Carr's latest effort to stir the IT pot

Nicholas Carr gets it partially right. Outsourcing is here to stay and is one of the important ways companies will augment internal efforts, but it won't lead to the end of corporate computing.

Nicholas Carr is back, following up his infamous "IT doesn't matter" essay in the Harvard Business Review with a piece in the MIT Sloan Management Review titled "The end of corporate computing."

A common theme in both is that the commoditization of IT has relegated its role to that of utility, much like electricity. This development, he concludes in the first article, means IT is no longer strategic, while in the new piece he argues that utility IT services are best provided by large centralized companies vs. tackled in-house.

It is essentially an outsource argument, and he makes some valid points.

When electricity was not widely available companies built their own generation facilities, Carr says. But when it became possible to deliver power over greater distances, entrepreneurs realized centralized production provided economies of scale and serving multiple customers made it possible to "achieve higher capacity-utilization rates."

IT is ripe for the same metamorphosis, he says, because companies today have large, overbuilt data centers constructed with commodity parts, supporting similar applications.

"The history of commerce has repeatedly shown that redundant investment and fragmented capacity provide strong incentives for centralizing supply," Carr writes.

There is no doubting that outsourcing has an important role to play, and likely an increasing one. Carr is right to conclude that the convergence of virtualization technology, grid computing and Web services is potent stuff that will change the face of computing, making it possible to develop new applications faster, scale environments to meet demand and maximize hardware utilization rates.

But he makes the same mistake in this piece as he did in the first in assuming kilowatts are the same as kilobytes, which colors his conclusion.

Generators were core assets when electricity was scarce or spotty. But when the supply became reliable and cheap, the decision to outsource was simple. Electricity is electricity. Ask a CEO if data is simply data, or ever will be.

What's more, you can't combine 100 volts here and 100 volts there to get 300 volts. With IT, the whole can be greater than the sum of the parts. Piecing together this piece of data with information culled from three other sources can mean real business value, and you don't want to be standing in line waiting for your "utility" to add it up for you.

Carr gets it partially right. Outsourcing is here to stay and is one of the important ways companies will augment internal efforts, but it won't lead to the end of corporate computing.

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