A lot’s changed in the world of information technology (IT) since Lief Morin launched Woodland Hills-based Key Information Systems in 1999, but some things remain the same. For consumers, the advent of Facebook, Twitter, iPhones and other gadgets and services have dramatically shifted the way people interact with each other and use IT. Consumers are more reliant on IT now than ever before. For vendors, the need for brick and mortar IT infrastructure has not gone away. But the industry is becoming commoditized, there has been a lot of consolidation, and “cloud computing” is forcing providers to re-think their business models. All of this spells “opportunity” for Morin, president of Key Information Systems, which provides IT hardware, software and support services to corporations. And the company is in growth mode. Question: What is one of the biggest challenges your company has faced, in terms of changes in the IT industry? Answer: Our business model is to provide high-end technology to support large computing workloads. In the 1960s, Intel co-founder Gordon Moore made a statement that has gone on to be known as “Moore’s Law.” He basically said the capabilities of central processing units (CPU) will double about every two years. That law has held for years. But now we’re starting to reach some boundaries in terms of the density of chip sets. And we’re starting to see the commoditization of hardware we sell. For example, Intel has a chip that they sell for the consumer population’s laptops and other devices. That same chip, and chip sets that go with it, are what we sell in our server environments. What Intel and IBM have done is leverage a single development effort for a single CPU amongst millions of possible opportunity sets. It supports a mass consumer market. In the past, when you wanted computer system that had eight to16 CPUs that service a particular application, that was a custom system and cost a lot of money. Now the same chip set is just altered. This is true of memory, disk technology, IO technology and more. But there’s still some high-end technology and we’re right in the middle of that. In some market places, the performance of hardware has also caught up with demand for software to consume the hardware’s resources. Companies can acquire the infrastructure for a fraction of the cost as the past, and the hardware can support more. So people are extending the lifespan of their hardware. Virtualization is a byproduct. People are consolidating hardware and software. A company would rather use 80 percent of the space of eight servers than 25 percent of the space of 100 servers. Q: How has Key Information Systems adapted to that change? A: We have had to place more of our focus on looking for companies that are consuming more IT resources. There are still companies out there that are in the mode of wanting more and more. Take Facebook. In only a few years’ time, the company went from one user to millions of users. And now, if a person doesn’t have access to their Facebook account for an hour, some think the world is coming to an end. The company is not our client, but it needs IT infrastructure to support this type of usage. Healthcare, media and entertainment, Web 2.0 businesses, and firms in the emerging energy sector, such as those working with the smart grid, are a few of the industries we’re interested in. We’re shifting focus to companies that consume the types of technology we convey. Q: Given the recent economic meltdown, there has been consolidation in the IT vendor industry? What does that mean for clients? A: That’s another gargantuan shift happening right now. I can’t tell if it’s permanent or just a sign of the times, but there is massive vendor consolidation. I’m constantly hearing about one IT vendor buying another. Oracle announcing its intent to purchase Sun Microsystems is just one example. There’s also a lot of vendor hemorrhaging. What this means is less choice for clients. But maybe for a short period that’s OK. I say that because in the world of IT, standards are good. Having less vendors that standardize their offerings can result in technologies working better together, which means less down time for clients. But where it hurts the consumer is pricing. We’re closely aligned with IBM. And because IBM is such a large provider of a wide variety of technologies, the consolidation in the industry has had a very limited impact on us. But there’s probably not a Sun vendor on the planet who’s not considering re-aligning. Q: Is Key Information Systems looking to make any acquisitions? A: We are absolutely in growth mode. In terms of how that plays out…we don’t know yet. Q: Does cloud computing factor into some of the changes in the IT industry and your business strategy? A: As I see it, there’s three types of cloud computing: the private cloud; public cloud; and a hybrid cloud. Private clouds are essentially what we do, when a customer wants to set up servers, storage applications, etc… This is applicable to clients who are large enough to need that type of capability in-house. It also applies to clients, such as retailers, who need a high level of capacity during certain times of the year. I was reading recently that in the IT business, 90 percent of all spending over the next three years is going to be in the private cloud space. So we’re going to do the same thing we’ve done. But the growth rate is smaller than the public cloud. The public cloud is going to be a big change to our business model in the coming years. (The public cloud Morin refers to is businesses accessing a variety of IT services via the Internet rather than investing in brick and mortar facilities and equipment.) Google hosted email and salesforce.com are two great examples. And the reason they can be so successful boils down to commoditization. How we adapt is to start re-selling products such as IBM’s cloud offerings. I look at it as an opportunity to grow by continuing to do what we’re doing and having new offerings. The “third cloud” is a hybrid. It’s a renaming of managed IT services, where we deploy a piece of equipment at a client site and Key Information Systems manages it. Q: I’ve been hearing a lot about augmented reality. If this technology takes off, how will it affect the IT industry? A: (Augmented reality refers to an evolving technology where computer generated graphics overlay real-world objects and environments in real time.) From my perspective, the more technology that gets deployed in the world the better, because an IT infrastructure to support that technology is required. It all has to communicate back to the servers, storage, memory and software that manage it. Technology innovation isn’t stopping. While commoditization is impacting the industry, new technology is opening up new markets. And it’s not just limited to the consumer space. Technology is impacting the business and industrial sectors. One notable area is biotechnology. The innovation and technical demands in this industry are enormous. I’m an optimist and think humans can solve big challenges. Let’s use the example of global warming. If it’s true, and I believe it is, that challenge has been caused by humans. Because it’s a human created problem I believe we will find a series of human created solutions. Whatever those solutions might be, technology will play a big role. The only problem is we have some really big challenges to solve.
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