Think Like a Startup

Many companies practice zero-based budgeting. The idea is that you do NOT start with last year’s budget. You don’t say, “We spent $xx in this category last year, so how much more or less do we spend this year?” You start with a clean sheet. This has the effect of getting rid of those costs that have always been there just because…well just because they have always been there. And that frees you to spend on what you really need, not on what you needed or thought you needed several years ago.

You can take the same approach to IT. Think like a startup, even if you have been in business for decades. Startups do almost all their IT in the cloud and using software as a service (SAAS). That is the default. A startup would think really, really hard about doing anything in-house or custom. Unless something is absolutely core (which means you should be the best in the world at doing it) it is best outsourced to a firm that does that as a core competency.

It is agility that really matters today. Huge companies are crumbling before our eyes. Watch Citigroup and General Motors and your daily newspaper as they go from invincible to suffering or dead. Huge companies have huge overhead. But medium-sized companies cannot afford that overhead.

In 1955, Fortune 500 companies accounted for one-third of the GDP in the US. In 2000, that had doubled to two-thirds. Within that cold statistic lies thousands of human stories of family farms, Mom & Pop stores and other small businesses trampled by Wal-Mart, Agribusiness and other large companies.

That is a massive shift. But it is not written in stone that large companies should control two-thirds of the economy. We may have seen the high water mark of this trend. It maybe reversing. The demise of huge companies is a massive, historical opportunity for smaller companies.

Mid-sized companies need to decide: Are you are agile like a startup or a smaller version of a large company? The latter may give you all the problems of a large company without their advantages of scale.

So, think like a startup. Only do some IT functions internally if you are really (no, really) convinced that those functions are totally core to your mission and you can be the best in the world at them.

That is easier said than done. You do have legacy IT and processes. The most important thing to recognize is that people’s jobs are at stake. If you make the process of moving to cloud/SAAS a genuine win for your people, those objections (”It’s OK for some companies, but its way too risky for us for this reason and this and oh this one as well.”) will disappear like morning mist.

Somebody who is maintaining/managing in-house systems needs to see one of two future career paths:

1. Within your company, moving from context to core, from cost center to profit center.

2. Outside your company, working for cloud/SAAS vendors, trading on the success of the migration of your systems.

Either is a good result, and it will vary by individual.

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Come On Techies, Gimme My Cloud Now!

For the biz guys, moving from a server that you had to buy and manage internally to hosting was a great move and a major hassle reduction. The cloud looks like the next logical step. The benefits — no upfront costs, no internal management, no capacity planning — are really compelling for guys who think about the business. But the guys who have to make it work in practice, occasionally say, “Woah, not so fast. You want this to work, right?” In this post, we look at the tension between business logic driving to cloud and the technical hurdles of implementing “apps that matter” in the cloud.

Questions For The Techies

So we decided to put some questions to some smart techies that we know. The role playing here is the CEO needing to make some decisions on where and how to host the service that will shortly get the team fame and fortune.

The first person who rose to this challenge is Tony Bain. Tony Bain is an expat Kiwi, father, entrepreneur, angel investor and blogger who occasionally writes for ReadWriteWeb. He kicked up quite a storm recently with his post “ Is The Relational Database Doomed.”

Apps That Matter

We use “apps that matter” instead of “mission critical” because it sounds less pretentious. These are apps that, when they go down or suffer brownouts bring on a storm of outrage in the blogosphere. Well, at least they do when you have traction, and you are planning to have traction, right?

Apps that matter usually involve write as well as read. They may also involve, at some stage, transactions that include money getting transferred. …
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