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GE and the birth of the cloud

February 2, 2009 7:44am
by Richard Waters

For an idea of the revolution that is sweeping through the world of corporate IT, consider the case of General Electric.

Cloud computing has attracted public attention mainly because of the rise of online applications offered by companies like Google, or because of the emergence of services like Amazon.com’s EC2. Yet it also represents a sea-change in corporate computing.

At GE, an “internal cloud” has been taking shape remarkably quickly. When I spoke last week to Greg Simpson, the company’s chief technology officer, he offered two  statistics that make the point: 

  • Three years ago, only a quarter of the money GE spent on computing power was allocated to its centralised datacentres: the rest of was spent by the group’s individual operating companies. Today, that datacentre share has climbed to 45 per cent and GE’s units “buy” far more of their computing as a service from the centre. Centralisation has taken hold.
  • A year ago, in 85 per cent of the cases where it had a new computing task to handle, GE bought a new server to deal with the task. By last December, that proportion had fallen to just 50 per cent. In place of all those extra computers are “virtual machines”: using software from companies like VMware, GE is loading extra work on its existing computers, then moving it between computers as needs change.

Mr Simpson says that with this new internal computing cloud GE benefits from much greater economies of scale and specialisation.

So will the GEs of this world eventually go head-to-head with companies like Google and Microsoft in selling their computing services to others? After all, that is what Amazon decided to do, to make better use of a computing resource it built to handle its online retail business.

That is not in the plan at the moment, says Mr Simpson. (Instead, GE is starting to sell other parts of its datacentre technology to others: from this week, that includes the new cooling and building management system it has built for its own datacentre in Ohio, which it says has greatly reduced energy consumption in the facility.)

The emergence of GE’s internal computing cloud points to a future that favours two types of company: those that are big enough to maintain their own centralised computing resource, and those that can only keep the unit costs of their technology operations down to competitive levels by outsourcing to larger, more specialised organisations. Those caught in the middle will find it hard to keep up.

February 2, 2009 7:44am in Tech | Comment

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