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The Future Is Special-ized

Your business is special; why not your cloud? CFOs should look for applications, platforms, and services designed for their needs.
Timothy Chou, CFO.com | US
March 16, 2012

Some of you may have read UCLA Professor Jared Diamond's 1997 Pulitzer Prize-winning book, Guns, Germs, and Steel. In it, Diamond answers a question from Yali, his aboriginal New Guinean friend. The question (and I'm paraphrasing) is: "Why do you guys have all the stuff?" That is, why did civilization - and all the good stuff that comes with it - prosper in Europe and Asia but not in New Guinea?

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Diamond's book is a 496-page answer to this question, and begins with the proposition that human civilization took an enormous leap forward when it moved from a hunter-gatherer culture to an agricultural one. Once humans could farm, they could settle down in one spot instead of following their food as it migrated from place to place. And once people could stay in one place, they began to specialize. One group would build shelters, another would till soil. One group would forge weapons for others to wield to protect the soil, and still another group would make clothing. And so on until we get to CFOs.

Fast forward to the 21st century.  If our tribe had just 100 people, then each of us would have to be a generalist as there are so many jobs that need to be done. But in a world of seven billion increasingly interconnected people, value is going to accrue to specialists. So what does this mean for you and the cloud?

First, we will increasingly see specialized applications, operations management, and compute and storage cloud services.  In a global economy, there's every reason to believe we'll have a supply chain application cloud service specifically designed for Asian retailers. Or, a cloud service specialized for the financial industry's large transaction volumes and its need for speed. And no doubt another for the health industry, with its special privacy concerns and its data ravenous imaging tools.

So as you look to move to the cloud, think about who are the specialists, whether that's a specialized JDA supply chain application cloud service, a financial services compute and storage cloud service from CFN, or an airline industry specialized compute and storage cloud service from SITA. 

After all, no matter how good your plumber may be, you wouldn't have him do your taxes, would you?

Specialization in cloud services has implications for how ultimately you will choose your next generation of information technology services and providers.  If you believe (as some do) that after the cloud space matures there will be only ten services, then choosing one will be pretty simple. But if you believe (as I do) that there will be a million specialized application, operations management, compute and storage cloud services, then a next-generation distribution channel must emerge that will also be specialized. 

For example, there are already a large number of security management cloud services. Why shouldn't there be a group that specializes in recommending and ultimately reselling security services specifically for your industry?  Why shouldn't there be a company that focuses on delivering applications for the oil and gas industry?

On top of that, the entire area of compute and storage is already enormous. Why wouldn't someone begin to specialize in understanding the thousands of services and millions of combinations of compute, storage, data center, and network services that will help you accomplish your business objectives?

Finally, if you're doing any career counseling, consider the implications of the global economy on one's future employment. Once upon a time, it might have been good to a jack-of-all-trades. But unless you live in a village of 100 people, each of us individually will have to choose to specialize in order to provide value. It may sound odd now, but one day specializing in poultry management application software for the Latin American market is going to make a lot of sense. It's going to be a good business.

By the way, the specializations we see will change as what was once specialized becomes standardized. This will put even more emphasis on that "lifelong learning" thing we pay lip service to.

So if you want to end up with "the stuff," focus on building, buying, and becoming specialized.

Timothy Chou teaches cloud computing at Stanford University. He is the former president of Oracle On Demand and the author of Cloud: Seven Clear Business Models.




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