Well, there is a basic conflict of interest that IT departments face as they think about the cloud, and that's true, of course, of any kind of internal department that faces the prospect of being displaced by an outside provider. We also saw some of this with outsourcing as well, so it's not necessarily new. What I think is more powerful than the resistance that may come from IT departments looking to protect their turf is the competitive necessity companies face to reduce the cost of IT while simultaneously expanding their IT capacity -- and the cloud offers one good way to do that. What I mean by competitive pressure is if one of your competitors moves to more of a cloud operation and saves a lot of money, then whether your IT department likes it or not, you're going to have a competitive necessity to move in that same direction. Over time, that is going to be the dynamic of why cloud computing becomes more mainstream.
And that leads to fewer IT folks, even though some say cloud services won't eliminate IT jobs?
NC: You hear that all the time, not only from vendors but IT managers as well, who say, "If we can get rid of these responsibilities, then we'll be able to redeploy our staff for more strategic purposes." That's a myth, obviously. Any time you get rid of a job, then the person in that job has to prove that their continued employment is worth it for the company. When you get rid of a job, more often than not, the employee goes out the door, particularly when you have an economy like today in which companies are looking not only for greater efficiencies but also to reduce their staff.
How do you see the current recession reshaping IT?
I have mixed feelings. On the one hand, it continues or even intensifies the cost pressures that have been on CIOs and IT departments over the last decade, and that would seem to imply there will be a search for more efficient and less costly ways to do the things you need to keep your business running, whether that's purely at the level of computing and storage capacity, or how you get a particular application in. From that standpoint, it should promote the use of cloud services simply because at the outset they're much cheaper and don't require capital outlays.
On the other hand, whenever you have the kind of severe economic downturn we have right now, companies tend to get very conservative and very risk-averse and so they might be less willing to experiment with a new model of IT. So there are these two contrary forces at work: One pushing companies to find more efficient ways to do things, and the other kind of this sense that "let's batten down the hatches and not do any experiments." And I don't know how those two forces play out. Earlier signs, if you look at Salesforce's results, which have held up pretty well so far, would indicate that maybe it is pushing companies to move more quickly to explore or even buy into the cloud, but it's too early to make a definitive statement on that.