Autonomy founder Mike Lynch knows a lot about cloud computing – as he puts it “Autonomy worked in the cloud before it was the cloud”.
Autonomy - a UK firm that was bought by HP last year - provides services to some of the world’s largest companies and government bodies - including the US Department of Homeland Security, the US Securities and Exchange Commission, the Olympic Games Security Committee, the UK Houses of Parliament, BAE Systems, Ford, GlaxoSmithKline, Philips and BMW. The company, which specialises in searching unstructured data, has built a 50PB private cloud that is growing at a “phenomenal rate”, according to Lynch.
Lynch, who left HP in May, shared his thoughts on how the cloud will change business and the tech industry, for better or worse, at the Global Business Summit on ICT in London on Friday. Here’s a summary of what he said.
1. Large legacy systems won’t move to the cloud
Everyone seems to have forgotten the IT rule that ‘If it’s working don’t mess with it’. Nobody gives you much credit for moving something that’s working and then breaks.
If you’re a venture capitalist be wary about investing in cloud version of a legacy app, such as ERP. Once a company has bought bought it they’re not going to buy it again.
2. Security isn’t really a big deal
As a PR issue it’s massive, it’s going to get more massive because we will have some disasters. Data in someone’s cloud will get out.
But the reality is this bridge has been crossed a long time ago. Lynch said Autonomy has every message on Wall Street stored in its cloud and it has been stored there for some time. When there’s an imperative to move to the cloud people get comfortable with it.
3. The IT department loses control of IT
What’s driving the cloud is the ability of people outside of IT to buy in services, according to Lynch.
Someone in marketing who wants to add optimisation to the corporate website talks to the IT department who will say ‘No’ and when they do agree to do it, it will be very expensive and will take a long time to appear. Or that person can enter their credit card details and have the service up and running by next Friday.
The power has shifted from IT to the business units and that’s what’s driving the cloud.
Procurement is being done off credit cards and it’s a massive corporate compliance issue because you can’t control it. If you are in a regulated industry like pharma your systems are likely so unhelpful that your staff are going to use Dropbox or install apps off Amazon.
4. Cloud pushes down the price of infrastructure
In the past businesses bought powerful servers but if you look with people with large cloud infrastructures - the Amazons, the Facebooks - the model is based on a lot of very cheap servers.
The buying power of those companies is very powerful, if Facebook turn up and want to buy a load of servers they are in a price-setting position. So you have a small number of big buyers who are in a incredible position to negotiate because a vendor can’t afford to lose that order.
5. Owning the data is key to making money in the cloud
Ownership of data in the cloud gives you the ability to put different services on that data that you can link to business benefit.
The data becomes an asset that can’t be moved, because it’s too large and complex, and that allows a margin to be extracted.
Salesforce.com is massive because they are amassing customer data and to build products on that data other firms have to go through its platform. Facebook has the ability to mine all of that consumer data.
There are a whole series of enterprise players looking to get hold of that data then build services on top of it.