Last week I visited Bob Muglia, president of Microsoft's Server and Tools Division, mainly to interview him about cloud computing. On my way to the conference room, I was offered coffee and directed to a large, shiny, self-service Starbucks machine. I pressed a button. The machine buzzed, whirred, and wheezed, its progress tracked by an LED readout that looked like a download bar. After what seemed like forever, it produced a good cup of coffee.
So it has gone with Microsoft's strategy for cloud computing. For over two years we've heard a variety of noises, some incomprehensible, about Microsoft's plans for the cloud. Although some business questions remain, I can report that -- if Muglia's responses to IDG Enterprise Content Officer John Gallant and me can be taken at face value -- Microsoft finally seems to have brewed up a good strategy.
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Muglia began with perhaps the best practical description of the core benefit of cloud computing that I've heard. It's worth quoting in its entirety:
The promise of the cloud is that by running [workloads] at very high scale, by using software to standardize and deliver a consistent set of services to customers, we can reduce the cost of running operations very substantially. And we know that the majority of cost that our customers spend in IT is associated with the people cost associated with operations. And that's where the cloud really brings the advantages.
The main advantage in terms of how customers will be able to get better business value at a lower cost is brought because the cloud standardizes the way operations is done and really dramatically reduces that.
If you look at most of our customers, they will have a ratio of somewhere between 50 and 100 servers per administrator. And a world class IT shop might get that up to 300 or 400 servers per administrator. When we run these cloud services, we run them at 2000 to 4000 servers per administrator internally. The translation of that is very dramatic in terms of what it can do. And by running it ourselves we are also able to engineer the software to just continue to drive out that cost of operations in a way that I don't think the industry has ever seen before.
That's exactly right. Have you wondered why our slow and painful crawl out of the Great Recession has been accompanied by a huge surge of interest in cloud computing? Because companies have laid off people across the board, including IT admins, and have discovered -- whaddaya know? -- that the joint is still running with that cost taken out. Maybe with the self-service, standardization, and data center automation of cloud services they can reduce the "people costs" of IT even further.