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Transcript:
Host: Jim Leach – SAVVIS Thought Leaders
Guest: Andy Schroepfer – Tier 1 Research

Jim Leach – SAVVIS Thought Leaders
Welcome to this edition of Thought Leaders, where we bring you candid conversations with the people whose research and writing are guiding both the buyers and suppliers of IT Solution. I’m Jim Leach. Today we are joined by Andy Schroepfer, President and Founder of Tier 1 Research. Andy is unique in market research field in that he is part Wall Street analyst and part IT Industry analyst. He applies his experience on Wall Street through his research and how IT companies are turning customer solution into shareholder value. Thanks for joining us on Thought Leaders Andy.

Andrew Schroepfer - Tier 1 Research
Hey, happy to be here, thanks for having me.

Jim Leach – SAVVIS Thought Leaders
Can you put on your Wall Street Analyst hat first and give our listeners your view on the hosting industry? How big is it? How do you segment it? Where are the growth areas?

Andy Schroepfer - Tier 1 Research
Sure. Well, from the Wall Street perspective, there were a ton of people that got burned back in the Internet bubble that looked at Exodus as the be-all-end-all company in the hosting sector and then there was Acomi and all these other companies that had monstrous billion dollar valuations, and obviously those all came down in fact, to zero to something probably above zero.

So, in a couple of years that ensued since then, it was tough for people to really understand why would I go back to that industry, it was part of the bubble. And fortunately now, we’ve had a five year - half a decade separation to where people can come back and revisit these.

So, that’s because of the Web 2.0 movement that gives a lot of prospects. BusinessWeek article from a couple of weeks ago; we have a $12 billion industry in hosting that people still don’t necessarily know how to look at. There is two ways to look at it. One is the old way which is the — there is data centers, and that’s a co-location business. There’s people with dedicated hosting that actually own the gear and it’s actually a single device or multiple single devices for specific a client. Then there is shared infrastructure; shared infrastructure used to just be defined as shared hosting, but now as you look, it includes utility computing and virtualized hosting. That’s the old way to look at it.

The form factor — way to look at it is not how we believe investors would want anyone to look at it. The new way should be, who is the buyer of the services that are being sold in this $12 billion hosting industry; it’s the consumer which buys blog services, media publishing, and sharing tools; it’s the small business that buys different software, the service applications, or host their own version of an appliance as an application. Then there’s large enterprises that have big needs for disaster recovery, big needs for facilities, for lots of their analyst applications.

So, the right way to look at it is by customer type that’s buying; and that’s how we are starting to segment our industry at least, in our revenue view of this $12 billion sector. But now that’s the right way to look at it, as people are starting to understand that and understand how these business models are working. The investors have started to come back, and most of the stocks in this sector that are public, and what we’ve seen are doubling over the last year, or at least they are more formalization in how their capital structures worked. So, I think investors have more of a reason to come back to this sector as well as a healthier sector to come back to.

Jim Leach – SAVVIS Thought Leaders
Very interesting; so let’s dig into those buyer segments a little bit, the consumers, small business and large enterprises. Where are the growth areas in those segments, are they all growing at about the same rate or are some of the areas hotter than others?

Andy Schroepfer - Tier 1 Research
The consumer sector interestingly, is actually being driven by free services, which are advertising based. So, it’s actually a different revenue model than people buying actually for the services whether it’s a blog service, whether it’s a shared hosting account, whether it’s an email account.

So that business model is completely different and there’s tremendous growth in online advertising because of the benefits that you can have from better targeting who you are trying to reach with your ad. As you get into the small business, those companies are finally understanding that they can take advantage of the applications that larger enterprises have used because they can buy them in a ‘software as a service’ delivery model, which gives it a per user, per seat, per month, pricing structure, and lets it be approachable by both the user as well as the buyer from the small business.

