Disruptive Forces: The Economy and the Cloud

New generations of digital infrastructure get deployed quickly even when they are incompatible with what already exists.  But old infrastructure is incredibly slow to disappear.   The complicated business and legal mechanisms embodied in computer systems are risky and expensive to replace..  But existing systems can't function without the infrastructure that was in place when they were built…  Thus new generations of infrastructure can be easily added, but old and even antique infrastructures survive alongside them to power the applications that have not yet been updated to employ new technologies.

This persistence of infrastructure can be seen as a force likely to slow changes in Identity Management, since it is a key component of digital infrastructure.

Yet global economic and technological trends lead in the opposite direction. The current reality is one of economic contraction where enterprises and governments are under increasing pressure to produce more with less. Analysts and corporate planners don’t see this contraction as being transient or likely to rebound quickly. They see it as a long-term trend in which organizations become leaner, better focused and more fit-to-purpose – competing in an economy where only fit-to-purpose entities survive.

At the same time that these economic imperatives are shaking the enterprise and governments, the introduction of cloud computing enables many of the very efficiencies that are called for.

Cloud computing combines a number of innovations. Some represent new ways of delivering and operating computing and communications power.  But the innovations go far beyond higher density of silicon or new efficiencies in cooling technologies…  The cloud is ushering in a whole new division of labor within information technology.

Accelerating the specialization of functions

The transformational power of the cloud stems above all else from its ability to accelerate the specialization of functions so they are provided by those with the greatest expertise and lowest costs.

I was making this “theoretical” point while addressing the TSCP conference recently, which brings together people from extremely distributed industries such as aeronautics and defense.  Looking out into the audience I was suddenly struck by something that should have been totally obvious to me.  All the industries represented in that room, except for information technology, had an extensive division of labor across a huge number of parties.  Companies like Boeing or Airbus don't manufacture the spokes on the wheels of their planes, so to speak.  They develop specifications and assemble completed products in cost effective ways that are manufactured and refined by a whole ecosystem.  They have massively distributed supply chains.  Yet our model in information technology has remained rather pre-industrial and there are innumerable examples of companies expending their own resources doing things they aren't expert at, rather than employing a supply chain.  And part of the reason is because of the lack of an infrastructure that supports this diversification.  That infrastructure is just arriving now – in the form of the cloud.   

Redistributing processes to be most efficiently performed

So  technologically the cloud is an infrastructure honed for multi-sourcing – refactoring processes and redistributing them to be most efficiently performed.

The need to become leaner and more fit-to-purpose will drive continuous change.  Organizations will attempt to take advantage of the emerging cloud ecology to substitute off-the-shelf commoditized systems offered as specialized services. When this is not possible they will construct their newly emerging systems in the cloud using other specialized ecosystem services as building blocks.

Given the fact that the best building blocks for given purposes may well be hosted on different clouds, developers will expect to be able to reach across clouds to integrate with the services of their choice. Cloud platforms that don’t offer this capability will die from synergy deficiency.

Technological innovation will need to take place before services will be able to work securely in this kind of loosely coupled world – constituting a high-value version of what has been called the “API Economy”. The precept of the API economy is to expose all functionality as simple and easily understood services (e.g. based on REST) – and allow them to be consumed at a high level of granularity on a pay-as-you-go basis.

In the organizational world, most of the data that will flow through these APIs will be private data. For enterprises and governments to participate in the API Economy they will require a system of access control in which many different applications run by different administrations in different clouds are able to reuse knowledge of identity and security policy to adequately protect the data they handle.  They will also need shared governance.

Specifically, it must be possible to reliably identify, authenticate, authorize and audit across a graph of services before reuse of specialized services becomes practicable and economical and the motor of cloud economics begins to hum.