By Mark Hurd
Whenever I look down from my office window at my car sitting in the parking lot, I get this sinking feeling – as in sunk costs. It’s the same feeling you should have when you think about your corporate data center.
This is how I think about it: I use my car for about 30 minutes in the morning and then 30 minutes when I drive home. Maybe I take it for an hour spin during the weekend, but that’s about it. Don’t get me wrong — I love my car, the tilting leather seats, high-end sound system, the sun-roof, and a few other customizations – but let’s face it: most of the time, my car does what it’s doing right now. It sits there waiting for me, for about 23 hours of every day, depreciating. Put another way, I get about 8% utilization out of my car.
If I had my druthers, I’d rather pay for a half hour usage of my car – but the car I actually want, the settings I want, the style I want, when I want it – but that’s not possible in this market.
Now think about your data center. It’s perfectly customized for all the developers in your company to create new applications that help your company get to market and sell. It’s there anytime they want it. Which, generally speaking, is the six hours a day they actually work on developing applications (a generous estimate in my experience). That comes out to 120 hours per month out of a possible 1200 hours, or 10% of the time.
Not only have you paid for hardware and licenses, but your IT team is also responsible for routine maintenance and patching, which keeps the costs coming. And you’ve got 10% utilization to show for it. Just about like my car.
Fortunately, businesses today can move all of the development and testing activities that programmers engage in to the cloud, and pay only for the time they actually use the set-up. Plus, they never have to pay for any of the upgrades or maintenance of on-premises IT equipment, not to mention the CapEx. Companies can still run the business applications they use on-premises if they so chose, but offload the cost of development to the cloud, where it’s much more economical for them. And if the programmers bring down the test-dev servers, none of their production applications go down.
That’s why I believe that within 10 years, all business dev-test activity will move to the cloud.
Too bad there isn’t a business model for renting cars customized to your preferences on demand.