Cloud

History repeating: Why cloud computing could revisit the mistakes of the 1980s PC boom

If you want to see what happens when business cuts out the IT department you should swot up on what happened after the PC boom in the 1980s, says a UK academic.

A common sales pitch for software as a service (SaaS) is that it puts business people in charge of IT: armed with a credit card a HR director can buy the SaaS payroll management service they want cheaper and faster than going through IT.

But this idea of new technologies putting business users in charge isn't novel. We've been here before and it didn't pan out well, warns Dr Will Venters, lecturer in information systems at the London School of Economics.

The same rhetoric about giving business power over IT was used to sell PCs to firms in the 1980s according to Venters, who was speaking at the Efficient ICT 2012 last week. At that time PCs were being sold as a low-cost alternative to the IT-operated mainframes and mini-computers that dominated business at the time.

"Back in the 1980s the humble PC was sold on the basis that it challenged the relationship between the business executive and the IT department," he said. For the first time, Venters said, the business executive had the power to buy a computer and put it on their desk: "It had better applications and they could procure the applications cheaply and easily themselves without needing IT executives to provide them."

But what happened next is a cautionary tale to any IT chief struggling against a proliferation of SaaS within their organisation, said Venters.

"What we ended up with was a confusion of poorly connected, uninteroperable networks of these things," he said.

Everyone had bought PCs at huge cost said Venters - leading to a glut of siloed PCs running a different platforms, the likes of CP/M, Unix, MS-DOS and OS/2, that were "costing a fortune" for the business to use and maintain.

"It led organisations to have to invest in IT departments to wrestle back control. I think that's a salient lesson for us as we start signing up for SaaS and PaaS systems in the commercial market," he said.

The dangers of staff using unsanctioned cloud services, so called shadow IT, are rightly a concern for IT teams said Venters. He reminded the audience of the ripple effect from SaaS purchases, how a decision to a simple SaaS purchasing decision could end up dictating corporate strategy.

"With SaaS you are signing up to someone else's strategic agenda for how IT will develop," he said.

He gave the example of a sales director who signs up to use a SaaS sales support system, which is then adopted by the rest of their team.

"If the sales director loves it and thinks it's fantastic, all the sales people start using it and love it - you're not going to persuade them to change it," he said.

But if that sales support system starts offering social networking, for example, and the sales people like it, this could lead to them signing up for social networking, which then proliferates inside the organisation.

"Now strategically a decision about corporate communication infrastructure has now been made by a sales director," Venters said.

The difficulty for the IT director is in communicating the long-term risk that comes with letting business people choose the cloud services they want.

"As an IT director how are you going to sit and discuss at the board level meeting the fact that the sales guys shouldn't pay $10 to provide social networking across the whole organisation? It's a complicated challenge."

About

Nick Heath is chief reporter for TechRepublic UK. He writes about the technology that IT-decision makers need to know about, and the latest happenings in the European tech scene.

16 comments
maj37
maj37

The way I see it the problem really comes down to this, HR, accounting, sales, etc. people within on organization think just because they can put a PC in their house or on their desk that they know as much about IT as the people that work in IT. It would be like someone in sales that keeps their checkbook at home deciding they knew enough to select a new general ledger system without talking to accounting.

Deadly Ernest
Deadly Ernest

attended in the early 1990s. The Australian Defence Force was very seriously looking at outsourcing what they could, all under the idea it would save money. Part of that was what they called the Commercial Support Program, the concept was to identify certain tasks done by uniform personnel that could be done by contractors or civilian employees. The bottom line was to identify what we could push outside the uniformed military structure so we could save big bucks, with much of it going to private enterprise if we could. Part of the week long event was for us to split into work groups and do a presentation to the conference either for or against outsourcing. My group included a number of one and two star military people and a couple of civilian equivalents. I put forward my thoughts and almost needed an ambulance for some people before I could finish speaking. In the end, my thoughts were the basis of our presentation, and I had to deliver it. It summarised as: 1. Huge savings could be made by outsourcing ALL military operations by employing mercenaries as needed or by coming to an agreement with another country that had a huge military organisation, such as the USA. 2. We felt the above option was not viable due to the lack of control and responsiveness. 3. We needed to clearly define what were the operational and security requirements of our military were and what was needed to meet those. 4. We needed to reduce uniformed military activities to those that were needed to meet the requirements above, their in combat field support, and their training to meet those. 5. Anything else needed to be reviewed to see how the loss of control and responsiveness would have an effect on items 3 and 4, and all the rest could be outsourced in some manner. ............. I think it's wise to say that all these points apply to ALL outsourcing decisions and need to be fully addressed before anything is outsourced, the only thing that needs to be added is to include legislative requirements in point 3.

