Clouds & storms: Nicholas G. Carr on cloud computing

Working for a frozen water company must have seemed like a sensible career move in New England during the 1850s. During the age of steam, America's ice traders carved 10 million tons of the stuff out of local rivers and lakes every year. They kept it cool in specially constructed icehouses, wrapped it in hay and then exported it around the world.

In London, during the mid-1800s, no elite dinner party was complete without a sparkling mountain of ice cut from Wenham Lake in Massachusetts. Frozen water from New England also found its way to destinations as diverse as Martinique, India and Singapore. With it came recipes for ice cream and cocktails dreamed up by promoters to generate demand.

In the end, it was the electricity generators that killed off this thriving business. Equipped with fridges, householders began to make their own ice. By 1920, the frozen water trade had all but disappeared in North America. This story of this mighty industry that melted away crops up in Nick Carr's latest book, The Big Switch.

According to Carr, cloud computing threatens the traditional IT department just as surely as electricity generation once threatened the ice traders. In retrospect, he argues, today's IT departments will come to be viewed as an evolutionary dead-end -- a temporary aberration necessitated by client-server computing but wiped out by The Cloud, which is emerging as the dominant mode for corporate computing.

If that argument sounds familiar, that's because it refines the thesis that Carr first propounded five years ago in a paper for the Harvard Business Review called "IT Doesn't Matter". In that article and in the subsequent book, Carr lunged aggressively at the shibboleths worshipped by IT professionals and at the industry that generates US$2 trillion in revenues annually by selling hardware, software, services and bandwidth.

IT, Carr proposed, had become a mere cost of doing business. Increasingly commoditized, it was "essential to competition" but "inconsequential to strategy".

Carr argued that CEOs needed to aggressively restrict the ambitions of IT departments. As for CIOs, he pleaded that their "ultimate professional goal" should be to "render themselves obsolete".

This would happen, he said, once the infrastructure of IT became "so stable and robust, so taken for granted, that it no longer requires active high-level management".

Five years after the great howl of outrage cause by Carr's first book, re-reading it is interesting. But trawling through its index is positively fascinating.

Open-source software, for example, merits a relatively heavyweight six mentions (it's a small index). But if you follow up each of the references, it becomes clear that Carr regarded the phenomenon as peripheral at the time.

Google ("operator of the leading internet search engine") receives just two, very brief, mentions. Between them, the words "cloud", "grid" and "utility" appear above the parapet just once.

Five years ago, Carr was describing The Cloud as a "utopian" prospect that must overcome "many technical barriers". It's a measure of how much times have changed, rather than a criticism of the author, that The Cloud now receives star billing in The Big Switch.

Change for the better

Just as interesting is the accompanying change in the way Carr thinks about IT departments. Yes, Carr still thinks that the IT department is "unlikely to survive, at least not in its current form".

But the form that IT departments will assume after the switch to cloud computing seems a lot more exciting to Carr now than it did five years ago. Back then, Carr was described as chucking "the rhetorical equivalent of a 50-megaton smart bomb" at corporate IT. Today, the terms of debate are more complex and more subtle.

Speaking on the telephone, Nick Carr sounds slightly hesitant.

I ask him whether his view of IT managers has changed during the past five years. Perhaps, I suggest, he has spent so much time speaking at CIO conferences that he has fallen victim to Stockholm Syndrome -- the psychological condition in which kidnap victims start to identify with their abductors.

Carr laughs, and then answers: "Hard to say. I don't think so."

So does he still get invited to conferences to say nasty things about IT managers?

There's a lengthy pause at the other end of the line.

"Er, yes," Carr replies.

He elaborates: "It's not so much saying terrible things about IT managers as challenging IT managers on some of the assumptions they hold about what they do.

"I have no problem being the designated irritant or a provocateur if it can lead to some self-questioning.

"In some ways, what I'm most proud of is fostering a debate that hadn't really happened up to that point."

Carr remains a popular speaker. In June 2008 alone, he was scheduled to appear at four conferences -- in New York, Orlando, Amsterdam and Boston.

It's not hard to see why. One conference organizer in the UK recently described him as an "excellent warm-up man". He explained: "Carr cost us a lot, but in the end, he was worth it. We put him on first and he really stirred up the audience."

After publishing "IT Doesn't Matter" in the Harvard Business Review in May 2003, Carr resigned from his job as executive editor of the Review and worked his ideas up into a book that eventually appeared under the slightly less aggressive title of Does IT Matter?

Agent provocateur

Does IT Matter? might have been intended as a provocation, but its success has institutionalized scepticism about corporate IT. Having changed the terms of debate, how far has Nick Carr moved on?

Carr maintains that Does IT Matter? and The Big Switch share a basic message: that it makes sense to "start thinking about business IT as shared infrastructure".

Primarily, he insists, this is because IT in itself "no longer provides competitive advantage".

"At this level," says Carr, "the big message is consistent."

That said, Carr's thinking has changed in two important ways.

Does IT Matter? felt like the spiky debut of a young man in a hurry. It was written by an outsider, a former management consultant, who peered into the IT department and was worried by what he saw. Like many before him, Carr responded with a simple Neanderthal recipe: follow, don't lead; innovate when risks are low; and focus more on vulnerabilities than on opportunities.

In one way, this wasn't so surprising. Carr's approach to corporate IT reflected the temper of the times. In 2003, the idea of technology-led innovation was buried below layers of attitudinal permafrost. To put it bluntly, not much was happening.

"Yes, my advice was to cut costs, avoid risk and not really innovate," says Carr over the phone.

