The Rise and Fall of the IT Cartel

Peter Coffee

VP for Strategic Research

salesforce.com inc.

I Guess We Asked for This

Vivek Kundra, the first CIO of

the United States,* used the

phrase “I.T. cartel” in a New

York Times op-ed in 2011.

I Guess We Asked for This

Vivek 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…

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 Scarcity

Old 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 Look It’s a connected planet: breathe the air around you

Thank You

Peter Coffee

VP for Strategic Research

salesforce.com inc.

pcoffee@salesforce.com

@petercoffee

in/petercoffee

Creative Commons Attribution-NoDerivatives 4.0 International