Sure, it may all happen, but expect a similar timeframe as for the paperless office.

Predicting the future is a lot more fun than analyzing the past, but as Mel Brooks might say “A funny thing happened on the way to the future, it changed from what we expected”. Plenty of predictions this week: in a very readable article Wired announced the death of the (browser based) web , as it will be replaced by dedicated locally installed desktop or mobile applications we now call apps. The outrage and the number of counter blogs were high. Mostly from people who simply love their browsers, but one can imagine that also many SaaS vendors had a rough night. Being able to run multiple SaaS applications next to each other, while still offering a more or less consistent, integrated look and feel –courtesy of HTML and the common web experience - is pretty fundamental to the long term success of Software as a Service.

Just a week earlier BusinessWeek ran an article by AT Kearney titled “The End of Outsourcing (as we know it)”  in which they predict today’s outsourcers will be rapidly replaced by cloud outfits, in the continued, relentless pursuit of economies of scale. They even go as far as to pick winners (Amazon and Google), potential winners (Oracle and SAP) and losers (today’s outsourcers, especially the midsized Indian companies).

Today’s outsourcing champions like HP and Accenture are being seen as hesitant to become cloud providers. Funnily enough they do not mention IBM, by far today’s largest player (HP may be a bigger company today, but mainly because they still sell lots of printers and PCs) nor Apple. Now you may argue that Apple is a consumer company, but as today’s innovations get introduced into consumer markets first, one should expect Apple to move their innovations into the enterprise market (enterprises) soon, include enterprise versions of Apples cloud offerings like MobileMe (maybe then called MobileInc?). That is, if the world indeed will change as fast as BusinessWeek’s article seems to predict.

But that is exactly the issue, today’s big enterprise IT is just not that agile. Lots of the stuff that is outsourced today still consists of code that was first written 20 years ago. We saw several companies try to “rightsize” their pre-relational mainframe databases year after year, always concluding that it either did not have any ROI, simply was not worth the effort or the risk was too high. And as a SAP executive recently said, many large ERP requirements are still far away from anything cloudy.

Now don’t get me wrong, sure tomorrow will be vastly different from today, in fact today is already vastly different from yesterday, as Phil Nash pointed out “Tongue-in-cheek” in a recent tweet “Welcome to the new decade: Java is a restricted platform, Google is evil, Apple is a monopoly and Microsoft are the underdogs”. But at the same time big IT will move slowly, as Brian Stevens CTO of RedHat seems to agree in a recent interview on Bloomberg TV “it’s going to be several decades before the technology arrives and our [financial services] customers are using the capabilities of cloud more readily.”

Now we may not directly notice this dichotomy because our magazines, articles and the enormous flood of social media almost completely focuses on describing new shiny projects (the 20% of the average IT budget) and hardly on the lights being kept on (the 80% of the average IT budget). In fact our view may be even more distorted, because - as Marcel den Hartog recently described - some of these older systems are so efficient that they run the majority of the enterprises transactions at a fraction of the total IT cost.

Still not convinced, have a look at Gizmodo's animated history of the internet protocol or this infograph. It shows how it took almost 50 years to get to the internet protocol, (which BTW is still changing). But now cloud will change everything this year?  (BTW the Infograph made me realize I am officially 1 year older than the internet, which I guess is why I -unlike Gizmodo- still know what a coax cable looks like!)

Maybe we should compare full cloud to the paperless office. Remember all the hype and anticipation around that? Funny thing, it never happened. In fact we now print more than ever before (making HP bigger than IBM) and only this year we finally see a device that may get us to this paperless dream. Yes, I mean the iPad, and it is not by coincidence (it never is at Apple) that the only function missing from iOS is … a printing function. The other major change attributed to the iPad (and it smaller sibling the iPhone) is Wired’s announced return of the App mentioned earlier.
 
Personally I do believe apps are a much to be preferred way to consume content, but the average knowledge worker is not paid to merely consume content (wouldn’t you wish to spend all your days just reading blogs like this one, and be paid to do so?). He/she is expected to create added value by analyzing, combining, mashing up and composing new content or put this content in a new context. If that could be captured in a single app, it could also be automated to something like the job George has in the Jetson’s. Just press one button and all the rest is automated. A bit like James Urquhart vision of self managing clouds, interesting and good to think/write about, but still far away. 

So SaaS vendors can rest assured, it will be a while before they are rendered obsolete. The same holds for outsourcers. Sure several outsourcers will need to add cloud like IaaS offerings to their portfolio. But at the same time we see IaaS main pioneer Amazon take a distinct step back last week by - as David Linthium described - starting to offer reserved instances. Machines dedicated to one customer for anywhere between 1 and 3 years (which is longer than most modern outsourcing contracts).

Don’t get me wrong, I am convinced cloud will happen also for existing applications, but it generally will happen after we stopped writing about it (see 4 p’s in a pot innovation ). Today, cloud will grow in those areas we just started to do (almost all social media sites are cloud based) or simply do not do today (like smart systems making George Jetson type smarter decisions by massive data analysis and number crunching). And that is not a bad thing. If we need to choose between deploying cloud to make the systems we already have 5% more efficient or to do 5 new things we do not do today, I would choose the latter any day. But of course, I am an evangelist and not a CFO. Question is what would/should the average CIO do? Thoughts? Suggestions?