The Build vs. Buy Question - Part I - The Problem Universe

Oh, this "Build vs. Buy" question on enterprise software - I am plain exasperated with it! No matter how many times this is conclusively answered, it resurrects itself with painful regularity.

This question came up again on a call yesterday that I was on. The people involved were talking about how best to pitch solutions to indian CIOs, and one of them remarked how almost every pitch to a Indian CIO invariably resulted in the CIO asking them about team size, the amount of time it took to build the solution etc - and this really meant that the CIO was sizing up the efforts he would have to put in to get this done in-house. Yeah, the same - should he buy this solution, or get it built himself? Should a CIO build software?

This has been answered by many many people. But for whatever it is worth, here are my thoughts on it. I think I am qualified to have an opinion, having been a CIO and vendor both - and have loved being both. So, heres my take on it - my two penny worth, so to speak :)

1. The Problem Universe of Technology

Companies who have IT teams, lead by CIOs, of 10 to 100 people, run their IT operations on need-to-run basis. They have IT people so that the IT people can support, lead and manage their IT initiatives. These IT initiatives are closely bound to the operations of the business, and in a way, these operations define the problem universe for these IT professionals. A microcosm in a way, of a particular industry, and in that, of a particular set of people who formulate and run the business processes within that company. Technology here, is defined in the way it can be deployed and modified to suit this particular company. Needless to say, this definition changes as the business needs evolve, people change and often, as the technology trend and usage changes in the world at large.

Technology then is evaluated by the best way it "fits" the needs of the organization, the means to the end. Technology is further tuned to meet the needs of the company, so much so that sometimes, the process becomes the USP of the company and its product/services delivery. In any case, the problem universe seldom exceeds the current company and its processes.

Contrast this with a start-up. Start-ups are small skunk-works teams that build some path-breaking technology, something that has not been done before, and try and find companies who need that technology to solve their business problem. Even for niche software companies, the problem universe is normally a set of processes, which could potentially be useful to a large set of users. Here, the technology is built, and then a customer who has a matching need, uses the technology to run its operations. The start-up then fits the problem more closely by watching its initial customers, and then very quickly tries to find who else could have a similar need, and sells it to them. The team listens to not just one customer, but dozens of them, and finds a way to build around the core technology so that it can sell to larger and larger no. of users.

Technology here is the end, and not just the means, for the start-up. And their problem space maybe initially defined by a set of companies, but they are hungry to built out their problem space so that they can be relevant to thousands of users.

In a nutshell, the difference in the Problem Universe is:

1. For a CIO led technology: Built for the company, bounded by the company, fitted for the company. The more unique, the better!
2. For a start-up led technology: Built for technology's sake, bounded initially but striving to be unbounded, seeking to fit as many companies as possible. The more general the better!

In the next post, I will talk about how the Problem Universe affects the constitution and architecture of the solution, its maintainability, and its shelf life.

The Divide: CIO's and Technology Vendors

Got back after an interesting session on "Candid Advice to Product Companies from CIOs", held at Nasscom Product Conclave, Bangalore.

It is interesting because this was perhaps the first time when there was a collective meeting of the IT sellers and IT buyers, in a situation where there was no specific agenda to either buy or sell. This was a purely consultative event, though an event with a lot of possibilities of doing just that - buying and selling.

It became even more interesting because there were so many view-points that I saw there, some from CIOs and some from the Product vendors - many of them vehement, some defensive, and may I add, some even desperate. What is clear that none of the two sides sees each other clearly. There is mistrust, and some amount of derision too. Not healthy.

Some of the comments I caught from the CIOs:
(1) These guys only talk technology. And how they go on! Pshaw........ and a long suffering sigh goes with this one
What does the CIO mean: Technology, for the sake of technology, bores me. What can "I" do with it? What can my "business" do with it? What have you done for other businesses that I can replicate for my business? Why does'nt this man talk about that?

2) Oh my God, they are so small!
What he means: I do like them, and wish I could propose them in my business. But they as so small - just 10 people! What if they shut down tomorrow? My users will kill me!

3) I haven't heard about you.
What he means: I have no idea of who you are, and whether you can be trusted. I haven't heard any of of my peers talk about you, nor are you talked about in the circles that I move in. Just who the heck are you?

