The Rise and Fall of The IT Cartel by Peter Coffee, VP Strategic Research, Salesforce

The Rise and Fall of the IT CartelPeter CoffeeVP for Strategic Researchsalesforce.com inc.

I Guess We Asked for ThisVivek Kundra, the first CIO of the United States,* used the phrase “I.T. cartel” in a New York Times op-ed in 2011.

Incumbent vendors, he said, “encourage reliance on inefficient software and hardware that is expensive to acquire and to maintain.”

* He’s now a salesforce.com EVP

Let’s Be Economists: A What?

“A producer cartel is an organisation that seeks to use control over the market supply of a commodity to keep prices within a target range to stabilise incomes and profits over time.”

(Unit 1 Micro: Revision on Producer Cartels, www.tutor2u.net/)

The implication of explicit restraint of trade is, perhaps, a little bit over the top…but the key is the notion of artificial scarcity

“A bad business model is relying on artificial scarcities—created by choice and by fiction—rather than market realities”

(Artificial Scarcity Is A Terrible Business Model, www.techdirt.com)

We lived in little bubbles of computation and connection

Going “outside” was a risky, specialized skill

Connectivity Used to be Scarce…

Connectivity Used to be Scarce…

…but today, not so much

Price Plummets; Demand Soars

Compute Power Used to be Scarce…“In the 1960s, programmers were paid under $10 per hour; computer time was measured in hundreds of dollars per hour.” - ZDNet

…but today’s IT orchestrates abundance

“What happens when cloud services offer nearly unlimited power, essentially on demand, solely constrained by what we're willing to pay?” - CloudBlog

It’s Not That Computing’s Worth Less“Is this about ‘the cloud’? Only in the sense that a conversation about gourmet cooking is about running water, or a conversation about home entertainment is a conversation about electricity.”

(Have You Rewarded Your Fans Today?, www.fastcompany.com/)

Ubiquitous, affordable utility services disappear into the background as high-value markets build upon them.

So…what are the mechanisms of the new IT marketplace?

Clouds Can Demolish Artificial ScarcityOld IT was hardware acquisition.Standards needed to assure plug-and-play substitutability.

New IT is service integration.Standards need to assure non-proprietary interoperability.

Old app design was monolithic and brittle.Customizations bled into the code base, impeding future upgrades.

New app design is modular, loosely coupled, API-based, resilient.Metadata configurability preserves the blood-brain barrier between code base and customer IP.

Because Carrying Dead Weight…

…Is Not a Good LookIt’s a connected planet: breathe the air around you

Thank YouThank You

Peter CoffeeVP for Strategic Researchsalesforce.com inc.

[email protected]

@petercoffee

in/petercoffee

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