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Monday, April 18, 2005

End Of Corportate Computing !!

Nicholas Carr writes, "Information technology, like steam power and electricity before it, is a general-purpose technology used by all sorts of companies to do all kinds of things, and it brings widespread and fundamental changes to commerce and society. Because of its broad application, a general-purpose technology offers the potential for considerable economies of scale if its supply can be consolidated". But those economies can take a long time to be fully appreciated and even longer to be comprehensively exploited. During the early stages ,by necessity its supply is fragmented. Individual companies have to purchase the various components required to use the technology, house those parts on site, meld them into a working system and hire a staff of specialists to maintain them. That’s been the traditional model of business computing. Such fragmentation of supply is inherently wasteful. It forces large capital investments and heavy fixed costs on firms, and it leads to redundant expenditures and high levels of overcapacity, both in the technology itself and in the labor force operating it. Now, exactly a hundred years later, the private data center faces the same fate.
Carr argues, Computing utilities will bring to an end the traditional model of "corporate computing" in which computing was carried out within individual corporations. And computing utilities will also represent the end state of business computing in general. It's IT's destination. Companies go to vendors to purchase various components — computers, storage drives, network switches and all sorts of software — and cobble them together into complex information-processing plants, or data centers, that they house within their own walls. Their executives are routinely sidetracked from their real business — manufacturing automobiles, for instance, and selling them at a profit — by the need to keep their company’s private IT infrastructure running smoothly.The creation of tens of thousands of independent data centers, all using virtually the same hardware and, for the most part, running similar software, has imposed severe penalties on individual firms as well as the broader economy. It has led to the overbuilding of IT assets, resulting in extraordinarily low levels of capacity utilization. When overcapacity is combined with redundant functionality, the conditions are ripe for a shift to centralized supply. Yet companies continue to invest large sums in maintaining and even expanding their private, subscale data centers. Why? For the same reason that manufacturers continued to install private electric generators during the early decades of the 20th century: because of the lack of a viable, large-scale utility model. But such a model is now emerging..." I think while Carr's argument looks logical,it may take a long time to embrace this model and also given the fact technology obsolesence is very high and since technology is seen as a key differentiator for running a business,we may see necessarily varied models of adoption of technology including varied levels of investment and usage of IT.

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