Nicholas Carr: Why IT Will Change

Nicholas Carr opens his new book with an example of high technology, circa 1850: the great water wheel built to power Henry Burden's ironworks in upstate New York. Just a few decades after it started turning, though, the giant wheel stood abandoned in favor of cheaper, easier-to-use energy from the new electric utilities.

In The Big Switch: Rewiring the World, from Edison to Google (W. W. Norton, 2008) Carr equates the mass electrification of the industrial world to what he sees as the coming age of the computing cloud, in which gigantic data centers and robust Internet connectivity will doom to obsolescence today's corporate information technology infrastructure. "In the end, the savings offered by utilities become too compelling to resist, even for the largest enterprises," he writes. "The grid wins."

In his previous book, Does IT Matter? Information Technology and the Corrosion of Competitive Advantage, Carr argued that corporate IT is increasingly becoming a commodity. Well written and researched, The Big Switch (go.cioinsight.com/BigSwitch) is not any more encouraging than its predecessor for CIOs who want to preserve the status quo. Soon enough, says Carr, a former executive editor at the Harvard Business Review and author of the punchy Rough Type blog, the job of managing even commodified IT will disappear.

He writes in the book, "In the long run, the IT department is unlikely to survive, at least in its familiar form. It will have little left to do once the bulk of business computing shifts out of private data centers and into 'the cloud.' Business units and even individual employees will be able to control the processing of information directly, without the need for legions of technical specialists." Meanwhile, the impact of this new information grid on business and society at large will be tremendous.

Carr discussed the subject with senior writer Edward Cone. An edited version of their conversation follows.

CIO Insight: For a guy who likes to deflate technohype, you make some pretty big claims in this book. Why do you think the changes afoot will be so massive?

Carr: I'm more confident today than when I started the book a couple of years ago. It comes down to economics. If you can get the information processing you need in a more economical way, then companies will naturally move in that direction, and that's what utility computing is starting to offer.

Ultimately, corporate decisions are economic decisions—and the advantages of utility computing are going to push companies in that direction.

The shift seems to be proceeding quickly. Companies are more open to using software-as-a-service offerings and other Web-based computing services than they were a year ago.

Smaller and midsize companies are leading the way. These organizations have the most to gain immediately from moving to the utility model because in many cases they just don't have the capital to build out IT infrastructures the way large companies do. It allows them to level the playing field without having to invest a lot of capital.

Over the last year or two, on the buyer side and the supplier side, we're seeing a fairly rapid evolution upmarket toward larger companies buying into the concept. You can see it in the shift in Salesforce.com's clientele, which started very much in the midsize company market and is moving up consistently to large companies, in some cases very large companies.

The biggest hurdle, particularly with large companies, is convincing them that they don't have to run everything themselves. That kind of shift in thinking can take many years, particularly given the fact that it's been their assumption for 40 or 50 years that they have to do all their own computing.

Page 2: The Hybrid Model