A subtle economic shift is happening in the industry. IT has for a while now been the single biggest capital investment for many companies. But the move to SaaS and HaaS is allowing them to start thinking of buying more of IT as an operating expense. And on a variable capacity basis. As companies consolidate data centers and use more virtualization, they squeeze even more out of capital investment. While there will continue to be be exceptions like UPS building out its delivery infrastructure or banks continuing to invest in large card or mortgage transaction engines, for most general commercial applications, the shift towards Opex is clear.
But this is pushing the onus of capital spending to the vendor community. Google's grid. Microsoft's grid. 21st century pyramids as Mark Anderson calls them. Outsourcers will find fewer data center deals in corporate world, but many more co-location and predictable service needs in vendor world. Software vendors will discover the need to deliver to stringent SLAs not just release software, buggy or not. They will learn what customer due diligence visits mean around security, scalability and business continuity. Telcos which intrinsically understand large capital spend management will find IT services an even more attractive market to diversify into (Verizon is learning with MCI, AT&T recently acquired USi). Wall Street will learn to accept Microsoft and Google's large capital needs as it acknowledges the shift in the capital spend from consumer to producer.
IT as a dial tone. May sound boring but lots of companies would like it with that reliability, scalability and predictable cost. But to get there the industry will see massive change - a lots more pronounced than going from CA to O on the annual corporate budgeting forms. And a lots more CA in vendor world.
