Wall Street Journal articles and analysis

Technology

How Technology Impacts a Company's Cost Curves

For purposes of this analysis of how technology influences a firms' cost curves both in the short- and long-run, an article authored by Walt Mossberg of the Wall Street Journal titled, These Services Make Backing Up Your Files Safe and Inexpensive, was chosen. Mr. Mossberg is an acknowledged expert in technologies and their evaluations for both business and professional use. The short-run impact on the cost curve of many organizations from using the two mass storage websites Mr. Mossberg mentions in his article, Carbonite and Mozy is to reduce the total cost of ownership for their more expensive RAID-based disk array servers, and the need for higher levels of it spending. In effect, the use of these two websites is akin to outsourcing data storage, back-up and recovery. These short-run implications also include a dramatically lower cost of in-house user services and support from the it organization. The economics of outsourcing that apply to many application areas including CRM with Salesforce.com apply to the process area of storage and retrieval of information from a hosted or Software-as-a-Service.

The long-term implications are even more dramatic, as it will force a drastic reduction in price of servers, storage, even to the media and platter level of the disk drives themselves. There are also the long-term reductions of a reduced use of on-premises storage is the ability to free up services and support staff to become more trained in programming and advanced concepts, acquiring skill sets that would be otherwise expensive to obtain outside the company. The continued focus long-term on cost reduction of servers, their infrastructure, and headcount requirements could eventually lead to the balance of power shifting from the it staff to the line-of-business users and strategists, many of whom are accustomed to using hosted services for the majority of their online application needs from both a personal and professional perspective already.