The end of the IT industry is 5 years and counting

If you work in IT (Information Technology) you have approximately 5 years left to retrain and get out before you’re going to be made redundant and unemployable.

Don’t believe me? Here’s why…

On the 4 April 1975 a software company called Microsoft started selling licenses. They made software, but they sold licenses. (For anyone who has ever been under the illusion that Microsoft is a software company, think again. Their business is selling licenses. Always has been and always will be.) They are very good at it and are only a few years away from reaching their utopia or end game.

The end game is the cloud. Nothing is coming after the cloud. That’s it. They win.

To begin with Microsoft sold licenses to OEM’s (original equipment manufactures) and boxed products to consumers.

Remember the saying in business, get BIG, get niche or get out. Microsoft needed to get BIG but you’re not going to do that selling boxed products, so they came up with Volume Licensing.

Volume licensing allowed business to buy a set of floppy disks or new shiny CDs / DVDs and then to accompany that with a slip or slips of paper that licensed that software to be installed and used on a set number of devices or by a set number of users. This was great because now Microsoft could shift 100’s or 1,000’s of licenses in a single transaction, but only had to ship one set of media and the corresponding license certificates.

The problem was that there was no predictability as to when customers would upgrade and renew their licenses. For bean counters (Finance Directors) and Sales Directors this is a big problem, because how do you make financial forecasts and thus investment, if you don’t know what your income is likely to be. The answer was Enterprise Agreements (EA).

Enterprise agreements were typically 3 year subscription deals, so funnily, Microsoft moved to a 3 year software release cycle for all its major products such as Windows, Windows Server, Office, Exchange Server, SQL Server etc. etc.

Microsoft were starting to lure customers in, because once they were on an EA there would be new products, guaranteed, within the life of that EA and once you stopped the EA you stopped getting automatic access to the latest versions of software and ‘free’ upgrades. There was also the added benefit that you could buy one license for a product within an EA and then true up at the end of each year of the agreement. This meant that you guaranteed the license pricing for the term of the agreement, without have to purchase all the software that you were going to use over the next 3 years. Microsoft were trying to be flexible but they were really being very clever.

Then the cloud arrives.

Microsoft no longer make software, they create services and sell subscription licensing and it’s truly genius and is the realisation of their original vision from 1975. No more software piracy.

Microsoft no longer need to ship shiny CDs and DVDs because their software stack is slowly moving into their own data centres aka the cloud.

Microsoft no longer need to ship slips of paper that prove you own the number of licenses that you say you own because you need to authenticate to the cloud in order to access their services. If you don’t pay your bill, Microsoft simply stop your access to their services. It is simply pay as you go. If you’re names not down, you’re not coming in. Simple as.

Because Microsoft now has you on a monthly or annual subscription they can predict, with huge accuracy, what their revenue will be for the forthcoming quarter, year, even the next 3, 5 or 10 years. Because of this, nothing is going to replace the cloud.

Why would it? The cloud is it. It is a software manufactures utopia.

Microsoft are as much a victim as the rest of us, because they were caught napping by the likes of Google, but they’ve caught up. Now all the main players are working towards a long term cloud strategy and business model because of the security of subscription based revenue.

It’s for this reason that Microsoft is willing to give Windows 10 away to existing customers, because Microsoft needs to retain the desktop and office majority in order to win the cloud war.

You’re not really getting Windows 10 for free because you’ll need a Microsoft account to log into it and once you have an account you’ll eventually sign up for subscriptions to Office, Xbox and future Windows versions through a small monthly fee.

So Microsoft and Google and Amazon and all the rest want to get your business into the cloud. Whether you like it or not, these organisations will ensure that sooner or later, you move to the cloud and when that happens it’s game over for IT departments.

If you think about it, you sign up for email from Microsoft. You pay something like £3 per use per month and you never have to worry about upgrading or buying new IT equipment ever again. Users can even bring their own devices to work so the need to provide everyone with a PC or laptop is no longer as important either.

