Above: Fried, Levine, Wallen, and Pearlstine
At the Bloomberg Enterprise Technology Summit this morning the opening panel said there is no question that we are past the "tipping point" where cloud services and consumer technology are disrupting enterprise IT. The panel included of Ben Fried, chief information officer of Google; Peter Levine, a general partner at Andreessen Horowitz; and Lincoln Wallen, chief technology officer of Dreamworks Animation.
"That ship has sailed," said Fried, who explained that most of the Fortune 500 now has a paid Google product somewhere. The unique economics proved by consumer-oriented technology companies have provided a price point that typical enterprise software companies can't match, he said. He suggested that for most enterprises, the really interesting thing comes from harnessing as much of the consumer technology revolution as you can. If you were starting today, he said, you would be in the cloud for everything.
Everything repeats itself, Levine went on to say, suggesting that we are seeing a "cyclical return to cloud computing" and that the trend toward cloud infrastructure, software-as-a-service (SaaS), and mobile computing is in many ways a modern spin on the old mainframe model.
"'One size fits all' isn't where we can sit," said Wallen. He said Dreamworks is not only a consumer of cloud services such as Google Mail, but also requires writing custom software. "Innovation comes from both ends," he said, citing both startups and also "significant investors in technology," such as HP and Intel.
Asked by moderator and Bloomberg Businessweek Chairman Norman Pearlstine who the losers will be in this shift, Levine pointed to companies that sell primarily enterprise services directly to the CIO. Moving from a perpetual license model to a pay-as-you-go software-as-a-service model is difficult, not only from a technical perspective, but also from a business and sales model perspective, he said. SaaS is sold to departments as opposed to only to the CIO, and that's a profound change.
The mission of the IT department needs to change, Fried said, and such departments should focus their technology investments on things that are unique to their business or industry while using common cloud-based services for general computing functions. It should be an "agent of change" in empowering users, he said.
Interestingly, Wallen, who represents a company that consumes services rather than sells technology, was a bit more skeptical of some of the new trends, though still acknowledged that they are very important. Employees bringing their own technology causes as many issues as benefits in the enterprise right now, he said, noting security and manageability concerns.
The newer SaaS companies are mostly either offering a very thin horizontal service (such as Box or Dropbox) or a more departmental focus (such as Salesforce.com), he observed.
Today, he said, these services don't mesh together well and it will be interesting to see whether these services come together in larger integrated products, or whether everything disperses into lots of little tools. If it's the latter, CIOs be mostly in the business of integration.
Levine talked about how SaaS vendors don't sell only to the enterprise, but also to small and medium business, giving such companies much more tools than they had before. Asked by Pearlstine about Andreessen Horowitz's $100 million investment in development collaboration platform GitHub, Levine said the company believes in the "software economy" and the notion that "software eats the world." In that model, he said, GitHub is "the repository of the world's intellectual capacity."
To illustrate the effect mobile can have on your workforce, Fried said he was able to review documents in a taxi on his way to the event using his Android phone. He agreed, though, that mobile devices pose new concerns and it is every IT department's responsibility to manage data.
"Moving bytes around" (such as distributing content on a DVD), as Wallen called it, is an old model and now people want access on demand. Similarly, he said he believes in a model where data remains in the enterprise, but SaaS products allow users to access the data.
In response to an audience question, Fried said that consumerization can allow IT to focus on a narrower set of higher-value problems, rather than deal with everything that has technology involved. Levine added that the emergence of cloud services enables rapid innovation since it doesn't require the infrastructure to be set up. This lets users quickly test what a user wants to see as feature and get speedy feedback
Wallen cautioned that he is seeing an increasing velocity of innovation, but not necessarily an increasing velocity of delivery. He said the challenges of security, quality-of-service, and enterprise deployment are only getting greater.
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