Ten years ago there was all this hype about Y2K. You would have thought the world was going to come to an end! Many clients updated their hardware and software to be Y2K compatible. For some of our clients we had them test their software on one of our servers with the clock set in the period of December 31st 1999 to January 2000. Many people spent too much money on the ordeal!
The good news for the technology industry, in the short term, was the dot.com bubble. After spending too much money on Y2K too much money was spent on anything with a .com. You could set up a business plan and even call it “losing money .com” and get investors to sponsor your plan. It was not about providing a service of value to society – it was about getting something started and selling out to a big fish or going public fast enough that making a profit was someone else’s problem! The plan was to last long enough until you go IPO (Initial Public Offering). While the .com euphoria decried the bricks and mortal businesses the companies that made the real money were the equipment suppliers and UPS.
After the .com bubble burst there was spare bandwidth and computers for some time. The first half of the decade there was a rationalization of capacity. Out of the ashes of all the spare hardware and internet capacity came start ups like Google. Other firms like Amazon.com and eBay had the time and resources and got the business plan right!
When the bubble burst any money that was left over went into real estate and the technology went in to the foundations of the web 2.0. You saw the results first in sites like Myspace and now in Facebook. When there was no cash to spend on crazy perks the money that was left had to be carefully allocated to the best return on an idea or investment.
The Death of ROI
Typically we think of ROI as Return on Investment. In the last two years I would say that idea is dead. People are not worried about the rate of return on their investment; their first concern is the return OF their investment. With equity investments evaporating faster than the polar ice caps investors are looking for a sure return on the money they invest – whether it was money deposited on a GIC or an investment in information technology – they want to make sure that they will get their money back either as cash plus interest or in hard savings in operational costs.
We saw that with Microsoft’s introduction of Vista into the Enterprise. It was slow to get in since there was no real return on investment. They would try to prod companies with the threat of dropping support of XP. Now there are options. There was no measureable return for the Vista investment. Options included staying with XP, going to MAC or Linux.
Looking Forward into the Clouds
The current financial cloud has reinforced that any cost or investment needs a payback. Either you will choose an IT investment that requires little investment or an overwhelming return. Enter SAAS (Software as a Service) and cloud computing.
The concept of the cloud has it roots in the .com bubble of years gone by. Now we have solid companies making hard investments in data centers with the technology and capacity to handle the computing requirements for the enterprise. In one sense it is back to old timeshare model with newer and friendlier technology. Cloud computing is using the data center investment of your provider plus the internet for the connectivity so that you can do your organizational computing anywhere you want, whenever you want or need. Basically all of the hardware and the management of it is in a central location.
Another acronym to introduce is HAAS (Hardware as a service). This extends the concept of leasing your hardware to a full service lease. Basically you rent a managed firewall. You don’t have to make an investment in the firewall and you don’t need the expertise to keep it up to date or to configure it. It is like a contract you would have with the phone or cable or utility company. The difference here is that the hardware is located at your site. Examples would include the managed firewall, the managed application server or a managed back-up service that includes an onsite back-up server.
We have been working on bringing enterprise class computing to our clients. We work on behalf of our clients to select the solution and model that best meets their needs. The above was a very brief overview of some history and current models.
Tom Kobelt
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