I recall a front page story I wrote for InfoWorld back in 1997. At the time there were still plenty of naysayers about whether websites were a plaything or a business tool. There was talk of clicks and mortar, and how the mortar would always determine business outcomes.
And then General Motors (NYSE:GM) - the very definition of a traditional big business - unveiled an expansive website that fully embraced the Internet across its businesses. We at InfoWorld wrote about GM's embrace of the Web then as a corporate tipping point, from which there was no going back. Clicks became mainstream for businesses. Case closed.
And so it is today, with IBM's (NYSE:IBM) announcement of Blue Cloud -- an approach that not only talks the services talk, but walks the services walk. We are all at the tipping point where IT will be delivered of, by and for services. If Google (NASDAQ:GOOG), Yahoo! (YHOO), Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) can do what they do with their applications and services, then why shouldn't General Motors? Or SMB XYZ?
So the king of mainframes and distributed computing moves the value expectations yet again - to the pre-configured cloud architecture. The standards meet the management that meets the utility that gets the job done faster, better, cheaper. Slap an IBM logo on it and take it to the bank.
The future of IT is clearly about the efficiencies and agility of the grid/utility/Live/fabric/cloud/SOA/WOA thing. There can be no turning back. I believe Nick Carr is coming out with a book on this soon, The Big Switch: Rewiring the World, from Edison to Google and IT, and IT is by no means irrelevant this time.
IBM's Blue Cloud, arriving in the first half of 2008, will use IBM BladeCenter servers, a Linux operating system, Xen-based virtualization and the company's own Tivoli management software. Nothing about this is terribly new. Sun Microsystems (JAVA) has been talking about it for years. HP (NYSE:HPQ) is well on the way to making it so, given its Mercury and Opsware acquisitions. Citrix (NASDAQ:CTXS) has an eye on this all too. Red Hat (NYSE:RHT) has its approach. Amazon is game. Google is riding the wave. Even Microsoft (NASDAQ:MSFT) has hedged its bets.
But the tipping point comes when IBM's global clout in the major accounts is brought into play. The sales force will feel The Force, Luke. IBM will march in and let your IT services architecture mimic the service providers' basic set-ups too. You gain the ability to integrate your internal services with those of your partners, customers, suppliers, vendors and providers. Next will come an ESB in the cloud, no? This makes for a fertile period of innovation.
Perhaps IBM will also cross the chasm and host their own services -- not applications per se, but commodity business functions that ISVs, providers, and companies can innovate on top of or in addition to. Google has maps, but IBM has payroll, or tax returns, or purchasing. Could be quite interesting. I would expect IBM to offer ads in these services too some day (come on, Sam, it's not so bad).
And that also means you'll be provisioning IT internally and externally as subscription services. Charge-backs and IT shared services models become the standard models across both supply chains as well as value-added sales activities. Businesses will determine their margins based on the difference between what they pay for IT services (internal or external) plus the cost of the value added services -- and then what they charge on the receiving end. High-volume, recurring revenue, fewer peaks and troughs.
This is really the culmination of several mega trends in two major areas: IT and economics of online commerce. The trends that support this on the IT side include virtualization, high-availability clustering, open source platforms and tools, industry standard multi-core hardware, storage networks, Java middleware, WAN optimization, data services and federation, scripting language maturity - as well as application consolidation and modernization, datacenter unification, low-energy-use dictates, and common management frameworks. The result is something like Blue Cloud.
The online economics trends include e-commerce, advertising supported Web services/media/entertainment, pay-as-you-use services and infrastructure-as-a-service, and - of course -- free code, free tools, free middleware, free stacks. It's all free - except the service, maintenance, and support (otherwise known as a subscription).
And if one major corporation buys into IBM's Blue Cloud and they deploy in such a way as to exploit all these mega trends -- while counting on IBM as the one throat to choke as the means to reduce change risk -- what happens?
Well, they might see total IT operating costs go down by 40% over a few years, while also being able to enjoy the productivity benefits of SOA, SaaS, services ecologies like Salesforce.com (NYSE:CRM), and therefore become more agile in how they acquire and adjust their business processes and services delivery. You might get to do more for a lot less. And a lot less IT labor.
And so our Blue Cloud-user corporation has their competitors who will, no doubt, need to follow a similar course, lest they be set on a path of grave disadvantage due to higher costs and an inability to change as quickly in their markets. If a mere 50 of the global 500 move to a Blue Cloud or equivalent, it would be enough to change the game in their respective industries. We're seen it happen in financial services, retail, music and media, and IT itself.
And so large enterprises will need not just make decisions about technology platform, supplier, and computing models. They will need to make bigger decisions based on broad partnerships that produce services ecologies in niches and industries. For an enterprise to adopt a Blue Cloud approach is not just to pick a vendor -- they are picking much more. The businesses and services and hosting all become mingled. It becomes more about revenue sharing than just a supplier contract.
Yes, Blue Cloud and many other announcements and alignments in 2007 point to a 2008 in which a services ecology evolves and matures for many industries. The place where differentiation matters most is at the intercept of proper embrace of the service model, of picking the right partners, and of exerting leadership and dominance of best practices within a business vertical or niche. You'll have a different relationship with your services partner than you do with your IT vendor. IBM will show you the way.
Hear the music? It ain't the Blues! It's the quick-step. Dancers, pick your partners carefully. You're going to be spending a lot of time sharing your futures together.