Cloud computing has enabled one of the most significant disruptions of the computing world in history. But to understand its magnitude, let’s look at the pre-Cloud world. Step into my time machine (ripply, wavy visual effects at no extra charge)…
Welcome to the pre-Cloud world! Here, storage and computing power can only be had by purchasing very expensive hardware and by paying through the nose for maintenance and support staff. Operating systems? Oh, you have to purchase those and pay for IT support, too. Databases are even more expensive and also require their own hired mercenary army of techies. But after you’ve spent ridiculous amounts of money and time to get your hardware, software and database, you can finally get down to running your dream startup.
Oh, right. I forgot about the annual maintenance fees you’ll have to pay every vendor for using their software/hardware/database, equal to 15% to 20% of the purchase price. All in all, you’ll need at least one million dollars just to turn the lights on. Isn’t nostalgia wonderful?
Okay, the past sucked. Let’s get back to today.
As a startup CEO, I found the old model excruciating. The margins of profitability were incredible for the hardware and software companies, and the maintenance fees were icing on the cake. Then, once you thought you had it all nailed and could move on with business, you suddenly had to upgrade your hardware, which meant upgrading the software. You needed more staff to transition to the new computing environments. It was a huge racket. Vendors made monster profits while startups got screwed and innovation was buried in favor of making more unnecessary stuff to keep the customers hooked: hardware, software and database companies as high-tech dope dealers.
No wonder Cloud computing and software-as-a-service (SaaS) took off like a rocket. When Amazon came out as the first company to offer SaaS, the world started changing. The protectors of the old, decaying model of course ridiculed Amazon initially as being only for mom and pop shops. But that was whistling in the dark. The ability to access storage, computing power, bandwidth, operating systems, applications and databases any time and anywhere shattered the computing paradigms that had held so many businesses in bondage. It changed EVERYTHING.
Now, the rebels run the country. Companies of all sizes say, “Why would I buy hardware, databases or applications when I can have access to what I need, when I need it and how I need it?” This has allowed hundreds of new players to enter the infrastructure market. Now the legacy players are struggling to hang onto their customers, not realizing that those customers are looking to SaaS options.
This is classic disruption. It overturns the established way of doing things, causes some chaos and anger for a brief time, causes pain for some…but creates infinitely more opportunity. Today, Cloud is encouraging innovation at an unprecedented rate. It’s creating a new world. We’ll look more closely at that world in Part Two.
image credit: cloudcomputingleaders.net
Linda Bernardi is a Technology Strategist, Investor, and Founder & CEO at StraTerra Partners, The Bernardi Leadership Institute and a Strategic Advisor at Cloudant Inc. She is also the Author of Provoke, Why the Global Culture of Disruption is the Only Hope for Innovation. For more information: www.lindabernardi.com