value add for in-house technologists is a deep understanding of the business. If the technologists don't have a deep understanding of the business of a law firm, they will be outsourced.

John said...

Nice Posting.

There is so much you can now offer in a cloud environment, ranging from the power of a grid-based server system, redundancy, user and administrative control, continually updated features and even customization.

It will take a bit longer but the battle between the appliance and the cloud has only one outcome. A thousand servers against one is an unfair battle.

But, its fun to watch things develop and to be along for the ride.

 

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