So that’s the biggest growth area as it relates to hosting. The large enterprise has already decided whether they’re going to do something in-house or whether they are going to do it on an outsourced basis. That usually has a five year cyclical nature and I think we are coming back to the marketplace — we are coming back to the part in that cycle, where the enterprises want to be outsourcing more. And interestingly the dynamic that’s hitting at the same time now is the availability of so many enterprise applications through this ‘software as a service’ model, which is causing enterprises to need less data center space in some cases, or if their delivery model is to be a ‘software as a service’ company, a lot of these companies are taking on more infrastructure.

So there’s as many companies growing huge in a large enterprise as it relates to their hosting needs, as there are companies who have a significantly less need. So a good large enterprise is probably the slowest growth sector but it’s more about who you’re targeting that large enterprise group.

Jim Leach – SAVVIS Thought Leaders
So the buyers of Web hosting services are starting to segment themselves into these different categories of consumer and small business, large enterprises. Are you also seeing a similar type of segmentation in the Web hosting providers? Are they trying to deliver different types of services and to meet the needs of these different segments?

Andy Schroepfer - Tier 1 Research
Yes, that’s a great question. It’s been the changeover from the seller having the power to the buyer having the power; and there’s equally as many companies that get this change, to the companies that don’t. So, the companies that get this change are offering so many services on a needed basis, or on a pre-user basis; that’s how the buyers are interested in buying right now. As you go down across those different segments from large enterprise down to consumer, the consumer is becoming so used to having free services, and they are happy to understand that advertisements are what’s allowing them to get that service for free.

You no longer have people interested in buying a software package at ‘Best Buy’ or ‘Circuit City’ or having them download software from the Web, you’re wanting them to just be able to drive right in and use the service and pay for it; then again, as you go up into the small business and large enterprise to be able to use that and pay for that on a pre-user basis, and above and beyond that the ones who really get this change that’s happened, understand that you are personalizing and verticalizing their offerings; so, not just offering a utility computing platform but tailoring it towards a particular vertical market such as financial services or retail or healthcare.

Whatever the application is that’s going to reside on top of an infrastructure, it’s going to have a better growth story behind it and a better traction and adoption if it’s tailored towards this specific vertical market. Those are the companies who really get what’s going on right now.

Jim Leach – SAVVIS Thought Leaders
Or in a sense that the consumer segment is driving the business segment; and from an IT supplier perspective, a number of the biggest hosting companies, firms like IBM, EDS, big telcos like AT&T and Verizon, they grew up in the business sector. Are firms like those big traditional outsourcers going to have trouble surviving in this new market? Do they have to regroup?

Andy Schroepfer - Tier 1 Research
They definitely need to regroup. I wouldn’t go as far as to say they have a problem surviving. I hope a lot of these mega-companies lay off a lot of people that hopefully go and start a lot of new interesting entrepreneurial companies. The entire reason that the consumer is driving the innovations in the enterprise services world is that it’s easier to adopt something that’s free. I mean you can get mass adoption of something that’s free, and you get a lot of people that battle-test different applications that are online.

So is Microsoft ready to offer their entire Office suite in an online format yet? Sure they’re probably ready, but will they? They won’t until they have to. Unfortunately, there’s companies from Google all the way on down to the companies like Zoho that are launching spreadsheets and word processing documents online, and making that something that Microsoft will have to react to; same thing can be said for the outsourcers on your question. If these services are geared towards being tuned with expensive consultants and expensive engagements, it’s not necessary that that’s wrong, there’s the need for that personalization.

They’re using the tools that have been battle-tested in the consumer world. You are able to more quickly and easily adopt, customize, personalize, and verticalize all these applications and the enterprises outside do think that IBM is at a disadvantage as a company, but hopefully the IBMs, EDSs, the CSEs will use to their advantage the divisions that are focused on looking at those technologies to their advantage for their enterprise accounts. So again, I wouldn’t go as far as to say they’re in trouble; I would go as far as to say they are disadvantaged relative to companies that do get to work closer to both the cutting edge consumer side as well as the small business side.