That advice, he admits, is now "contradicted" by parts of The Big Switch.

The second change, says Carr, involves the way in which he thinks about CIOs.

A tad defensively, he says he never liked the idea of singling out IT managers as "whipping boys".

Maybe not. But Does IT Matter? did precisely that. The book encouraged CEOs to regard their IT departments as irredeemable spendthrifts with questionable project management skills who ran a rather boring branch of corporate operations.

Carr has partly recanted this view. As he puts it: "I think I declared IT management boring too early. As we go through this change in the nature of IT, there are some big decisions, risky decisions and exciting decisions that companies will need to make."

There's definitely a hint of Stockholm Syndrome in this, I suggest. At the very least, he now writes like an insider, and not an outsider.

"Speaking to a large range of IT professionals has probably given me greater respect for their work," says Carr carefully. "I have met a lot of IT managers who found my arguments interesting even if they didn't buy into them. For the most part they have been very temperate in their responses to my writing, unlike the IT industry which took great offense."

Fighting talk

The IT industry did greet Does IT Matter? with a hailstorm of abuse. Bill Gates called the book "the dumbest thing I've ever read" Not to be outdone, Steve Ballmer called it "hogwash".

Another Microsoft executive, Charles Fitzgerald, threatened to write a couple of articles for the Harvard Business Review -- one entitled "Brains Don't Matter" ("Everyone has a brain, so why bother to think?"), the other called "Food Doesn't Matter" ("for the restaurant business").

During a question-and-answer session at a Gartner conference, Intel's perennially prickly Craig Barrett refused to discuss Carr's ideas, suggesting instead that he and his interviewer "talk about something more consequential".

The mob reacted with less courtesy. Anonymous users at one IT news site called Carr a "charlatan" and the "Janet Jackson of authors". Summing up, National Public Radio in the US suggested that the industry's preferred solution was to burn Carr at the stake -- "metaphorically at least".

Since these outbursts, Nick Carr and the IT industry have largely kept their distance from one another. A few vendors, he says, have actually "enquired" about taking him on as a consultant. But nothing has ever come of it.

"To be honest," Carr tells me, "I've found that between speaking and writing I can make a living. So by avoiding consulting I think I can maintain my independence a little more clearly."

Silver linings

Despite this, I get the feeling that Carr would like to be known for something other than his ability to start a fight in a room full of IT salespeople. Conveniently, the development of cloud computing gives him something mildly positive to say. Like much of his writing, Carr's discussion of The Cloud proceeds by analogy. The starting point is familiar enough. It's been kicking around since the mid-1990s, when Scott McNealy, then CEO of Sun Microsystems, liked to tell audiences that his mother would never have to use Windows again.

Instead, said McNealy, she would use "a new model of computing ... a Java client, because you just click -- down comes your application, it's verified, it's safe, it runs".

By 1999, Larry Ellison was telling anyone who would listen that corporate IT would "begin to look like the electricity utility, the telephone utility, or the water utility systems".

So how much has been achieved in a decade? Given the hype, not a lot. Part of the explanation, suggests Carr counter-intuitively, has been bandwidth scarcity, and if you accept that argument, you might also accept that The Cloud is destined to become a permanent feature of life this time around.

Carr certainly thinks so. Oddly, how-ever, The Big Switch soft-pedals the question of what will happen to the finances of Oracle, SAP, IBM and Hewlett-Packard when they venture into The Cloud.

This is curious. To understand why, you only need to look at the revenue growth and share price performance of utility companies. In the absence of oil shocks, both are typically as flat as the Fens. Utilities are companies for widows and orphans, safe investments characterized by thin margins, big cashflows and fat dividends. They tend to be highly regulated too -- something that presumably delights the denizens of Armonk (headquarters of IBM of course).

In conversation, if not in print, Carr does have some thoughts on this. He thinks that there's "a lot of internal conflict going on" at enterprise IT giants.

The traditional vendors, says Carr, should be worried that and are offering cloud services "for a modest fee -- in Amazon's case a very modest fee and small profit margins".

He also believes that there is some denial in the mix. SAP's web-based Business ByDesign offering, he says, has been presented internally as a way of opening up the mid-market. "But if it works for the mid-market," says Carr, "it's going to eventually work for the big guys too."

This prompts the suggestion that running cloud and client-server businesses alongside one another will prove "troublesome, difficult and expensive" for traditional software vendors.

Some critics accused Carr of excessive generalization in Does IT Matter? The same criticism might be made of The Big Switch.

Carr admits: "I emphasize the role of the central utility provider because that's where we're going to see a lot of growth."

In the real world, things will be a lot more varied. "For large companies," says Carr, "it's going to be a hybrid model for a long time. The traditional functions of IT departments aren't going to disappear overnight."

Carr predicts that lots of large companies will want to "run their own clouds while also pulling in capability from outside suppliers". This, it turns out, is one of the reasons why running corporate IT will be less "boring" in the near future than he once thought.

Carr also foresees the possibility of a "lucrative period of re-investment in IT" over the next few years as corporates build out their own cloud capacity. Much of that re-investment should benefit behemoths like IBM and Hewlett-Packard.

Carr believes that IT departments will lead a hybrid for the next five to 10 years. In this variegated world, Carr predicts that IT departments will only progressively divest themselves of what he calls "digital millwork".

But what, if anything, will remain in the wake of this "wrenching" change? Actually, quite a lot. Getting out from underneath the burden of maintenance and support should allow CIOs to realize one of their "desires", he says.

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