What is this big switch you see coming? I think we're at the early stages
of a fundamental shift in the nature of computing, which is going from something
that people and businesses had to supply locally, through their own machines
and their own installed software, to much more of a utility model where a lot
of the computer functions we depend on are supplied from big, central stations,
big central utilities over the Internet.
It's analogous to what happened to mechanical power 100 years ago, when the
electric utilities changed the nature of that resource and how businesses and
people used it and received it.
How did you come upon the electricity analogy for computing? It was
pretty clear to me that we were in this kind of shift. I'm interested in the
history of technology and had been reading a lot about the technologies of the
Industrial Revolution. It struck me that the kind of radical shift that businesses,
in particular, had to go through when they decided to close down their waterwheels
or steam engines at their factories and trust an outside supplier to provide
this essential resource reflected the kind of upheaval that people feel in computing
when they begin to rely on and trust outside suppliers to supply another essential
resource.
You refer to both electricity and information technologies as general-purpose
technologies. Has computing gained that status? Yes. General-purpose technology
is a term that economists use to describe any technology that can be used for
many, many different purposes. They're very rare, and they're very important
in economic and business history for the simple reason that you can use them
so broadly. I think it's widely acknowledged now that the two most important
general-purpose technologies in history really are electricity and computing.
Processing is done in so many different ways and for so many different purposes.
Is it really as general as you make out? The analogy between electricity
and information technology works at an economic level, pretty well, I think.
When you start looking at a technological level, you see that there are, of
course, major differences, and I'm not arguing that IT is like electricity in
some fundamental technological way.
The main difference is that IT is extremely modular in a way that electricity
wasn't. With the electric utility, they produced the power, transmitted the
power, and then everything on your side of the electric socket was your responsibility.
With IT, all of the functions can be considered as individual modules. Raw processing
can be done either locally or over the net; data storage, same thing; and all
the applications -- unlike electricity -- can also be supplied either locally
or over the grid.
But I do think that, if you break computing down to its essence -- which is
data processing, data storage, data transmission -- that it is very much a general-purpose
technology. Similar to the electric grid, you can build all sorts of applications
or appliances on top of it to do all sorts of things.
Which will be more significant in the near future: scientific and engineering
breakthroughs or economic forces? Ultimately, it's the economics that really
determine what people and companies do. It's easy to lose sight of that, because
it's exciting to see technological breakthroughs and progress. But businesses
are completely economic beasts. It's going to be the economics of IT, and the
central or local supply of IT, that determines how companies think about information
technology in the future, and how this new utility industry matures and grows
and the ultimate structure that it takes.
What do you recommend to CIOs and CTOs? The first thing I recommend
is staying aware of these new capabilities that are coming online and not viewing
them as threatening. Even though they promise to transform or even fundamentally
change the nature of IT, they're not something to be feared, because companies,
CIOs and IT professionals now have many more choices, and will continue to have
many more choices, as online services get better and the suppliers build their
own scale and increase their own sophistication and reliability.
So really this is a trend to be welcomed because suddenly, if you're a company,
you have more options in how you get the IT capabilities you need to operate
your business.
Do you think corporate IT departments will shrink? I think over the
long term they will, and by long term I think this is a shift, like we saw with
electricity, [over] a decade or two, particularly for larger companies.
A lot of the jobs that are inside IT departments today, in fact the majority,
are related to maintaining the internal assets -- the machinery and the software
that runs locally. Over time, those kinds of jobs will move from inside companies
to the supplier side.
The IT department may shift more toward pure manager of information or connector
of software services to business processes.
Do you think the same thing might be true for some of the vendors? Yes,
definitely. There are a couple of trends here. One is the supply of IT -- whether
it's raw computing, data storage or applications centrally -- which will tend
to expand the workforce on the supply side. On the other hand, we're seeing
a fast move to more automated IT services through virtualization and other types
of trends, which will tend to push down the labor requirements. So we have two
opposing but very tightly related trends.
Explain the World Wide Computer and its programmability. I argue that
the World Wide Web is turning into a World Wide Computer, which means that all
the pieces of a computer that we used to maintain locally -- the data processing
chip, the data storage and the applications -- can now be assembled from components
that lie out on the Internet, and may be supplied by many different companies.
In essence, that means that the Internet, like any other computer, becomes programmable.
If you're an individual at home, you can go to Facebook
and program the information flows, and you can manipulate what is in essence
a software program to your own needs. You can program the Internet. I think
companies now also have the capability to assemble the IT requirements for their
business from all the components that lie out on the Internet or in their own
data centers that are hooked up to the Internet.
One of the big challenges for companies is to figure out how to program this
great new shared machine in a way that fulfills their needs efficiently and
flexibly and reliably.
If companies are starting to use the Internet for data processing, is security
a huge problem? I don't think it's a huge problem. The onus is on the suppliers
to prove their reliability and security and earn the trust of the buyers, but
my own feeling is that ultimately the utility model will offer greater security
than we have today, because today our IT system is incredibly fragmented. Some
companies and some individuals are very attuned to security and are very good
at it, and others aren't.
A lot of failures of security aren't because of some central failure, they're
because of individual failures in taking appropriate care. As we move toward
more of a utility model, and more and more data is supplied from big utilities
whose entire existence depends on maintaining a high degree of security, I think
we'll ultimately see more secure data.
Electric utilities have tended to be highly regulated. Do you see the same
thing happening with computing? My opinion about that has changed quite
a bit, even since I began writing the book. Originally I thought the modularity
of computing implied that we could have a very diverse set of suppliers whose
services would be joined together through a lot of industry standards. So my
initial imagination of the utility industry was of a lot of different companies
doing different specialized things and competing with each other in a way that
you don't see with electricity, which tends naturally to become a local monopoly.
There's no reason that computing needs to be a local monopoly, since you can
supply these things in many different ways from many different places.
More recently, though, I think we've seen a lot of pressures to centralize
and build utility data centers of really massive scale, which requires a lot
of money and a lot of expertise. That implies that we'll see a great deal of
centralization in the industry. If that does come true, if we have monopolies
or oligopolies begin to form, I think inevitably we'll see more governmental
regulation the way we see with other utilities.
You claim that there was a democratizing effect from the electric grid.
Do you think the same thing will be true from the computing grid? Yes. Once
you start computing as shared services, you can gain great economies of scale
and you can push down the price of computing even as you expand the availability.
The great advantage of this model is probably for smaller companies, which
have been at a disadvantage to bigger ones because they haven't been able to
build big data centers or put into place big ERP systems. As soon as you move
to the utility system, you suddenly level the playing field and allow smaller
companies to tap into the same kind of sophisticated computing operations that
have been available to larger companies.
