I recently gave the keynote address at a Kansas City symposium on cloud computing. So when I saw this article, my interest was piqued. The author believes that cloud computing is devouring itself. Um, alright. I guess I can buy the premise. But I think the author may be too absorbed with the technical layers of the infrastructure rather than focusing on the real transformation.
From my vantage point (as a consumer and as a technologist), I see this wave of transformation as being more about business and less about technology. Maybe even more important is the fact that tech-centric companies are moving from a capex-centric budgeting model to an opex-centric budgeting model.
What does this imply? First, it means that businesses are seeing IT as fundamental to their future. But while it is fundamental, it is no longer a strategic differentiator. Indeed, most companies are frustrated after spending thousands of dollars (or millions or billions) on IT capital without any real strategic benefit. The cloud allows a company to abandon capex investments in favor of opex outlays. This means that companies can be nimble – assuming that the cloud vendors are nimble enough to meet their customers’ needs.
But the larger and more fundamental implication of this capex/opex migration is that businesses are moving to an even more short-term focus. With a capex focus, companies were thinking about tax advantages and long-term viability. With an opex focus, they are looking at short-term return to the owners/shareholders. This does ensure that a company is competitive as long as it is agile.
But are we abandoning the future by focusing even more acutely on the short term? I am not certain. It does mean that on a micro-level, individual companies are trusting their future to their partners. On a macro-level, we may not be losing future investment streams to other countries. But we are pushing capital investment into the hands of a smaller number of companies that will be managing public or private clouds on behalf of other companies.
If this is indeed what is happening, then the savvy investor will need to look at hosting providers within the tech sector as these companies will be the real capital aggregation points. I’m looking at HP, Rackspace and Amazon being some of the biggest players in this space. And I would throw Salesforce.com into the mix as a software aggregation point.