At what point is a Finance Director going to turn around to the IT Director and say, ‘Of course you can have £3,000,000 to spend on new servers and licensing to create a new Exchange Server farm and bring email back in house from the cloud. And while you’re at it here’s another couple of million for new support staff and contractors and consultants to set it all up and manage it for you.’

It’s never going to happen because the economics simply don’t add up and business is all about making money and cost saving, because that’s how you make the most profit.

At the moment companies aren’t moving to the cloud because of compliancy issues, but these will get ironed out over the next 5 years or so. Then what happens when all the bean counters get their way and move all the IT services to the Microsoft, Google or Amazon cloud?

There is no longer any need for any IT departments.

Microsoft data centres, just like Google et al. are all run using automation. Things like Microsoft System Center runs Microsoft’s data centres and all their data centres have built in redundancy. It’s all done with lights out and near zero human interaction.

A team of 100 cloud engineers can now do what 10’s or 100’s of thousands of engineers, professionals and developers used to do for in house IT services.

Still don’t believe me?

Trust me, in 5 years time you are no longer needed by your company. Microsoft sure as hell won’t need you and profit generally comes before people.

So what are you going to do now because your skills are literally redundant?

It’s happened in the manufacturing industry and it’s about to happen to the technology industry.

You have been warned, so make hay whilst the sun shines or you’ll be left out in in clod and obsolete like the CRT monitors of yesterday.

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4 Replies to “The end of the IT industry is 5 years and counting”

  1. Interesting comment and I agree but you are missing in big corporations there are other IT operations that require internal IT:

    – bespoke apps
    – running the networks to connect to the cloud
    – support operations
    – traditional telephony
    – mapping business requirements to solutions
    – non cloud enabled apps

    It’s not just a Microsoft world 😃

    Like

    1. Thanks for your feedback and I take your points, but IMHO I think you’re assuming that the way things are today will be how things are in 5 years time.

      I’m saying that changes are coming that are going to make most of your bullet points redundant.

      – We won’t need wires because mobile working and wireless will have taken over and the mobile carries will be mostly responsible for that.
      – Devices will become increasing intelligent, self managing and will be controlled by Internet of Things (IoT).
      – Windows 10, which the world will run on in 5 years time, whether we like it or not because free is a very powerful motivator for bean counters, will have revolutionised the ISV market with Microsoft’s new App Store.
      – The idea that non cloud enabled apps will exist in 5 years time is just tradition thinking in action. ‘Thin’ cloud Apps will start appearing over the next 1-2 years and become the dominant market share in 5 years.

      IT will be like the car industry. Today, people are still needed to use the machines that make the cars, but the number of people required is a small proportion of what it used to be in say the 1970’s.

      I followed this post up with this one yesterday: https://danielewen.me/2015/06/02/out-in-the-cold-and-obsolete/

      Liked by 1 person

      1. I don’t think you can apply your thinking across all business sectors. In my sector (NHS) we use in excess of 100+ apps and yes we have a small subscription to Office 365 which we would like to expand in time and we are running BaaS (Backup as a Service) and are interested in other cloud offerings because of the advantages you mentioned.

        In 5 years I do see us using cloud offerings for business productivity apps and collaboration tools and a whole range of apps delivered to devices including BYOD which we already embrace. However I do still see a place for an IT service (although it will be contracted) to manage our bespoke apps and infrastructure for radiology, pathology etc. . In addition we will always have wards, A&E departments, laboratories, critical care, intensive care which requires specific IT solutions and networking which yes will be wireless like they are now.

        Other areas of important for IT services will be integration especially with the IoT and self care devices to help manage a patients condition which require to be added to our line of business applications.

        In 10 years again who knows what will change (as medical system vendors adopt cloud and general advancements in medicine mean more care delivered at home), change is inevitable in IT and we are a adaptable lot 🙂

        Interesting view here from a number of years ago:-

        https://econsultancy.com/blog/8530-death-of-it/

        Like

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