4) How different are you from XYZ - the current incumbent for this technology within my company
What he means: There is no point of you telling me about the technology unless you can give one strong compelling reason why I should switch from my current incumbent vendor to you. You think it is only about software cost - but for me the cost is much more - the cost to me is the cost of change. I have to retrain my users, migrate my data, re-engineer processes, and explain to hundreds more people why. I need to know why it could be worth my while. Faster, better, cheaper is just not reason enough.

Some comments from the Product Vendors
1) Just how do I get an appointment from you, Mr. CIO?
What the Product vendor means: You are so busy with the biggies, the people who you pay TOP dollars to - you do not even give me time to come and tell you what I can do for you. For heavens sake, let me in! Please listen to me, just once!!

2) I think they are just dumb pompous people who do not want to change.
What he means: Why cant they (CIOs) he see that I have a cheaper, better product? Why go to SAP/Microsoft/Oracle when I can sell it to them for much lesser? Can't they see it? Just why cant they change for the better? What do they he know about technology anyway?

3) I would rather go to the business people
What he means: The CIO is a man who is in a fixed mindset. Heck, he does not even like innovation! He is stuck is some weird time wrap him. I will go over his head, and meet the business people directly. They will tell him....

4) They will just make go through a song and dance routine, and waste my time
What he means: The buying cycle is so tortuous for me a small new vendor, I am asked to do a POC, a pilot, a six month long negotiation, and at the end of it, I am just given peanuts for my new path-breaking technology, while the biggies walk away with millions.

5. If Microsoft can not do it, why expect it from me?
What he means: These CIOs expect me to give them something that is entirely bug free. If they find a bug, they rubbish my technology and call me worthless. Worse, they expect me to jump up and down every time they find a bug, and make my entire support team dance to them hold their hands. Arrey, the biggies are much worse, they don't even give them even an hour of support, and here, with me, they are not happy even when I dedicate one support person to them for a week! Grrrr.....

6. They will take things free from me, and expect me to make money out of their account using their reference?
What he means: They know I need their reference - they know my weak spot. But my, how much will they make me bend for it? They expect me to fill my stomach with empty words, while they would expect me to make money elsewhere from using their account? Hey, I need the money to fill my stomach today - and I need it from you! I am giving you my hard earned work, am I not?

As it obvious, both the sides have much bridge-building to do between them. This acrimony and mistrust will not get them anywhere - as truth be told, the CIO needs the Product vendors as much as the Product vendors need them. The CIOs need them to keep themselves and their businesses innovative and cost effective. CIOs also need them so that they can remove the shackles of the biggies, and work with people who would provide solutions that are unique to their businesses - never mind if they solution is not required elsewhere in the world. And Product vendors can invest in that innovative research and prototyping focused on local needs. Product vendors need the CIOs so that they feed their engineers and themselves, and become the next Microsoft/Google.

There was one more thing I noticed - CIOs have built and deployed many innovative solution themselves, and some of them have solved business problems within their organization themselves, as they would not find any solutions out there. Many of the Product Vendors could actually learn from them. Innovation is not a birth-right of Product companies - innovations, many many a times, far more often than what Product companies are comfortable about, happen right inside organizations. And contrary to what many engineers believe, CIOs can and do make them happen on the strength of their technical prowess. Some solutions could actually be productized!

So, how do we build bridges between these two worlds? Most often, people from their side of the table cannot see the views of the other side at all. I can. I have been on both the sides, and I know first hand of what it looks like.

And I can clearly see that these two groups need to talk to each other, learn from each other, and lean on each other. And the time to do it is now. Indian companies need ways to compete within the global arena, and indian technology companies can help them get there, in unique homegrown ways, that do not come easy to biggies, or are too expensive.

On how could they do that? Here are some ideas:

1. Just like Nasscom invited CIOs to listen to Product companies, could we have CIOs present their innovations to the technology world? How about instituting the "Most Innovative Solution of the year, deployed by a CIO" award, which could be judged by a panel of CIOs and core technology people? This would give CIOs the recognition they deserve in the local technology geek mind, and also provide a food for thought for the local geeks?

2. For some of us, we have worked with CIOs who have rolled up their sleeves and have worked with us, in the trenches, as we have co-innovated to create solutions for their enterprises. Could we, as Product vendors, celebrate such stories, and let the CIOs tell the story to the geeks? When a CIO speaks, all CIOs listen, but when a geek speaks, CIOs thinks he is just another seller!

3. Could we, as a community, work with the IBMs of the world, and have them celebrate their domestic SI/ISV stories, in their flag ship events, here and abroad?

