The first post on shadow IT looked at R&D spend. Now we look at CapEx spend – specifically PP&E – property, plant and equipment. That’s where new datacenters, servers, storage and networks go.

Big Spend
The FY13 PP&E spend in billions from major players:


While R&D expense is a proxy for innovation velocity, PP&E is a subtler metric. To the extent that the major cloud providers buy large quantities of kit, they influence the commodity market more than traditional system vendors.

Why? Because vendors are no longer on the cutting edge of demand or technology. Suppliers focus on where the growth is – and it isn’t in the legacy vendors. The opportunity to sell 500,000 units concentrates the mind wonderfully.

Big (ops) data
Another difference is that cloud vendors have deep insight into their operations that is not available to legacy vendors or analysts. They don’t need to explain the “why” to vendors, just the “what”. That means that even their suppliers have little insight into the opportunities their customers are exploiting.

We see this influence in several developments over the last 8 years.

  • Rapid adoption of high efficiency power supplies
  • Continued investment in high-capacity optical disks despite little consumer uptake
  • Advent of shingled magnetic recording drives (SMR) without public announcement or availability
  • DC power distribution systems

There are probably dozens of less obvious changes due to the cloud vendor’s buying clout, such as the many-core chips, many-drive (≈40 or more) servers, and containerized data centers. Since these changes aren’t responding to enterprise needs, most enterprise people don’t try to understand them.

The StorageMojo take
As Arthur Conan Doyle put it in his Sherlock Holmes story Silver Blaze:
Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”
Holmes: “To the curious incident of the dog in the night-time.”
Gregory: “The dog did nothing in the night-time.”
Holmes: “That was the curious incident.”

It’s hard to see the action of unseen forces. Whether it’s dark matter or dark money, we are forced to look for the strange effect and then reason backwards to the cause. It’s not easy.

The most obvious long-term effect of the cloud vendor’s OpEx and CapEx primacy is legacy vendors will fall further behind in both invention and implementation. By extension, so will enterprises who outsource their infrastructure architecture to legacy providers pushing low-scale systems.

The shadow IT industry is changing IT faster than ever before. Now is the time to start following and planning for it.

Courteous comments welcome, of course. See the first part here and part III here.