Is Google your next data center?
Jonathan Snyder's five-person team at Dreambuilder Investments LLC isn't your typical IT organization. Or is it?
The New York-based company, which buys and sells defaulted residential mortgages, uses Salesforce.com Inc.'s Force.com as its financial services platform. It backs up data using EMC Corp.'s hosted MozyPro service. Dreambuilder's server is hosted by RackForce Networks Inc. in Canada, and its e-mail is handled by Apptix Inc., a hosted exchange in Herndon, Va.
Granted, Dreambuilder Investments is a five-year-old company that lacks the IT infrastructure that a typical Fortune 1,000 enterprise has built up over decades. But as Chief Technology Officer Jonathan Snyder sees it, his firm's core business is mortgages, not server maintenance and disk backups. "If it's somebody else's core business to handle an Exchange server, let them do that," he says.
It's not just small to midsize businesses that are following Snyder's lead. By 2013, at least one-fifth of enterprise IT workloads will be managed in cloud computing environments, according to Mike West, an analyst at Saugatuck Technology Inc., a boutique consulting firm in Westport, Conn. He says that big companies are increasingly handing over their IT infrastructure activities to traditional IT services providers such as IBM, Hewlett-Packard Co. and even recent market entrants like Amazon.com Inc. and Boomi Inc. The goal is to lower their costs, access enhanced functionality, sidestep skilled-labor shortages and reduce their data center footprints.
Moreover, building or installing commoditized applications or IT infrastructure services that don't provide competitive advantage has produced diminishing returns over the past few years, says John Dutra, CTO at Sun IT, a division of Sun Microsystems Inc. that's preparing to launch a hosted computing platform for developers called Network.com.
Companies "are no longer going to buy technology artifacts, like ERP systems," predicts Thornton May, a Biddeford, Maine-based futurist and Computerworld columnist. Instead, he says, "they'll commit to a service."
Cloud computing -- the ability to store files and data on a remote network using the Internet (see our QuickStudy for more on cloud computing) -- provides benefits such as lowered infrastructure costs and enhanced speed to market. Studies have shown that it would cost some companies millions of dollars to set up their own virtualized server and storage environments, says West.
With hosted IT services, West says, "you don't have to buy the hardware and software; you just subscribe. There's not a lot of capital outlay. The attraction to that is huge."
Moreover, hosted services providers such as Google Inc. and Amazon are making pricing transparent. Google Apps (which includes e-mail, word processing, spreadsheets, presentations and calendaring) is priced at US$50 per user per year, says Matthew Glotzbach, Google's director of product management. Amazon says its Simple Storage Service (S3) is priced at 15 cents per gigabyte each month.
"We've removed so much of the friction by being transparent
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