Are we living in another IT bubble, and is it about to burst?

Since the invention of the internet, IT has slowly become an integral component of almost every business in existence. Storing and accessing data, keeping records, communicating with clients on the other side of the world - these are all massive business benefits of IT. But, if the dot.com bubble of the 1990s has taught us anything, it’s to be wary of overly-optimistic interest.

Right now, with our deep interest and strong reliance on IT, the question is: Are we finding ourselves living in a bubble? And is that bubble about to burst?

The importance of IT

To answer the big question, we first have to understand our relationship with IT and IT infrastructure. IT is crucial to the running of a number of organizations, and the general consensus is that it will only continue to grow in importance in the future. Testament to this is the fact that such an extensive economy has developed around IT infrastructure: from generators and computing platforms, down to the data center power cables, every part of existing IT infrastructure is in some way integral to keeping businesses operating smoothly.

What the COVID-19 pandemic has highlighted in particular is our extreme reliance on IT as a way of working and keeping in contact remotely. With this in mind, it is hard to imagine a nearby future where IT starts to diminish in importance. So, given its proven value, is it really possible for us to be in an IT bubble?

It’s true, IT will only grow in importance and relevance as time goes on. However, the fact is, something can be incredibly useful and important, but still be in a bubble.

Our IT bubble AKA ‘the cloud bubble’

The IT landscape, as we currently see it, is a crowded one. IT has always relied on several legacy applications, or more recently, on bridging the gap between legacy applications.

Right now, we’re currently seeing a duality of digital transformation, with the cloud as a centerpiece. We are witnessing a strong push towards a one hundred percent, cloud-first environment but alongside this, we’re also seeing an even newer emphasis on things like multi-cloud software.

If nothing else, this shows how ‘the cloud’ has taken hold within the world of computing. So much so that there is a whole economy now built on top of this widespread desire to be ‘in the cloud’, with things like cloud management tools cropping up for businesses who are striving to become cloud-first organizations. So, it seems we may be living in a bit of an IT bubble - though, a more accurate name for it may actually be the cloud bubble.

Bursting the bubble: A rejection of the cloud

Despite heavy interest in cloud computing, we’re also seeing more people questioning the cloud’s overall value - which is why an increasing number of businesses are starting to bring their applications down from it. This so-called ‘cloud Repatriation’ seems to be the flavour of the year, with big computing companies like Nutanix starting to begin conversations around it. In fact, TRG Datacenters have bet on cloud repatriation gaining steam, building an entire Last Mile Delivery (LMD) programme and introducing measures like Colo+ that are designed to provide a cloud-like experience for customers, without having to actually rely on the cloud.

Speaking more generally, the last 5 years have seen the world gain more of an understanding around what people are looking for in terms of IT experience. It’s now understood that people need a tailored experience that aligns with the concept of operations that exists within their specific organization. The world has caught on, and it’s being shown through examples like Nutanix’s exploration of cloud repatriation and cloud-based management for Cisco Meraki. On the back of this, we are seeing an increasing number of cloud-like devices as people start discovering that the cloud is ultimately just a piece of software.

As all of this comes around, we start to approach the efficiency portion of the Gartner innovation curve for the cloud, where developments are going to be increasingly geared towards reaching efficiencies rather than pure innovation. Consequently, we’ll start to see an increasing number of people running towards cloud models, but quickly bouncing back - indicating that the ‘cloud bubble’ is indeed starting to burst a little bit.

Will the bubble burst completely?

The cloud bubble may be bursting a little bit, but that doesn’t mean it’s about to disappear entirely. The goalposts are simply shifting. The bubble surrounding the cloud as a space is starting to pop, but the idea of the cloud as a delivery model and as a piece of software is here to stay. Overall, it’s likely that cloud-like services will start to become more efficient in the future as they become the predominant measure.

If we look at this potential bursting from an economic perspective, the picture is just as nuanced. Right now, it looks as though we’re headed for a recession economy. When we think about the existence of the cloud in this context, we need to remember that the cloud (as the mainstream platform we know it today) didn’t really exist during the last recession in 2007/8, which leaves a lot of questions up in the air surrounding its future value for businesses. Ultimately, we’re seeing mixed perspectives on this. On one side, companies like Bank of America are talking about building their own private cloud during earnings calls, but as mentioned, we’re now also seeing companies turning away from cloud-first strategies.

So, is the IT bubble really bursting?

What we can say confidently is that IT will remain on earning calls as an important cornerstone of businesses, and one that all leaders should be focussed on. However, the emphasis will change. What we’ll start to see is more delivery-model centric and software-centric developments, rather than a focus on the cloud as a computing space. People will begin to understand that cloud storage platforms like AWS and Azure aren’t the be-all and end-all, and with this realization brings new opportunity for a lot of businesses.

Author bio:

Chris Hinkle is CTO of Houston-based TRG Datacenters. As a third-generation data center operator with strength in design he enjoys the cross-section of engineering and economics that data centers represent, and utilize experience owning data centers as feedback for design in many ways that your typical engineer misses from a desk.