A former colleague and friend, Esteban Herrera, commented on Nick Carr’s summary of Nick’s new book, The Big Switch. Nick is really getting around - on September 25th Nick was on The Colbert Report, a segment that was absolutely hilarious.

Esteban’s post focused in on Nick’s comparison of how 100 years ago, companies stopped producing electricity themselves in favor of consuming it through an electric utility and how that corresponds to today’s move to cloud computing. Esteban agreed with the general notion and the trend, but registered a few concerns and asked for comments.

Like Esteban, I think the general concept of cloud computing and the Internet becoming “The World Wide Computer” is valid, but the change will be a long journey of resolving several problems that hav not been solved before. Here are my comments to each of Esteban’s concerns:

1. Esteban was not sure the metaphor of electric utility fits because electricity only comes in one flavor and software solutions vary to business situational needs. I hope Nick’s metaphor of the electric utility industry was meant to compare anything the enterprise does that is not in the core sweet-spot and can be provided by others faster, better, and cheaper. If so, the metaphor works fine to me. If Nick meant to compare electricity to software services, I’d have trouble with the metaphor like Esteban. There certainly is room for greater standardization in many areas of business software, but to imply all software can easily be made consistent across enterprises is to say software offers no competitive advantage whatsoever. I guess I’m too arrogant or proud to accept that notion just yet.
2. Esteban expressed that safety and security are two issues that have to be overcome and it will take decades to overcome them. As an architect, I agree and add another: integration. Right now SaaS for the enterprise seems to come as point-solutions. Most enterprises are still suffering from the “waxy build-up” of incompatible point-solutions over time. The “cloud” doesn’t solve that problem by itself. I expect it to get worse before it gets better much the same way point-solutions proliferated over the past couple decades in most enterprises. The immediate gratification a company gets with a point-solution usually takes precedence over the longer term consequences of an complex architecture. So moving nonintegrated point-solutions into a cloud does not integrate them. SOA, WOA, REST, SOAP and all the technical standards in the world don’t solve the problem of having 30 different sources of customer or product data that have different identifiers yet high data redundancy.
3. Esteban also wondered out loud whether “utility” is a good or bad thing. I think this goes back to the first point and what Nick meant with the utility metaphor. If he means getting companies out of the business of doing things that do not differentiate them and can be consumed from other providers that can do the work faster, better, and cheaper, then I guess it is a good thing. But if he means that all software is inherently non-innovative and “utility” SaaS providers can meet all the computing needs of businesses in the future - crap, it’s a bad thing. As one that lived through the 4th Generation Language, CASE tool, Code Generator era, I remember all the hype back then about how the need for software developers was coming to a rapid end. Those predictions were fashionable in the 80’s, but look pretty silly now.
4. Finally, Esteban wonders what the impact of cloud computing will be on the outsourcing industry. This is a very intriguing thing to contemplate. Is cloud computing an alternative that will make outsourcing obsolete? I would think there has to be an impact and traditional outsourcers that see themselves as an alternative to an internal IT department better rethink their business model. For all the reasons previously expressed, they may have plenty of time to react. But the smart ones should start working now on bundling cloud computing options into their services. If they are the ones that figure out the answers to all of Esteban’s concerns, they will get the business and thrive. In essense, they could become the “RedHat” for enterprise software services. If not, their value proposition may begin to errode, eventually to the point of becoming irrelevent.

Thanks again, Esteban for starting an important dialog.