[ON magazine, Number 1, 2008]
The Nick Carr Q & A
The Big Switch: A New IT on the Horizon?
New choices in how a company runs its IT operations
Recently, Chuck Hollis, EMC’s most popular blogger, talked to Nicholas Carr, author of The Big Switch: Rewiring the World, from Edison to Google. In his book, Carr predicts significant changes in IT management as the Internet continues to provide more and more shared computing opportunities. Here are some highlights from their conversation.
Chuck Hollis: Your book presents some very thought-provoking ideas about the future of IT. The way you highlight the similarities between past and current trends is really going to make people think.
Nick Carr: What I’ve noticed over the last several years is a fundament shift in the way people use computers. Ten years ago, individuals used PCs as standalone devices, with applications running off their hard drives. Since then, we’ve seen a dramatic shift, with applications running off the Internet, out of somebody else’s data center.
This trend follows the pattern we saw with mechanical power 100 years ago. Before 1900, people had to generate their own power. With the alternating current electric grid, suddenly power was supplied as an inexpensive, flexible utility to everyone who plugged into the grid.
I believe a similar economic and technological trend is evolving now as the Internet allows us to distribute data applications and raw computing power from afar, just like the electric grid does. We see this happening with Google, which is like a giant information utility, with top-secret data centers all over the world where they run applications like their search engine and Google Earth.
The book lays out what I see as lying behind the shift and talks about some of the implications, not only for business, but also for society and culture in the years ahead.
Chuck: You present a strong case that economics is driving the shift. That’s one argument, but people can be awfully stubborn. What else might cause the adoption of this shift?
Nick: You’re absolutely right about the resistance. Large companies will be the slowest to shift because of their investments in private computing operations, along with their concerns for data security and for the people who have built careers on running the operations.
However, I wouldn’t underestimate the power of economics to drive this new model, which can reduce the cost of computing dramatically, particularly with capital investments. If a company saves a billion dollars, suddenly the resistance is overcome. Another driver is the collaboration and flexibility that we’re seeing with shared data and Web 2.0 applications.
Chuck: Do you think companies that create a new, more collaborative style of working will have a competitive advantage?
Nick: Yes, I do. However, I would say we’re at a stage where the knowledge and skills to build a collaborative infrastructure are pretty scarce. Smart companies will create a hybrid or balanced approach, where they take some resources from the network while they continue to run some IT operations locally.
Chuck: IT departments will in a way become more intellectual, creating value as they answer the question: How can we take these fundamentally modular capabilities and put them together in a sensible way for our business?
Nick: Over time, the IT department as we’ve traditionally known it is going to change fairly dramatically. Right now, it’s clear that most IT people focus on maintaining the infrastructure. I see that function moving outside the company and being centralized on the supply side, rather than fragmented across corporations.
Chuck: If we go forward two, three, or four years, what does the new IT look like?
Nick: First, IT people can’t be defensive about these changes nor can they be afraid of letting go of the assets and capabilities they’ve built up. We’re not talking about a threat to IT; it’s a means of opening up more opportunities and choices for IT and the companies they work for.
Chuck: Like getting a new set of power tools to build something with.
Nick: Right. Moving functions like maintenance to the supply side will free up IT to focus more on the business—how information flows and is deployed, and how to create the right mix of application capabilities, whether internally or externally. IT then becomes a kind of asset manager and broker for information, allowing companies to exploit the information they have.
Chuck: We believe the new wealth of our economy is information. The valuable stuff, the risky stuff, the important stuff is the information. Think of yourself as the new CFO of information and how you use this new asset to run your business, save money, and stay out of trouble. But we’re finding that no one is looking out for the information portfolio. Will large organizations need to govern information the same way they do finances?
Nick: As you know, one of the problems with traditional IT is that it’s private, running in separate islands, and the shift to the grid will help overcome that isolation. But there will be challenges. With external suppliers, the security of information can become an issue.
I believe we’re heading toward a solution, and secure information exchange will become easier over time. Information governance, however, isn’t just about protecting the corporation—it’s also about determining what value we can create when a particular partner has the information.
We’re in a very dynamic place, where norms are changing. We’re already seeing companies combine very rich streams of information about people, whether employees or customers, with very, very cheap computer processing that enables them to crunch data in ways that were not possible before. As this trend continues, companies would be wise to police themselves and to think very carefully about the consequences of using personal information and to err on the conservative side as we make our way into this new world.
I also think the government must deal with issues of information ownership as more commercial and industrial infrastructures become virtualized and go online. Over the next 10 years, the government’s going to realize that economic competition—never mind things like the potential for cyberterrorism and such—is going to hinge on how you control the way the network works, the way you protect sensitive information, and where you put that information.
Chuck: What advice would you give IT managers today regarding the potential challenges and risks of this shift?
Nick: I’d tell them to not view the shift as a threat. View it as an opportunity that’s providing more choices. Stay informed about what’s going on, what’s available, and experiment. Remain open to the fact that the best ways to get the power out of this new model may come from the end user who stumbles onto it in the normal course of their work or home life.
I’d tell them not to fall into the trap the PC caused when IT tried to keep PCs away. People became distrustful of IT as they felt their ability to work efficiently was restricted. That really colored the relationship between the business people and IT.
Right now IT is in a place where, by giving up some of its operations and the assets it controls, it can transition into a more mainstream business function. However if IT resists, it may find that its role actually shrinks as business units or other parts of the company step in and take over.
Photograph by Asia Kepka