Jim Leach – SAVVIS Thought Leaders
Let’s talk a little about the startups that you alluded to, that it might start emerging over time. I know you keep an eye on that part of the marketplace. Have you seen anything interesting with the startups that you think could have a big impact on the broader Web hosting industry?

Andy Schroepfer - Tier 1 Research
Yeah, I think social networking is essentially the heart of what the Web 2.0 movement stands for; it’s the ability for anyone to interact with any content and share it with anyone that they want to, in any format that they want to. Whatever website you might go to, whatever application you might interact with, it should afford you the opportunity to use that in a community fashion whether it’s reading a news article online, whether it’s buying a product online, whether it’s writing a blog entry online; everything that you might do is something that should be something that can exist in a social network.

So, whether it’s the social network software makers themselves that actually pioneer this into all of the enterprise applications is yet to be seen - kind of like business analytics, that’s the sector that still exists today with business objects and a lot of mega companies still – essentially analytics need to be applied to every application. We think social networking is the latest thing out of the startup movement and needs to be applied to almost every website, every application that exists.

Jim Leach – SAVVIS Thought Leaders
It’s always a pleasure to get a chance to spend some time and talk with you Andy, I really appreciate you being a part of Thought Leaders. Let me asked you one last question.

Andy Schroepfer – Tier 1 Research
Sure.

Jim Leach – SAVVIS Thought Leaders
There has been a lot of press coverage recently about an impending battle between Microsoft and Google. Are the battle lines really being drawn between these two companies, and if they are, who’s going to win and what will it mean for the IT industry?

Andy Schroepfer – Tier 1 Research
When the company is afforded evaluation like Google has, and is simultaneously able to spend increasingly mega amounts of money and be rewarded for that, that’s a hard monster for anyone to compete with. Fortunately, there are a couple players in the world like Microsoft that have dollars that they can go and compete.

So, Microsoft committed a couple billion extra dollars in this current year to go build the platform to compete. But what’s really happening is, who can build up a complete platform that anyone in the world can plug an application into and be able to like Google, help monetize that in return for access to this monster platform. Microsoft, I think is going to do the same thing; so, I guess, I do believe they are at battle completely and wholly. Do I think Microsoft has the ability to win? They have the chance to win, but this is Google’s game to lose at this point. The longer the market continues to afford Google, evaluation, to the extent that they have it for putting together this monstrosity of the computing platform, it will become almost untouchable.

So, everyone in the world that wants to have an application — and again, this comes back to the hosting sector and say, if I wanted — do I want to go build my own complete resource, or do I want to potentially tap that into a Microsoft platform or a Google platform or a Yahoo platform or an Amazon - eBay could, on down the line. Fortunately, the hosting companies that get this, again are offering utility computing, so you can hopefully tap into an unlimited amount of resource, so you can serve all of the people that want to come visit your site. But specific to Google and Microsoft if I had to pick a winner, I’m still picking Google at this point, but if you had to compete against anybody - if I’m Google, I don’t want to compete against Microsoft, if I’m Microsoft I don’t want to compete against Google; its going to be an interesting battle. Google’s my pick for the winner right now.

Jim Leach – SAVVIS Thought Leaders
Thanks again to Andy Schroepfer, President and Founder, Tier 1 Research, and thanks to you, our listeners for joining us on this edition of Thought Leaders.

Copyright ©2006 PodTech.net. All rights reserved. Privacy policy

Tags: Thought Leaders, SAVVIS, Andy Schroepfer, Tier 1 Research

Transcript:
Host: Jim Leach – SAVVIS
Guest: Rona Shuchat – IDC

Jim Leach – SAVVIS
Welcome to this edition of Thought Leaders, where, we bring you candid conversations with the people whose research and writing are guiding the buyers and suppliers of IT Solutions. I’m Jim Leach. Today we are pleased to welcome Rona Shuchat, Research Director for Telecommunication Transformation Strategy and top industry analyst from IDC. Rona conducts research in the evolution and roll out of next-generation services, using the Internet Protocol or IP as well as manage network services, Web Hosting, utility and on-demand computing, virtualized services, intelligent content delivery networks, service portals and application,-a way of networking. That’s quite a list Rona, you must be pretty busy.