alfred
alfred

There will always be chaos when a business is outsourcing non core functions whether they be IT or anything that needs expertise. The business is then dependent on the supplier for advice and this, of course, will be that the supplier's product is the best there is. Getting competitive tenders without the in-house knowledge to assess them means that the cheapest is chosen no matter how bad it is.

TNT
TNT

Everyone who warned about putting your data in the cloud has valid concerns which I share -- security being primary. Let's not forget, however, why the "cloud" has become such a popular idea. There are merits, especially for SMBs. In real estate its all about location, location, location. Likewise, regarding corporate data, itss all about access, access, access. We in IT need to acknowledge the benefits that the suites see and offer them those same benefits. For some a public cloud infrastructure makes sense, but for most a private cloud makes more. We simply have to show the board that we are interested in empowering them to meet the companies objectives, and we want to help them do that in a way that doesn't end disastrously.

348314
348314

From someone who used to sell time sharing (TSL, ADP Network Services - remember them?) with dial-up to SaaS (databases, project management, specialist software - and raw computer power). The wheels came off when customers looked at their monthly bills and thought they could buy their own PDP-8 and put it in a cupboard for that amount (what infrastructure?!). PS - who remembers the mini-PDP-8 in a (large!) briefcase? What was it called?

Rob.sharp
Rob.sharp

This is already happening on the BYOD front. There's a lack of integration and control of these devices as soon as they hit your business. Microsoft is trying to change this with Windows 8 PCs/Tablets and Phone but now IT has to convince the CEO that his Apple product doesn't belong! IT leaders need to take the power back and cure the disease before it spreads.

cybershooters
cybershooters

I think cloud-based services have their place, for example, web-hosting has been around for ages now and that is where this all started. Have lots of virtual web servers sat on a box connected via the internet. I'm not sure the example provided is a good one, you've got to be pretty sloppy with your web control and so on to let the sales manager get to the point of doing that. But it is definitely overhyped in a major way, I mean you can buy a 1.5TB external HDD for $100. Worried about losing it? Buy two. When you factor in the cost of having an internet connection and renting that space in the cloud, you begin to see what a ripoff it is. There are so many downsides to the cloud though, legal liability for example, if so and so user uses your cloud-based service for kiddie porn and they turn it off, what then? What if the server is located in a foreign country? What about having to access data over a shaky internet connection instead of having it with you? What if you're in Cuba or another embargoed country? What if the law places restrictions on what you can do with the data (e.g. healthcare or govt. information)? I read in the EU there is the Acquired Rights Directive which basically makes outsourcing very difficult. The list goes on and on.

robo_dev
robo_dev

Not that I have the answers, but more to clarify the questions. The cloud is a sexy name for outsourcing, and there are significant challenges with managing both the delivery aspects of ANY third-party relationship as well as the technical, data management, and security of the company data, while making sure systems are available and meeting the business needs. The Billion dollar question, is when push comes to shove, can IT say the simple word 'NO'. If IT cannot say no, then it's game over, period. The flip side, of course, is how IT can re-brand and reposition itself to call what it does something sexy like 'private cloud' so that all the suits can tell their golf buddies that their business is all cloud-based. IT needs to take a page from Microsoft's playbook...Adopt, Embrace, and Smother. I say that with sarcasm, but I don't think it's an understatement to say that we are at a turning point...we see both this lemming-like rush to the clouds as well as the rise of 'cop in a can' GRC platforms. He who falls for anything stands for nothing. The whole cloud kool-aid is a major shot across the bow to corporate IT. The rise of the desktop PC is a VERY good analogy....and also consider what happened AFTER the initial love-fest with the IBM PC/AT running Lotus-123. The good parts of PCs were adopted by IT, and the tide went back to IT. The server room filled with mainframes and mainframe controllers became filled with racks loaded with Compaq ProLiants running Netware, then Windows NT server, and now VMware, Windows, Linux. Not to digress, but how different is a virtual server hosting a virtual desktop so different from an IBM mainframe connected to a bunch of color terminals? The answer is it's not. History repeats itself, and those who do not learn the lessons taught by history get to repeat the same mistakes again and again.