I am sure more ideas will come to me - but all of you who attended that session, ideas anyone? What could be done to ensure that CIOs and domestic product vendors become partners?

Nasscom Product Conclave

I am getting ready for the Nasscom Product Conclave.

Now, technology events, as they are, are old hat to me. Been in many - some as a vendor, some as customer, and some just as a curious passer-by. In most, saw things that I had seen before, and except for meeting some interesting people, they did not require me to "get ready".

But this event is different. As the event web site tells me, it has 600 companies participating, and most of them are Product Companies. Whoa! 600 is a HUGE number! The energy from just one software enterprenuer can change the world - but 600 of them, all together - just what they could'nt do!

I am getting ready to this high energy meet. Sure to meet many interesting passionate geeks, and many passionate money making hounds, and yes, hopefully some buyers too. This time we have taken up a booth there. And we would do some kind of a show-and-tell session there.

So, whats business got to do with it? Quite a bit. Indian Businesses can now look at this software product community which has grown underfoot, and Indian-made software products should soon become a part of the IT buying process for Indian CIOs, if they are looking for smart, and cost effective technology solutions. Time that businesses looked at buying options other than biggies - enough of being treated by biggies as the second cousins with respect to buyers in the US and Europe. Businesses in India - time for you folks to take a look at people who would work alongside you to create great business value for you, right from the Indian soil.

Sounds patriotic, does it not? But hey, why not? Why not look at your own soil before you go looking elsewhere? It may be worth your while...

The Cloud has Security Issues - So, whats new?

There is so much talk about the cloud and cloud based SaaS - with many in the "Ok" camp, and as many in the "Not ok" camp. The biggest reason that the Not Ok camp has is of security, data confidentiality, and so on.

However, when the security issues are detailed to me, I have to shrug the feeling of deja vu. Now, where have I heard those before? The issues that the same server could be having our competitors data, so just what happen if our data is leaked to theirs, and vice versa. The issue that since the servers are not within our premises, how do we know that nameless faceless masked people are not walking in and snooping with the data? And then, there are some on disaster recovery. Oh, what if their server breaks down? What will we do?

These are all legitimate concerns, and they need to be addressed. These concerns were always there, and the risks were always there earlier too - just as we earlier did, we just need to understand those risks, and manage them. To be able to do that, we need to first, manage the fear that stalks our minds, and paralyzes it, and then we can really deal with it. Fear of the unknown is a luxury that most business people can ill afford.

In the early days of networking, when we started to use the internet to transfer company sensitive data, rather than our own completely-owned VSAT networks, the kinds who networked only internal machines and had absolutely no path out, we had to contend with our hysterical business people worrying that the same wires carried their competitors data. We had to sit them down, and patiently explain how we "could" secure the pipe, even when the pipe now was shared. It was important for us to explain how our competitor, though sharing the pipe, could not look into ours, and list the risk probabilities out. Soon, people understood, and the days of relying on internet to transmit business data began.

Then, when we moved our servers from our own premises to the third party data centers, another fear, or losing location control, had to be taken care of. We had to explain that even though the data center could have our competitors servers, and ours, how the ingress/egress policy, agreements, user provisioning policies, and whole slew of other measures could deal with this risk. We also had to explain that competition stealing data or user identity theft was not something that was only technology related, and had to involve people and understand the inherent risks in working with human beings. Soon, once again, people understood, and today, most companies do not have their ERP or BI data servers inhouse, but in secure, managed third party service provider setups.

Even in the case of cloud computing, the scare of sharing the same computer, or even the same application across competition is large - and legitimately so. Once again, rather than giving in the nameless fear, we need to understand the risks one by one, of using a shared infrastructure and an application, and break it down into risks, that we can then examine properly. And then walk the business users through the risks, and allow ourselves and them to come to a informed decision.

Point is, the risks of data security were always there. When we had our neat little machines on our tables, with no network, we had them then. When we networked them, we had them then. When we moved them to the shared data centers, we had them then, and now too, when the cloud computing and SaaS wave is upon us, we have them now. Just like the earlier times, we need to deal with the risks, and not just throw the enormous benefits that the new paradigm can offer, simply because we are too paralyzed with fear to deal with it.

So, CIOs, just dig a little deeper. The more the things change, the more they remain the same. And you would deal with this too, just the way you dealt with all the previous fears - and embrace this brave new world.

Amen to that!

Advertising - whats IT got to do with it?

