Whatever Happened to CEOs - Chief *Electricity* Officers

January 17, 2008

The power grids that we enjoy today did not magically appear as power generation developed during the Industrial Revolution. In 1902, according to the US Census, the country had 3,600 central systems and over 50,000 isolated power plants in large homes, hotels, and other commercial establishments. Thus, it’s a pretty safe bet that companies employed a fair amount of people who were tasked with “keeping the lights on.” For our purposes, we’ll call them the Chief Electricity Officers (CEOs).

This was the era before electricity was a utility. As we know, the power grid eventually encompassed the whole country and provided all needed electricity on tap. Once companies found that it was far more economical to plug into the grid than to generate their own power, the poor CEOs had to find other things to do in their organizations. Of course, industry regulation played a part here also, but the basic economics worked – with the grid in place, it was cheaper to buy power than do it yourself.

I see several parallels in this present Information Age. Many companies have Chief Information Officers and/or Chief Technology Officers. Part of what these folks are tasked with is IT infrastructure, i.e., acquiring the computing and networking gear required by the business and operating it in a redundantly powered and cooled data center. In most companies, IT is not the core competency of the business, yet they lay out a lot of capital expenditures and employ a lot of people for an overhead operation – much like what the old CEOs did with independent power generation.

SoftLayer and companies like us parallel the rollout of the power grid which began about a hundred years ago. In the coming years, companies will realize that the time, people, and capital expenditures required to locate data center space, find redundant power, set up backup power, install redundant HVAC systems, expend capital to acquire routers/switches/servers/storage systems/load balancers/firewalls/operating system software, and hire the people to run it all and upgrade everything every few years will be far too great a cost compared to “plugging in” to a provider such as SoftLayer. With Softlayer, IT infrastructure is our core competency. Companies need only give us a shout to instantly have IT infrastructure provided at far better economics than doing it themselves. They’re essentially “plugging in” to IT as a basic utility to be used to perform their core competency – just like they plug into the power receptacle to use electricity to help perform their core competency.

Hey, when Sun Microsystems says they’ll be out of data center operations by 2015, that raises our eyebrows around here. Dan Golding of Tier 1 research concurs that by 2015 “enterprise data centers will be in decline.” Once the business leaders of companies grasp the economics of halting their independent data center operations in favor of plugging in to utility providers, the CIOs and CTOs will have to do what the old CEOs did – find other ways to add value to their companies.

-Gary