_large.jpg "Redshift: A radical change in the fabric of computing")
Some companies are boosting their computing power to massive scales. Should your company? That depends on whether your company’s needs are blueshifting or redshifting. Greg Papadopoulos, Jonathan Schwartz and Jason Woods explain why these new business terms could define your company’s future.
A market-redefining shift is afoot in the information technology (IT) industry, one in which the consumption and delivery of computing is dramatically different from previous eras. Some areas of IT are experiencing geometric growth, while others seem confined to the more traditional computing patterns and requirements that have driven historical IT demands in most companies. In essence, we now have two distinct areas defining the IT marketplace, each with increasingly divergent requirements and demands.
Far-sighted executives will keep their eye on what we call “redshift” systems design and deployment; this is a global shift to network scale services, including “cloud computing” and software-as-a-service. Look carefully and you can see that the amount of investment and engineering pouring into redshift systems design and deployment suggests this style of delivering IT services will soon dominate the marketplace. The result: future growth in IT will be derived from non-traditional market segments, and the implications for technology producers, operators and consumers are far-reaching.
For example, as companies, industries, governments, societies and, in fact, entire economies increasingly connect to the network, massive investments in IT are underway to support swelling infrastructure demands. The manner in which and the metrics behind how companies extract value from IT is shifting. Industry data show that, historically, the majority of money spent on IT was consumed in supporting the internal operations of the business. In the near future, the industry-wide spending pattern in IT will inflect. Our model shows future investments in IT will soon be dominated by decisions to use IT principally as a competitive weapon – radically changing how companies should evaluate and think about IT. Although this transition is still incipient in nature, it’s no longer anecdotal (or negligible). As we see it, this transition to redshift computing is inevitable.
The redshift evolution
The story begins with a simple, but powerful, observation. Moore’s Law predicts the doubling of the number of transistors on an integrated circuit approximately every 18–24 months, which (in turn) has been a good predictor of increases in computer performance and, thus, the supply of computing potential in the marketplace. Given that price bands for computers have remained fairly stable over the past decade, Moore’s Law is, in practice, an enormous and vicious deflationary force: the cost of performing a given computation is cut in half about every 18 months. Traditional computing demands represent markets that tend to experience growth rates in step with a company’s growth and, in aggregate, something closer to global Gross Domestic Product. Notable examples include a company’s demands for customer relationship management (CRM), sales force automation (SFA), enterprise resource planning (ERP), general ledger, payroll and the like. Many, but not all, of these functions are inwardly focused on the daily operations of the entity.
Continue Reading in PDF Format . . .
Like problem children, if they’re not handled well corporate ventures can cause their parents financial heartache and make them wish they’d never been born.
"London Business School empowers individuals and organisations to perform at their best."
Please click here to view our posting terms and conditions