IT managers of yore would never have anything to do with advertising or marketing. That was for those pony tailed folks, the ones who had a pencil on their ears, and sometimes even wore a ring in their ears. The kind of people IT managers could not identify with, as if they were beings from another planet. IT managers stuck to running ERP projects and BI projects and laying down complex networks and spoke in lingo that no one understood, leave alone those marketing nerds.

How things change. Technology makes people hobnob with very different kinds of people, and I can't think of any different sets of people than IT managers and marketing/brand managers.

Because, marketing is now turning to technology like never before to get their message across. So much so, that their way of life/work has soon get completely changed due to technology - and these days one finds those creative pony tail bearers beating down the technology tracks in droves. Making Youtube videos, creating alternative lives, creating face-book identities and managing them.

The change hit me as a I read this article on how on-line communities are forcing Unilever, the CPG gaint, to look at technology enabled communities and word-of-mouth, and dealing with its impact on their advertising strategy. It hasn't come to their budgets yet, or so they say, it isn't easy to depose earlier held beliefs - but the change is real enough.

So, whats IT got to do with advertising? Plenty, in a couple of years. It may become the way brands and built and protected, if they are not already. And if you are an IT manager, you could only ignore web 2.0, on-line communities and the effects it can have on your company at your peril. No, make that to the peril of your CMO. He/she may or may not have a job if he does not make nice with you, and you ditto.

Lets start at the very beginning

I did that start a few months back, and then stopped. I got completely embroiled in the hurly burly of the business, and this business called life.

In the meanwhile, during the intervening months, the boom has gone bust, the economy is reeling the way it had'nt for years and years, the business outlook is much worse than one had ever imagined - and some. Lehman Brothers went bankrupt, AIG - the underwriters to the worlds insurance has to be underwritten by the US government, the stock markets lost more money in weeks than they had made in several years, the stock markets in India more than halved, pink slips rather than job hops are getting discussed over coffee, the US got a new prez - Phew - its been a very momentous few months! No wonder I could not catch my breath and blog!!

Ok, so lets begin again. At the beginning.

What has business got to do with IT?

It is amazing that even now, when the entire business landscape is awash with technology, and technology has made an impact on business far greater than what the earlier technology pioneers has dreamt in their wildest dreams - even now, this questions gets asked, every so often, on every wave, for every new front that technology opens.

And it is right that it should. There is so much change around us that just figuring what it means and what it could mean, and what it could'nt mean is an extremely difficult task, and even the best can sometimes miss it by a mile.

So, here goes my take on the question. IT is the plumbing of the business. And the new brave thing quivering on the horizon for the business - and it is both simultenously. It is boring - and it is spectacularly exciting.

As soon as we IT to run efficiently within the company, it turns into the plumbing of the business, and then, it needs to be treated the way plumbing is. How important can plumbing be, you ask? Let your toilet plumbing break down for a day!!

And if new, all new, completely new technology, this quivering, yet-to-be-stabilised technology is not offered to the new hordes of customers, for all you know, you may be out of business - or you have a whole new business created by some cheeky enterprenuer, right under your feet, without you even realizing it was happening. Yes, it used to happen to businesses earlier also, but increasingly it is happening quite a lot due to information technology reasons, and you can ignore it only at your peril.

Business must take technology very seriously, and mostly it does. It is only with the new technology it really dithers about - to do, or not to do. To run or not to run....

In the current conditions, businesses must look at ways of leveraging technology like never before. Use technology to collaborate like never before. Reach for younger consumers who have grown up on the staple diet of technology like never before, build technology based community like never before..... the list goes on.

Why this blog

It got created because of two things.

First, one of my co-speakers at a Web 2.0 conference had his talk titled as "Whats law got to do with it" - and that got the song worm embedded in my head. Its been ages since I heard that Tina Turner song, I mean, the one thats got the love word, but it is a powerful song, and the song worm kind of settled in my brain.

Second, I met this CIO friend of mine, someone whom I worked with in the my previous avatar as a IT manager, and while I was gushing about web 2.0, I noticed a glazed look come into his eyes - and he wondered aloud - "But whats that got to do with me?" . Plenty, I thought, as I tried to answer him.

And I thought, he is so right. There are so many times when technology comes along, bursting at the horizon, and there are many of us who are caught wondering. Will this effect me? Should I know about it? Should I care? Where do I begin?

Its for times like this that I would like to blog about. Of course, I can only write about stuff I know, or I think I know, and I will learn as a I blog, but hopefully, some of you would do too with me - and some of you would teach me.

-Sangeeta