Rona Shuchat – IDC
Well, thanks for inviting me Jim. It is really fast moving market, I’m covering a lot of areas but there is a lot of new innovation and we’ll talk about that.

Jim Leach – SAVVIS
Oh, we’re so pleased to have you, thanks for joining us here on Thought Leaders. The first question I have is, you bring really a unique prospective to our audience and that you study the strategic impact of both Telecommunications and Web Hosting. So, let’s start with Telecommunications. Ten years ago, at the height of .com boom, corporate networks were the rage. Venture money was pouring in to .com startups to develop new IT gear and billions of dollars were being spent to build out global networks but today corporate networking seems kind of boring. Other than Voice Over IP, is there anything interesting going on in corporate networking?

Rona Shuchat – IDC
Yes, actually there is a lot more going on than it first may be obvious. What comes to mind for me are areas like Deep Packet Inspection. The use of Web Optimization techniques. Even the use Web based portals to administer internal networks. For example, Deep Packet Inspection is a technology that’s helping IT managers, better understand how applications are using their network, helping them to set policies for controlling the utilization of IP Bandwidth, really with the goal of helping them to better control costs. Another innovation that I thought of is really the use of application acceleration products, to enhance the performance of highly dynamic transaction oriented Websites. I think, what we’re really seeing is there’s lot of new or refined optimization techniques incumbent to help companies improve application performance bringing together functionality like low bouncing, caching, compression, read optimization.

If you look at portals, like say more and more reporting and network control functions are being developed with portal type functionality and this is really an improvement over what I call previous separate control systems that often necessitate companies to support large development stuff that have expertise in different languages. So, I could go on and on Jim, but I think I’m going stop there, there really are a lot of interesting developments in corporate networking.

Jim Leach – SAVVIS
It seems like Rona, common thread across those different initiatives in the networking space is focused on the application and what applications need to run effectively and yet those of us in the IT Solution space, I think we tend a look at IT in discrete parts, whether it’s hosting or networks, servers or software. If CIOs are really looking for integrated IT Solutions for their applications, that cut across the Silos, is there an opportunity for telecommunications and hosting to come together to bring value for an IT Department or is it really better for an IT Department to continue buying these pieces individually.

Rona Shuchat – IDC
Jim, I think, there is a far more advantage for corporations to look at bundling a combination of elements to lower their overall total cost of ownership and when I say elements, I’m referring to potentially outsourcing a combination of server hardware, IP Bandwidth, storage, software, security you need in systems to monitoring into a single bundle. As we look out, at the different market segments, it’s really expected that small to mid size companies are really going to have a hard time, keeping up with and absorbing the in-house cost and expertise that they will need to support the growing complexity of their networked applications. From a large enterprise perspective, we believe that they can also benefit from advanced outsourced solutions, that take advantage of functionality like automated virtualization or utility computing and what I’ll refer to as performance application engineering.

These different elements help a company to consolidate their server resources but also enable then to scale, the whole concept of virtualization and utility computing for dynamic allocation of resources, will enable companies to scale their applications while keeping their cost under control, which is really a critical element that CIOs and CFOs will continue to watch, as applications grow and become more complex over time.

Jim Leach – SAVVIS
I think virtualization and utility computing for some of us, they sound just like another buzzword in IT and for those of us who’ve been around the IT block, a few times, I think, were all, a little bit jaded and some of us were even a bit cynical. Can you help us understand, what virtualization and utility computing are and what their real value is, that those concepts can deliver to a corporate IT Department?

