CIO Straight Talk - Issue 2 - 56

systems. Ultimately, that fragmented model got replaced by
the AC system, which went a step further in centralization.
We are seeing a similar thing happening in cloud computing. We are, in a way, in the “Edison stage.”
We see this with private clouds, for instance, with lots of
companies building their own utility computing center, or
data center, or having somebody operating it for them. This
is very much like the Edison model of “build your own
generator.” And at the same time, we are seeing the
build-out of public grid, the shared grid – and again, this is
something we saw in the early stages of the electric utility
industry. I think we are entering the same kind of transitional period: Although private cloud computing plants will
be popular for quite a long time, increasingly, more of these
services will move toward the public grid.

You have interviewed a lot of advisors, CIOs and
experts in this field. Do you think that they are
working toward a common workable system?
I would say no, in many of the cases. The way cloud
computing is developing – and, again, this is common – is
that different suppliers and different users look at this as a
set of tools to do particular things. So we’re seeing great
progress in particular in SaaS applications, in a particular
model of utility: computing utility services, storage,
compute cycles and so forth. But a lot of this innovation is
still taking place in a fragmented way. One of the biggest
challenges in cloud computing in the next five years or so
will be: How do we make this a unified system? How do
we set the right standards for interoperability and data
transfer? How do we create interfaces that allow us to
integrate all of these fragmentary services? This is going to
be a necessity for getting all the promise of cloud computing. And also, it is going to be a big area of competition
among IT suppliers and a big worry for the users of IT
because increasingly they will want more integration, more
standardization and more interoperability.

Technology that is more efficient when shared rather
than run in a fragmented way – “infrastructural
technology,” to use your term – tends to eliminate
jobs. So when you actually go to an IT organization
and talk to the IT person, how do you allay their
fears? What guidance do you give them?
To some extent you can’t allay all those fears, because
some of the fears are very well-founded. No doubt, as the
power of IT increases, the sets of jobs it can replace, or
reduce demand for, increases. A big question in general for
the economy is whether IT ultimately is destroying more
jobs than it creates. So far, our hope is that this won’t turn
out to be true. It certainly wasn’t true with Industrial
Revolution, which also got rid of some jobs, but created
many more in their place.
So far, there is no clear evidence that IT investments are
creating big new areas of employment, particularly wellpaid employments. Within the IT organization itself, one of
56

// CIO Straight Talk

the effects of centralization is automation, which often
comes along with it. This leads to a reduction in the
demand for certain kinds of IT skills – data center maintenance, application administration and so forth. The need for
those kinds of skills may come down in the future.
Although some of them will be sucked up by the supplier
side, one way the cloud suppliers compete is by being very
efficient and a fairly non-labor intensive operation. On the
other hand, what we continue to see in IT more broadly
defined is that there are constant shifts in what skills are
valuable. If we look throughout the economy, there are still
people who are very smart programmers, who are very
smart at building interfaces, at figuring out all the different
ways – whether it’s social networking or internal collaboration in companies – computers can help those types of
activities. These become areas of booming employment,
even if they might not influence the entire economy.
For internal IT staff, it is really important to look out ahead
at what skills are going to be in demand in the marketplace
and what skills are going to lose out in value. They can then
ensure that in their own personal career they make a ‘skills
transition,’ if that is what is necessary, and begin to look
ahead to what part of their skill sets need to be strengthened, what part is going to be less important and thus make
the transition with the technology itself.

If you put on your economist’s hat, do you think that
the cloud will result in, to use Joseph Schumpeter’s
term, creative destruction in the IT industry going
forward?
I think it will. We are in an interesting stage right now. In
the IT industry, most if not all IT companies – starting
from big transitional component suppliers, whether
hardware or software, to the outsourcing and service-based
companies to the pure-play cloud computing upstarts,
whether SaaS or IaaS or PaaS – recognize that this model is
going to shake up the industry. On the other hand, the fact
that we are seeing lots of investment in private clouds – the
refreshing of old data center models and the technologies
that go into that – has meant that even a lot of traditional
suppliers are now seeing the move to the cloud as a growth
opportunity, rather than a threat to their existing business. If
you, as a company, can provide the hardware and software
and the services that allow individual companies to build
private clouds and get the advantages of virtualization, you
can make a lot of money.
I think, though, right now we are probably underestimating
the amount of disruption, whether it is creative destruction
or just pure disruption, that is going to happen because of
this change. Ultimately, a lot of companies are going to hit
the point of diminishing returns by investing in their own
private cloud. That is going to push them more and more
onto the general utility grid. And as that happens, you are
going to see a lot of areas of IT becoming pure commodities. That could create a huge dent in many big companies’
profit margins. So I believe we will see even more creative
destruction – more than we anticipate right now – over the
course of next 10 years or so.



