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IT, a Decades-Old Virtual Business Model, and Lessons for the Industrial Internet

IT, a Decades-Old Virtual Business Model, and Lessons for the Industrial Internet

Is cloud computing the new, new thing? Was it ever that? We talk about Software as a Service, Platform as a Service, Infrastructure as a Service and many other things ‘as a Service’, as though they were invented only yesterday. Yet much of the basic cloud computing model has already existed for decades. What is new and exciting about virtual computing is the massive swing it is causing in how people and organizations use IT. The cloud is increasingly where everybody lives and does business.

So what does that mean for other sectors and the industrial internet that is growing up between them?

Don’t Kid Yourself, VMs in IT is Fifty Years Old

Decades Old Virtual Business Model

Much of the cloud computing done today relies on virtualization. Physical IT resources (servers, storage units and other hardware) house several different virtual machines or ‘VMs’. Hardware can be shared out between not only many users, but many applications and many separate customers. This makes pay-as-you-go services possible, where customers pay only for what they use.

However, in the 1970s, IBM had already introduced its VM operating system that allowed multiple virtual machines to run inside its mainframes. VMs is not new. It is the way they are being used that is new.

The Move from IT Service to Ownership – and Back to Service

The first useful computers were too expensive for many organizations to acquire outright. Timesharing bureaus rented out mainframe time to customers on a ‘pay-as-you-go’ basis. Next came the wave of departmental and mini-computers, with IT autonomy for sales, marketing, manufacturing and other departments. The model was CapEx or capital expenditure on IT resources with a one-time purchase fee.

Cloud computing now offers OpEx (again), meaning an operational expenditure model. There is no sunk cost. You start using and paying when you want and you stop when you want, too.

Big Changes in Customer Service and Billing

What has changed considerably in the current era of cloud computing is the way customers can use and pay for services. Self-service in particular sets cloud computing apart from the old VM days of half a century ago. Enterprises no longer need to wait for IT teams to set up and run platforms or apps. They can go to the cloud and get solutions with a few mouse clicks and a credit card. Accordingly, cloud operators are pushing ease of use and flexibility in set-up and billing, together with the possibility for customers to define their own customized solutions.

Insights for the Industrial Internet

Industrial internet and the Internet of Things (IoT) are based on physical objects. These physical objects, whether cars, trains, buildings, fridges or toasters, must all be on-site, producing what the customer wants where the customer wants it. Virtual toast is no good. It has to be available for you directly in your kitchen, or not at all.

By comparison, virtual data centers can be used remotely. In IT, ‘raw materials’ and ‘finished goods’ move backwards and forwards over a cable or wireless connection. This places some restrictions on the real world that are not present in the virtual one, but much of the services model can still be carried over.

Look for the Value, then Apply the Technology

Physical objects can be connected, managed, and metered over the industrial internet. Physical asset usage levels and charges can be pegged or changed online as required by customers. Periods of non-usage can automatically trigger proposals for redeployment. If you haven’t used your jet turbine for the last few months, a vendor could offer to stop your rental payments by moving the asset to another customer’s premises for more use (and better rental payments) there.

With broadmindedness and a suitable customer self-service and billing application, then just like for IT, large portions of today’s industrial CapEx could turn into OpEx tomorrow. 

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