Rona Shuchat – IDC
First of all, there is really a lot of media play around virtualization and utility computing. There’s a lot of different interpretations but there is, what I would say a real functionality to these concepts which is being provided in solutions by a number of large providers such as yourself. Simply put, a virtualization is the ability to take a single resource and make it appear as more than one, so that each instance can service separate application. For example, virtualization helps to partition servers, storage or even network interfaces and this in turn allows through the dynamic allocation of fixed resources.

When you think of utility computing, it’s very similar to the way you pay for electricity that you use over, let’s say the power line to your house. You only pay for what you consume over that power line and in today’s hosting world, this concept has been enhanced, I would say to include not only metered usage cost but the dynamic allocation of additional resources as they are needed and those resources might include things like processing power, storage or bandwidth.

So the point here, is that virtualization and on-demand computing can minimize the total cost of ownership for an enterprise, way beyond what they could achieve with a fixed resource model.

Now we are seeing savings in the — anywhere from 25-40% enterprisers say, when they compare a virtualization strategy versus a dedicated model. So, companies can really minimize their overall capital expenditure outlay. They don’t need to buy extra servers, for example, for those unusual peak periods and they can continue to scale and grow their applications and adjust up or down depending on how their growth moves ahead.

Jim Leach – SAVVIS
Oh, let’s talk a little bit more about Web Hosting and that’s another key area of your research and it appears that both supply and demand for Web Hosting are working to drive prices up in this area. There is a demand for high quality data center space with the right kind of power and cooling and security and the supply seems a little bit constrained. Can you talk to us a little bit about what’s driving this demand and do you think it’s going to increase?

Rona Shuchat – IDC
With the wholesale migration of traditional applications to Web-oriented architectures, we’re really seeing a tremendous growth and the need for Web Hosted applications. It’s really leading to, what I have call, resurgence and the need for web support systems and in addition to this migration of existing applications, I’d say that enterprisers are really bringing online, a wide range of new e-business functions, tie it to marketing, sales and transaction type services, there is really no limit for the types of applications that are evolving for e-business and to share some stats with you, IDC’s 2006 research shows, that approximately, 50% of all companies are now outsourcing all or part of their Website operations through an external service provider.

And this is up from about 44% compared to 2004 and we really expect this demand to keep growing. Our latest, Web Hosting forecast for example, shows that the US market for out sourced hosting services is predicted to grow from just under about 7 billion in 2005 to 14.5 billion in 2010, so we’re definitely projecting significant growth in this area.

Jim Leach – SAVVIS
So, if demand is going to continue to grow for Web hosting, you’re actually a trusted advisor to a number of corporate IT Departments. How are you advising them to evaluate Web hosting providers?

Rona Shuchat – IDC
Fairly, with so many options on the table today, it can very well be confusing to a corporate IT Department, there is multiple types of Web hosting providers out there. There’s Telecom Carriers, there’s IT outsourcing firms like IBM or EDS, there’s specialized managed Web hosting companies that are more of a (Inaudible) like a Rackspace for example, and then of course, there is the mass market hosters like GoDaddy or Yahoo, but as an enterprise customer, I think it’s really important, they need to assess whether the hoster can provide the scalability, needed to support their anticipated application growth and complexity and scalability isn’t just about providing data center capacity and processing power.

It may require the use of virtualization services or on-demand utility to achieve the economies of scale that are going to make the difference for that enterprise in terms of really lowering its total cost of ownership in an outsourced model. The enterprise also needs to evaluate the provider’s capabilities in terms of prepackaged solutions, levels of customization available. Last but not least, I’d say, they need to consider, the training and availability of support staff at that Web hoster, what kinds of certification does the staff have, availability of SOAs, what are the penalties for non compliance, there’s just really a whole diligent process, that an enterprise needs to go through to ensure that they are selecting a qualified Web hosting provider.

