10 January 2017


In my last article, I wrote about a core truth of cloud computing: it’s rapidly turning into a network effect market led by three massive providers: Amazon AWS, Microsoft Azure, and Google Cloud. To my mind, it’s an undeniable truth that these three companies are transforming the very nature of information technology -- they are building massive services that offer functionality that could not possibly exist absent their existence.

However, most of the IT industry fundamentally misunderstands the revolution these providers represent. They insist on perceiving the three as outsourced infrastructure providers and analyze them in the context of how IT organizations have always done business.

So you see discussions about how cloud providers don’t offer the flexibility to implement one-off server configurations. Or how IT organizations can implement the same functionality themselves, but at a lower cost. Or why IT organizations should avoid public cloud computing because of lock-in.

Essentially, most members of the IT industry cannot comprehend doing information technology any other way than it’s always been done, and so fail to understand the enormous impact and innovation cloud computing delivers. They judge cloud computing by their existing practices and find it wanting. Their feature requests typically take the form of demanding that the cloud providers transmogrify themselves into something that looks like the old way of doing things.

Frankly, their inability to understand the profound implications of cloud computing accounts for why business units increasingly bypass IT and directly engage in so-called Shadow IT.

It’s all too sad. And, unfortunately, all too predictable. This ineptness in the face of innovation is reminiscent of the last transformative invention society experienced. I speak, of course, of the automobile.

People viewed the first cars introduced to public roads as dangerous threats. They worried about them scaring horses or injuring pedestrians, which led to red flag laws. They were viewed as noisy intrusions into existing environments, and assessed primarily as to how they would disrupt the current state of affairs.

Inability to understand the profound implications of cloud computing accounts for why business units increasingly bypass IT.
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However, that all changed on April 1, 1913 -- the day Henry Ford launched the assembly line revolution. While Ford’s assembly line started humbly, with a few workers at a stand building magnetos, within 18 months Ford had created what we would recognize today as an automated line passing cars through a series of workstations staffed by workers performing repetitive duties.

Workers assembling magnetos

18 months later, Ford has implemented a fully mechanized assembly line

Ford didn’t stop with creating a fast way to turn out cars. He pursued a vertical integration strategy, buying iron mines and forests, transporting the products on Ford-owned shipping, and placing his own steel mills and foundries next to the assembly line buildings. Unusually, rather than using this increased productivity to grow profits, Ford chose to drop prices for his cars; in turn, this led to increased demand, which enabled further investment in productivity … and you get the picture.

The net result of this strategy was that a Model T that cost $850 in 1908 carried a price of only $260 in 1920, and Ford built over 15 million of them. At its peak, the Model T captured 50% of the worldwide market for cars.

The Ford River Rouge Plant. Note barge in canal.

Clearly, Ford’s inventiveness created a hugely successful and financially powerful company. But that’s not the most important part of the story. What’s really important is what happened as a result of Ford’s invention: the transformation of society.

Important thing to understand about cloud computing is Its impact won’t be on doing the same old IT stuff a bit faster and a bit cheaper.
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Because we are so embedded in an auto-centric world, it’s difficult for us to understand how most people existed before Henry Ford converted the automobile from a luxury to a consumer good. People typically lived in one of two settings: dense cities, or rural country. To go anywhere you either walked, rode a horse, or took a train. The first two were slow, and confined you to your near locale, while the third was fast, but limited your destination options.

A century on, and human habitation has changed more than in the previous 10,000 years. People live in sprawling suburbs and exurbs:

People work in suburban office parks:

People drive to dinner, eating at restaurants made possible by automobiles:

Once easy personal transportation was available, thanks to Ford, other segments of society gradually adjusted their offerings to integrate with it. Over the course of a century, this integration caused profound transformation in the way we live, work, eat, and do virtually everything else in our daily lives.

Not that people expected this when they first encountered a car. They viewed it as something that would create a slightly better version of the ways things already were. The initial term for automobiles betrayed their captivity to existing concepts; they called them horseless carriages. Ford recognized people’s inability to comprehend the potential for cars when he said “If I had asked people what they wanted, they would have asked for a faster horse.” The reality is that the impact of automobiles wasn’t in being able to do existing things a little bit better, it lay in doing things that had never been possible, or even imagined, before.

That’s the important thing to understand about cloud computing. Its impact won’t be on doing the same old IT stuff a bit faster and a bit cheaper. Its impact will be seen in entirely new products and services created by users who assemble new offerings or tinker with existing offerings to deliver something better, made possible by cloud computing’s agility, low cost, and innovative computing services.

In other words, judging cloud computing by how well it mirrors legacy practices is to miss the point entirely. And those who insist that the only way cloud computing can succeed is to allow them to continue doing what they’ve always done, just a little bit better, will find themselves consigned to the ash heap of history.

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