Systems Guy
Systems Guy

I was working on mainframes at the time and remember this all too well. Want-2-be programmers coding spread sheets, amoung other things with no knowledge of test procedures etc. It caused a lot of problems with us trying to prove our data was correct. And now the soapbox: Don't put your corporate data in the cloud! The data is a corporate asset. Can you afford to lose access to it or have it stollen?

Dr_Zinj
Dr_Zinj

Sharing data between different applications and business areas. At least with an in-house I.T. department coordinating interface development and maintenance, the Finance department can send information to Accounting, and warehousing, and manufacturing, etc. and they can all speak to each other intelligibly. Few, if any, cloud services provide that capability across the entire corporate spectrum; and if they do, they certainly aren't going to be cheap, or as responsive.

Deadly Ernest
Deadly Ernest

the leaders of sub-groups within the organisation making decision that affect the whole organisation based only on their sub-group's limited needs. This often results in a decision that is very harmful to the overall welfare of the whole organisation; and that's what happened in the 1980s. One sub-group got a set of PCs that best fitted their sub-group, while another did the same, and then they found out the two answers weren't compatible while another answer would have given them both a 95% fit and been better for the overall organisation. Today we're seeing a lot more of this "stuff the organisational needs, I want" attitude with the proliferation of mobile devices and BYOD - each person gets what they want and don't care how it fits with the organisation's needs or legal requirements. Cloud computing is very much the same way. Any decision about IT MUST be made by someone who knows and understands the FULL technical, legal, and operational ramifications of what the changes will mean for the overall organisation. This very rarely happens when the decision is amde by a single unit head in isolation.

wdewey@cityofsalem.net
wdewey@cityofsalem.net

You also need to remember that IT is there to support the business. If HR has a need that is not being met by the IT department then they are going to be looking else where. Open communication and trust need to be built between IT and the departments it supports or money will be wasted on unnecessary or underutilized technologies. Bill

Deadly Ernest
Deadly Ernest

several months now. All along I said cloud services are great for many private individuals like college students, even some high school students, etc. But from a business and corporate perspective there are so many land-mines that the cloud service providers deliberately do NOT discuss it's not funny. I've yet to see any cloud service provider presentation or website that gives more than a passing nod of the head to the many laws that control how business has to deal with personal data or how they intend to provide you with full-time access to your data regardless of location and time. They give lots of figures on how well they'll keep the server farm up and running, but nothing about how they'll keep the comms links up and running. For most businesses, even the SMBs, there are significant risks that are being downplayed by those who stand to make money off of cloud services.

dogknees
dogknees

A technology that has never really worked well. And probably never will. You just need too much horsepower on the server to support real users who are limited by the speed of their PCs rather than the speed of their thoughts.

Imprecator
Imprecator

I am shocked! shocked I tell you, that organizations will most probably be making the same mistake they made in 80s with PCs and in the 90s with Wintel Servers ALL OVER AGAIN!

Deadly Ernest
Deadly Ernest

HR often is unable to do. Ditto most other business areas. What causes issues is when a business area falls for the glib talk of some sales person and insists on a certain device or software be purchase and when it does NOT live up to what the business area wanted they blame the IT people who told them at the start it wouldn't meet the needs they said they needed. Or if it meets the stated needs the new gear / software doesn't meet the unstated needs that were never mentioned, and it's IT's fault for not being aware of those unstated needs. I been there and seen it all happen, again, and again, and again.