Jim Leach – SAVVIS
Oh Rona, this has been a great conversation and we’ve gotten a chance to talk with you about telecommunications and networking and Web hosting. Let’s put on your forecaster hat for the last question and give you the opportunity to look out five years, what recommendations would you give to Web hosting companies and corporate IT Departments?

Rona Shuchat – IDC
It’s going to be really important for companies to be able to dynamically scale their applications under increased usage and load and only pay for what they use, I think cost is still going to be a critical consideration for IT Organizations. So, in response to that, I think, it’s going to be a really important for hosting companies to be able to offer very granular utility computing service model, that can support very cost efficient solutions to help companies to be able to scale — outsource more complex applications and in the same breath really keep their costs under control.

Jim Leach – SAVVIS
Oh, thanks again, Rona Shuchat; Research Director at IDC and thanks to our listeners for joining us for this edition of Thought Leaders.

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Tags: Thought Leaders, SAVVIS, Rona Shuchat, IDC, deep packet, virtualization

Transcript:
Host: Jim Leach - PodTech
Guest: Nicholas Carr

Jim Leach - PodTech
Welcome to this edition of Thought Leaders, where we bring you candid conversations with the people whose research and writings are guiding the buyers and suppliers of Information Technology. I’m Jim Leach. Today, we’re delighted to welcome Nicholas Carr, acclaimed business technology writer and strategist. His writings include the article, ‘IT Doesn’t Matter’, published in the Harvard Business Review, the follow up book, ‘Does IT Matter?’, and his most recent paper called ‘The End of Corporate Computing’, published in the MIT Sloan Management Review. Thanks for being here Nick.

Nicholas Carr
Sure.

Jim Leach - PodTech
I guess it’s possible that someone involved in Corporate Computing has been on a remote island for the last three years and has not heard about your ideas regarding Information Technology and Competitive Advantage. Could you summarize for us your thesis?

Nicholas Carr
Sure. The basic thesis is that Information Technology is maturing like other technologies have in the past, and as it matures it becomes more commonplace, it becomes cheaper, more accessible, companies learn how to use it and share best practices. All of that tends to diminish its ability to set one company apart from other companies. So it neutralizes its ability to provide Competitive Advantage. It’s still essential, you can’t operate without it, but it’s harder and harder to get and sustain an advantage. Therefore, what I conclude is that companies need to shift the way they approach IT, in their investment in it, to looking at it more like a shared infrastructure, that you want to operate as efficiently as possible, but don’t think you’re going to innovate your way to a Competitive Advantage.

Jim Leach - PodTech
I guess the good news is that your ideas have encouraged a healthy dialogue between IT people and business leaders. I guess the bad news is sometimes that dialogue can get quite emotional. I’d imagine you’ve heard just about every kind of criticism there can be for your ideas. Can you tell us what some of the good ones are and how you’d respond?

Nicholas Carr
Most of the media criticism came more from the IT vendor world than from the user world. There have been interesting commentaries from both sides. I think there are two criticisms that I think are particularly interesting. One is that everything I say doesn’t apply to IT, because IT is so flexible and because it consists of software that you can program to do different things. So it’s very different from railroads, for instance, or the telephone network. I think that’s true to the extent that it accurately describes the flexibility of IT, but I think IT as its used by business is still subject to the same competitive and economic and technological forces that any other business resource is subject to, in that overtime IT behaves in the same way. It becomes harder and harder to get advantage.

The other criticism is that there are exceptions to my rule. I think that’s absolutely true and very important to recognize that there are some ways that some companies can apply IT, that they do get a Competitive Advantage, and really when you look at those, what you see is they tend to be very narrow, very specialized applications of IT, and very tightly tied to their own business processes. So, if you do something different from your competitors and can use IT in a way to make those things even more distinctive, then you can still get a Competitive Advantage, but it tends to be very, very, as I said, narrow, specialized things. The vast majority of your IT spending probably is not strategic.

