I have quite a bit to say about the coming tidal wave that is IT Virtualization. But before you quit reading or think it's going to be boring, let me start off with some historical context. Since we'll be discussing strategy, you can expect that we will use a little military history to set the scene.
In the early 1600s, the age of firearms started first in Europe and quickly across the world. I use the word 'firearm' because projectile weapons didn't evolve into actual rifles until 200 years later. Soldiers in armies would be equipped with a projectile weapon and then marched up to the enemy where both sides would drill away at each other until one or the other would run away.
You'd think that this would be a clumsy way to conduct warfare, and it was for about 100 years. But with humans being the intelligent creatures that they are, the "art" of infantry tactics advanced quite a bit. One of the most proficient countries in firearm warfare was Great Britain. They got so good at it that they equipped their soldiers with red coats (Paul Revere, anyone?) The purpose there being to present easily visible targets to their enemies in order to both mock and intimidate them. It was like saying, "Here we are - we're coming for you - take your best shot!" Napoleon Bonaparte took the art even further by developing tactics that massed men into a small area in order to deliver tremendous firepower against opposing troops. He was so good at this type of warfare that he actually dominated all of Europe and western Russia for a short time. His tactics were still very much the norm during the American Civil War (1861-1865).
So there was a basic idea of massing men with firearms together and using that formation to overwhelm the enemy. HOWEVER, that entire set of tactics was completely based on the technological limits of the tools at hand. It was understood by generals and countries alike that the best trained soldier could only fire 3-4 aimed rounds per minute. And you can guess that after a few battles, well-trained soldiers might be in short supply.
Fast forward to World War I. The technology of warfare had changed dramatically but the tactical ideas had not. At the outset of the war (1915-1916), estimates put the total number of soldiers killed in actual combat, just in Europe, at over a million men. In just one year an entire generation had been almost completely wiped out. Why, you might ask? Well, the generals were still massing men and charging them at the enemy. But rather than being able to shoot 3-4 rounds per second, the armies were equipped with a new technology called the machine gun. These rifled guns could put out 200-800 rounds per minute! Can you imagine the carnage??
Eventually the generals of WWI adapted, but much too slowly. Never before in history has humankind paid such a steep price for trying to solve the problems of today with the solutions of yesterday.
In the IT, we are on the precipice of just such a moment. No, I do not think personal lives are at risk but the futures of companies are definitely at stake. If you are a doubter, let's take a look.
In 2010, just three years ago, as a CIO there was very little of my core infrastructure that I could virtualize, let alone applications. What I mean is that at that specific point in time, there was no "Cloud" that I could harness.
Today I can utilize one of at least a dozen different cloud-based providers to service every part of my IT portfolio. By no means am I running a completely virtualized shop. I still have plenty of servers located in a data center. But the fact remains that I could go completely virtual if I wanted to and if done right, my user community would never know the difference.
By now you might be asking how this all ties into the WWI story. The first thing to know is that very few companies and their CIO/IT heads are fully embracing the cloud. They are still making major investments in hardware, data center facilities, and application services that are physically present and available to them. While not everything can fit into the virtual world, especially in the financial services sector, much of it can. By failing to even consider the lower costs, higher availability, and scalability of vitualizing IT, these companies are spending money on commodities that should be spent on innovation and differentiation.
The penalty these companies pay can be illustrated by a simple example. Imagine two companies, "Firm A" and "Firm B", each of which has $10 to spend on IT. Both Firms are expanding globally and need new distributed IT services in a hurry. Firm A decides to implement SAP and spends $6 on the necessary infrastructure to run it. Firm B also goes with SAP but spends just $2 to implement it out of the cloud. If everything goes perfectly, Firm A has $4 left over for other services and innovation. Firm B, on the other hand, has $8 to spend. Who is going to gain the competitive advantage over whom?
Yes, that example was slightly facetious but it truly does represent what is happening in business all over the world today, especially the 1st world. It is not readily visible unless you know where to look, but companies willing to risk moving to the cloud for reasons of finance and agility are gaining a huge advantage over their competitors. Don't think for a moment that ignoring new technology trends is a safe strategy. Can you say "Blockbuster Video"?
To finish off on a strong note, do not let issues of information security deter you from moving to the cloud. When asked, many company leaders state that a fear of data loss and theft are actively deterring them from moving information to cloud-based locations. And yes, every so often you hear about Amazon (http://www.newser.com/story/151679/amazon-tightens-security-after-high-profile-hack.html), Sony (http://www.digitaltrends.com/gaming/sony-fined-almost-400000-for-2011-playstation-security-breach/), and TJ Maxx (http://www.informationweek.com/tj-maxx-parent-company-data-theft-is-the-worst-ever/d/d-id/1053522?) getting hacked. But the fact is and remains, about 70-80% of all corporate information security issues are caused by internal employees.
If you are an IT leader or a business executive who depends on technology, don't ignore the cloud and virtualization. If you do, keep your head down as you charge those machine gun nests.