CIO Straight Talk - Issue 2

Table of Contents for the Digital Edition of CIO Straight Talk - Issue 2

CIO Straight Talk - Issue 2
Contents
So What Do CIOs Want
Innovation at the Periphery
The CIO as Thought Leader
Career Move: From Managing Technology to Managing Change
Every CIO is in the Information Business
Analytics and Decision Making
Putting IT at the Center of the Customer Experience
Pick n Pay Focuses on Delivering Value to Customers
Bringing "Lean" to IT
Whither the Cloud in a Stormy IT Enviroment?
Management by Driving a Stake in the Ground
From Data Processing to Orchestrating Knowledge
Extreme Collaboration
Enterprise Mobility: Delivering the Connected Customer Experience
CIO Straight Talk - Issue 2 - CIO Straight Talk - Issue 2
CIO Straight Talk - Issue 2 - Cover2
CIO Straight Talk - Issue 2 - 3
CIO Straight Talk - Issue 2 - Contents
CIO Straight Talk - Issue 2 - 5
CIO Straight Talk - Issue 2 - So What Do CIOs Want
CIO Straight Talk - Issue 2 - 7
CIO Straight Talk - Issue 2 - 8
CIO Straight Talk - Issue 2 - 9
CIO Straight Talk - Issue 2 - 10
CIO Straight Talk - Issue 2 - 11
CIO Straight Talk - Issue 2 - 12
CIO Straight Talk - Issue 2 - 13
CIO Straight Talk - Issue 2 - 14
CIO Straight Talk - Issue 2 - 15
CIO Straight Talk - Issue 2 - 16
CIO Straight Talk - Issue 2 - 17
CIO Straight Talk - Issue 2 - Innovation at the Periphery
CIO Straight Talk - Issue 2 - 19
CIO Straight Talk - Issue 2 - 20
CIO Straight Talk - Issue 2 - 21
CIO Straight Talk - Issue 2 - The CIO as Thought Leader
CIO Straight Talk - Issue 2 - 23
CIO Straight Talk - Issue 2 - 24
CIO Straight Talk - Issue 2 - 25
CIO Straight Talk - Issue 2 - Career Move: From Managing Technology to Managing Change
CIO Straight Talk - Issue 2 - 27
CIO Straight Talk - Issue 2 - 28
CIO Straight Talk - Issue 2 - 29
CIO Straight Talk - Issue 2 - Every CIO is in the Information Business
CIO Straight Talk - Issue 2 - 31
CIO Straight Talk - Issue 2 - 32
CIO Straight Talk - Issue 2 - 33
CIO Straight Talk - Issue 2 - Analytics and Decision Making
CIO Straight Talk - Issue 2 - 35
CIO Straight Talk - Issue 2 - 36
CIO Straight Talk - Issue 2 - 37
CIO Straight Talk - Issue 2 - 38
CIO Straight Talk - Issue 2 - 39
CIO Straight Talk - Issue 2 - Putting IT at the Center of the Customer Experience
CIO Straight Talk - Issue 2 - 41
CIO Straight Talk - Issue 2 - 42
CIO Straight Talk - Issue 2 - Pick n Pay Focuses on Delivering Value to Customers
CIO Straight Talk - Issue 2 - 44
CIO Straight Talk - Issue 2 - 45
CIO Straight Talk - Issue 2 - 46
CIO Straight Talk - Issue 2 - Bringing "Lean" to IT
CIO Straight Talk - Issue 2 - 48
CIO Straight Talk - Issue 2 - 49
CIO Straight Talk - Issue 2 - 50
CIO Straight Talk - Issue 2 - Whither the Cloud in a Stormy IT Enviroment?
CIO Straight Talk - Issue 2 - 52
CIO Straight Talk - Issue 2 - 53
CIO Straight Talk - Issue 2 - 54
CIO Straight Talk - Issue 2 - 55
CIO Straight Talk - Issue 2 - Management by Driving a Stake in the Ground
CIO Straight Talk - Issue 2 - 57
CIO Straight Talk - Issue 2 - 58
CIO Straight Talk - Issue 2 - From Data Processing to Orchestrating Knowledge
CIO Straight Talk - Issue 2 - 60
CIO Straight Talk - Issue 2 - 61
CIO Straight Talk - Issue 2 - Extreme Collaboration
CIO Straight Talk - Issue 2 - 63
CIO Straight Talk - Issue 2 - 64
CIO Straight Talk - Issue 2 - 65
CIO Straight Talk - Issue 2 - Enterprise Mobility: Delivering the Connected Customer Experience
CIO Straight Talk - Issue 2 - 67
CIO Straight Talk - Issue 2 - 68
CIO Straight Talk - Issue 2 - 69
CIO Straight Talk - Issue 2 - 70
CIO Straight Talk - Issue 2 - 71
CIO Straight Talk - Issue 2 - 72
CIO Straight Talk - Issue 2 - 73
CIO Straight Talk - Issue 2 - 74
CIO Straight Talk - Issue 2 - Cover3
CIO Straight Talk - Issue 2 - Cover4
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