Jim Leach - PodTech
In your most recent paper, ‘The End of Corporate Computing’, you suggest that IT is shifting from being an asset that companies own, to being a service that they purchase. Can you walk us through that idea?

Nicholas Carr
After writing ‘Does IT Matter?’, I started to think about, okay, given the fact that so much of IT is now infrastructural, that everybody has to buy it and use it, but they use it in very similar ways, what does that mean for the way its applied to companies? I think what we’re seeing is that it makes a lot of sense to begin to centralize and consolidate IT assets in utilities and provide those basic IT capabilities as services that many different companies can share.

What you get through that is you get much more efficient use of your assets, rather than every company having to go out and buy and maintain its own data center and all its own applications. You can consolidate all that, get it much more cheaply, much more efficiently, but also much more flexibly because you’re not locked in to whatever you happened to buy at any given moment.

Jim Leach - PodTech
That idea sounds compelling. Do you think it’s for real?

Nicholas Carr
Oh I do, I think one of the main reason’s its for real is that now we have the distribution capacity, the network, what was the electric grid before and its today the Internet. Particularly, the broadband Internet with all the fiber optic cable that’s been laid, that gives you the transport mechanism to supply lots of, even very sophisticated IT capabilities from a distance, from a centralized utility. I think we’re seeing companies moving that way, both on the hardware side and increasingly on the software side as well.

Jim Leach - PodTech
So let’s move now from the theoretical to the practical. If indeed IT does lend itself to commoditization, do you have any suggestions for the IT professional out there for how they can maximize the value they deliver to their business, their organization?

Nicholas Carr
I think the first thing you have to do is take a very skeptical look at your own IT operation and say, “Is this stuff that we’re investing in and innovating in, is it providing us a competitive advantage or is it something that all our competitors are doing either now or will soon do?” If its in the latter category, and I think most IT is now, I think you should look for how you can capitalize on commoditization and on the utility model by consolidating your assets, by standardizing them and by beginning to prune them. To move the assets out of your own control and your own ownership over to utility suppliers and begin to move to the model that says IT shouldn’t be an asset that you own, but should be a service that you can buy for a monthly fee, in essence.

Jim Leach - PodTech
Well, recently you’ve been writing about innovation. I was reading on your Blog about the conservative innovator and the prudent innovator. Innovation seems to be the next big buzzword in business today, can you tell us a little bit about your thoughts regarding innovation?

Nicholas Carr
Sure. First of all, innovation is absolutely critical to the vast majority of companies to gain a competitive advantage. The danger is that companies begin to see innovation as an end in itself and start to think we should innovate everywhere and every aspect of our business should be an innovator, and I think that’s a mistake. I think the prudent innovator looks at those particular areas where a competitive advantage might be gained and focuses their innovation in those particular areas, because the problem with innovation is that it tends to be expensive and risky. So to innovate everywhere is just a recipe for wasting a lot of money, but if you can target those few areas where you can gain an advantage, then it can pay off in space.

Jim Leach - PodTech
It’s been great spending time with you today, Nick. We really appreciate it. As a thought leader, your ideas are shaping business strategies, can you give us a little insight into what you see is the next big thing, what are you working on now?

Nicholas Carr
Well, I’m working on another book that will go into this utility model, and what it means when we start having the Internet as kind of the universal grid for computing and software capabilities. So, what I’m going to try to do is look at it, what it means, not only in business, in terms of utility suppliers there, but in terms of companies like Google, which are in many ways utilities now, that use the Internet to provide very sophisticated services. I think as this plays out, we’re going to see it have all sorts of economic and social effects, and my hope is to probe some of those in my next book.

Jim Leach - PodTech
Well, our thanks again to Nicholas Carr, a business strategist and writer, and thanks to you for joining us for this edition of Thought Leaders.

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Tags: Thought Leaders, SAVVIS, Nicholas Carr

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