Author: Bill Kirwin
I am currently reading a book (77 Shadow Street, by Dean Koontz) where the main antagonist is called “One.” One is comprised of trillions of bots; nanocomputers that have common architectures and specialized functions that can create new biological forms. The attribute that makes them One is a collective consciousness and singular directive. I will call One an amalgamism in that it expresses itself as a single organism while being an amalgomous assemblage or pooling of computing resources.
I am also reminded of Thomas J. Watson’s alleged 1943 statement, “I think there is a world market for maybe five computers.”
Today, I believe Mr. Watson was wrong by a factor of five.
My prediction is that within 10 years, today’s cloud computing diaspora will be viewed as one abstract entity, a common seamless pool of resources to build, deploy, and apply solutions. It will be location independent, device agnostic and deliver the collective aggregation of big data and intelligence of the masses. It might even be self-analytical and intuitive as well as self-healing.
I project that in 10 years over 50 percent of business computing transactions will occur on this platform, rising to 80 percent in 15 years. Whatever infrastructure remains outside this pool will be virtualized resources that are not incorporated. These non-federated resources will probably remain so due to regulatory and security issues that require extra hardened protection.
So what are the implications of this ubiquitous computing utility? First let’s look at the IT industry.
Hardware – Over the next 10 years, commercial data centers will shrink by attrition as their private/hybrid cloud footprint shrinks due to the rapid shift of economy balance toward hosted solutions. There will be a common, commoditized hardware architecture (x86?) that will primarily be marketed to a relatively small number of utility providers with huge, globally decentralized data centers. It will be almost as exceptional for a business to have its own computers as it is today for a company to generate its own electricity.This transition looks identical to the one that took place in the late 1800s as utility power companies began to be the norm for power generation and provisioning. Also, telecommunications companies have followed a similar model, as many smaller entities came together to form a few large collectives that provide centralized services regionally.
Key insight – hybrid cloud is a transitionary state and will likely grow over the next 3-5 years and then fade as architecture within the 10-year planning horizon. This rise and fall will be driven by the complexity (and resulting cost) and corresponding cloud economics.
Software – Software as a service (SaaS) will be the predominate delivery model for an increasing number of business applications, which require additional security parameters and offer centralized services such as tax and payroll processing. The term “community cloud” was tossed around a few years ago to describe cloud environments and applications that were industry specific; such as healthcare and finance. There will be fewer and more dominant application service providers and a cultivated supply of start up players, of which over 95 percent will be acquired or not survive. The remaining 5 percent will break out to be next-generation commercial SaaS providers.
Patent law will become as important as innovation as a driver of acquisitions. Competitive differentiation for businesses will be found through optimizing business process and creative use of software, but not by customizing software itself. However, platform as a service (PaaS) will continue be available for new application development for in-house use and for commercial developers. Software will be provisioned by consumption models rather than licensing models.
Key Insight – There will be 10-20 market dominant SaaS enterprise market leaders driven creatively through acquisition from a farm system of smaller developers.
Services – The services market will largely migrate from complex implementation engagements driven by the need to integrate disparate systems and merge private and external cloud solutions to optimizing business processes and developing service delivery systems for IT management. This will be a key efficiency driver, as service labor costs become the dominant IT cost driver over the next five years.
As market forces have taken the hardware market down to “seeds and stems” and driven the software market to the lowest cost model of usage based pricing, it has shifted the IT market to a professional service based model. Professional services will be the next frontier for cost reduction. Reducing the complexity of IT will reduce the need for professional services, thus enabling an ever-increasing demand for IT. However, it remains to be seen how the cost elasticity will increase the overall IT market size.
Key Insight – Complexity of IT systems will be radically reduced by singular cloud solutions, which will steamroll the market to those solutions.
Thus, in 15 years there will be One compute resource that will provision transparent, abstracted, automated and well managed IT and inform commercial enterprises both large and small. This platform will enable new levels of innovation as businesses compete for market efficiency and creative solutions.
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Bill Kirwin is an analytics consultant for VMware Accelerate Advisory Services.