The Big Switch

I finished reading Nicholas Carr's new book, the Big Switch, which describes the rise of the 'cloud' (web applications like Google or Amazon) using an extended analogy from the electricity industry 100 years ago.

Carr points out that companies originally had their own electricity departments generating power, but as the technology matured and economies of scale kicked in, they instead purchased electricity from dedicated utilities. In the same way, he argues that companies nowadays have their own IT departments managing software, but as web technologies mature, organisations will subscribe to websites managed by utilities instead.

It's a powerful argument, and already conventional wisdom in Silicon Valley. Carr states it eloquently and clearly to a wider audience. Executives will love the arguments; IT departments have always been expensive and very difficult to manage, and the prospect of simply subscribing to websites instead will remove many a headache.

Carr lists Google, Yahoo, Salesforce and Amazon as being at the forefront of this change. In fact, he implies that there is only space for three or four mega-suppliers of web applications. I reckon that's not true, and it's an area Carr could have spent more time.

For example, the financial services industry still spends far more on technology than the search engine industry. Some of that is spent on email systems and word processors, which could be procured from Google instead. But the vast majority is spent on trading, lending, sales, securitisation and investment systems; Google is not a bank and therefore can't compete with this. Banks will never give these systems away because in financial services, knowledge is power. Citi and HSBC belong to Carr's list of mega web suppliers - it's not just Silicon Valley!

The Big Switch is targeted at an executive level of readership, as you'd expect from a former editor of the Harvard Business Review. I think it hits the mark pretty well - it doesn't go into technical explanations (we're still missing that book!) but explains the likely social and organisational consequences of the web in a clear, engaging manner.

I wasn't so impressed with the other sections of the book, which debunk the techno-utopians who assume society can only benefit from the cloud, and explain how the web is becoming a form of Artificial Intelligence. It might be well put, but it's not really news - the web is hardly unique as a new technology in having winners and losers. Also I suspect Carr is overhyping the power of the web's AI.

Overall I was impressed with the style and subject matter. Carr has hit on a fundamental transformation in IT and the book will help business executives - and IT managers - understand and prepare for the changes to come.