The Googlization of IT

by: Ed Sim, CFA

Tuesday I took a sales team from a portfolio company to meet with a couple of senior IT executives at a major retail company. Towards the end of the meeting, it started to become quite clear to me the effect that Google (NASDAQ:GOOG) and the web has had on IT to date and where it was going. In an oversimplified way, it seems that there have been 3 distinct phases to how the web and Google have impacted the enterprise, first starting at the app layer and increasingly diving deeper into the core infrastructure.

Phase 1 - Consumerization of IT - all internal corporate users are consumers first and then employees second. We have all seen how consumers have gotten used to using browsers and SAAS-based applications and how successful startups have been able to provide web-based applications that users can pull into the enterprise environment starting at a department level rather than having to go out and sell and push technology into enterprises.

Phase 2 - Rise of open source - I would call Phase 2 the rise of open source software over the last 10 years - most of which is hardcore infrastructure type software such as databases, virtualization software, and the like. IT folks leveraged the web and Google not just for applications but also to download core software to help run their internal operations.

Phase 3 - Googlization of IT - have as much of your infrastructure as you can run like Google's - distributed, commodity-based, and in the cloud on a private basis.

Phase 1 and 2 are ongoing and Phase 3 is where I see a few of the more forward-thinking IT departments I have met with over the last few months going. I am not just talking about Google Apps (like email, etc) but about how companies can run their infrastructure internally like Google. If Google can deliver a number of highly scalable web-based apps by clustering commodity servers, then how can enterprises do the same for themselves. This is not about getting sucked into buzzwords on the cloud but really understanding the cost savings and performance benefits a company can get from transitioning some of their infrastructure to a Google-like model.

One of our large customers said that data was a strategic weapon and that he wanted to make the cost of a running a new query zero. In today's world and without the enterprise data cloud initiative I can tell you that running new queries in a global organization is an expensive and time consuming task of replicating data, creating data marts, running the processes, etc that can take months to get going and days to run reports.

Yes there are public clouds like Amazon (NASDAQ:AMZN) EC2 which is now also offering virtualized private clouds. But the reality is that many large IT organizations want to control their own data, find ways to make it more easily accessible to everyone, significantly reduce infrastructure costs, and be able to launch new apps or services quickly and cheaply.

This is where I believe many IT organizations will be headed in the next 5 to 10 years creating private and hybrid clouds for existing and new applications, a phase which I call the Googlization of IT.