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I totally agree with the outsourcing of IT. My father owns a minor distribution company. That deals with spa, pool, and bath parts. No piece of software has eve

I totally agree with the outsourcing of IT. My father owns a minor distribution company. That deals with spa, pool, and bath parts. No piece of software has ever come to make their life easier. I have been involved with every major software purchase and I am constantly thinking to myself, I know these people I could probably make something that would work. The biggest problem I see is that hosted apps are great, but these guys need the software to be up all the time. They may even have bad internet connections. So I was thinking the best model would be to have a hosted application, and then if the company wanted greater up time they could by a box and put it at their location and it would take care of syncing with the online counterpart. That way they could continue business while offline. As long as you are taking care of integration, and migration you could probably open source the underlying software and still make money on support services. You could also make money selling monthly low cost licenses per user like 10 or 15 dollars per person.

jerry5 18y ago
I've sometimes wondered whether IT isn't becoming the 'core' part of a business. I.e. the one that's most complex and drives the competitive edge and success of a business. I have worked in IT in many different industries and often enough found the 'business' part of the business to be easy to pick up while it sometimes took ages and a lot of brainpower to get on top of the technology. In other words, IT people can understand 'businesss' but business people can't understand IT. So, in the future, instead of having a bank with an IT department, we'd have an IT company with a bank department. They'd probably switch sooner from banking to insurance than from one IT infrastructure to another. I think amazon is a good prototype for this. It's a tech company that also sells books. They later added all sorts of other crap like electronics, then stuff that they don't even deliver but where they just act as a front for other retailers and finally they are now offering their IT services purely by themselves (S3, EC2).
- LarryV 18y ago
  I don't think IT will ever become that important. IT will just take its rightful place next to Law Firms and Accounting Firms as a necessary part of the business but not the core. It is kind of surprising that IT, with its self references as fast-paced and innovative has taken so long to realize its own inefficiencies. IT (in the sense of internal computer systems for businesses) was greatly over invested starting in the 90s because the executives of the time were so scared. I remember stories of Hollywood executives who would ask their assistants to surf websites they were going to invest in and videotape it. They would take these video tapes home for 'research' the same way they would research actors, directors and movies to invest in. They completely didn't get it. So what did they do? They did what most people do when they are scared, they try to buy insurance. This insurance came in over-investment in all things technology both externally and internally, leading to huge IT departments that then used their bulk to buy more technology and increase their internal political might until all this over investment corrected itself in the legendary bubble pop. I think when all is said and done, IT will be just like Payroll. When was the last time you met a person who works 40 hours a week processing payroll? They used to exist at every company - now everyone's checks come from ADP or PayChex. IT will be done by an outside company and will part of the budget for each person on the payroll. But of course I am a little biased... Hmm, payroll - There is an industry to be disrupted...
  - jerry5 18y ago
    I have a vague idea what you mean by the 'inefficiencies'. I am wondering whether these would have manifested in the first place if IT had been given a more central role. It's a lot about motivation too, the 'central' people in a business are usually motivated by being shareholders as well as employees at the same time. If you treat IT as just another accountant they will find endless means and ways to drag their feet and just generally pursue their own interests which are generally opposed to that of the business. Being linked into the flow of information, i.e. high level senior management decisions, is important too for efficiency.
    - LarryV 18y ago
      Jerry, I totally agree that things could always be better and that incentives are the key to this. There is a business concept from the 80s called 'open book management' where everyone in the company sees where all the money goes. This is more transparency than even public companies have. I think it could be a technique that would get everyone from accounting to IT more involved in the business. I also think there needs to be much shorter expectations of how long someone will work for a company. Hollywood is on to something with the way they bring together small teams to make a film that then disband and reform in a new configuration for the next film. I wonder what would happen if every person in the company had to choose each year whether they want to continue with the company. They would in effect have a one year job. This might make their sense of urgency and priority for the 52 weeks within that year much more focused. It might also form a company with much more dedicated people who really want to be there.
ghs 18y ago
"The biggest problem I see is that hosted apps are great, but these guys need the software to be up all the time." I was the Director of IT for a $250mm startup, a little under 5 years old. We started, as almost all valley startups do, using quick books for our financials. Very quickly issues like Purchase Orders, Expense Reports, became more important so we looked to move to an online SAAS financials system - we chose Netsuite. Our internet connectivity grew as the number of our employees grew, until today, at 120 employees, we have a finance/procurement department of 10 people, and a 3 Mbit connection to the internet. Our Financial software has been on the Internet somewhere for the last 4+ years, and has never gone down. I used to be impressed that our DSL link was as reliable as our T1, until an ISP explained to me that they were probably both landing on the same equipment on the back end - just one of them was coming at me with T1 Framing. This is just a long way of saying that Internet connectivity can be assumed now. Large (very large) companies don't think twice of oursourcing their business critical functions, and, in fact, as we transition from Netsuite to Oracle Financials, we didn't even consider hosting it ourselves - found a third party and paid them $5500/month to host it for us - access over a L2L IPSEC link. Anybody want to form a YC company - don't worry about the Internet Part - unless you are building a real-time/nuclear/medical/navigation/flight safety product/etc..., hosted apps are the way of the future.

jerry5 18y ago

I've sometimes wondered whether IT isn't becoming the 'core' part of a business. I.e. the one that's most complex and drives the competitive edge and success of a business. I have worked in IT in many different industries and often enough found the 'business' part of the business to be easy to pick up while it sometimes took ages and a lot of brainpower to get on top of the technology. In other words, IT people can understand 'businesss' but business people can't understand IT. So, in the future, instead of having a bank with an IT department, we'd have an IT company with a bank department. They'd probably switch sooner from banking to insurance than from one IT infrastructure to another. I think amazon is a good prototype for this. It's a tech company that also sells books. They later added all sorts of other crap like electronics, then stuff that they don't even deliver but where they just act as a front for other retailers and finally they are now offering their IT services purely by themselves (S3, EC2).

LarryV 18y ago
I don't think IT will ever become that important. IT will just take its rightful place next to Law Firms and Accounting Firms as a necessary part of the business but not the core. It is kind of surprising that IT, with its self references as fast-paced and innovative has taken so long to realize its own inefficiencies. IT (in the sense of internal computer systems for businesses) was greatly over invested starting in the 90s because the executives of the time were so scared. I remember stories of Hollywood executives who would ask their assistants to surf websites they were going to invest in and videotape it. They would take these video tapes home for 'research' the same way they would research actors, directors and movies to invest in. They completely didn't get it. So what did they do? They did what most people do when they are scared, they try to buy insurance. This insurance came in over-investment in all things technology both externally and internally, leading to huge IT departments that then used their bulk to buy more technology and increase their internal political might until all this over investment corrected itself in the legendary bubble pop. I think when all is said and done, IT will be just like Payroll. When was the last time you met a person who works 40 hours a week processing payroll? They used to exist at every company - now everyone's checks come from ADP or PayChex. IT will be done by an outside company and will part of the budget for each person on the payroll. But of course I am a little biased... Hmm, payroll - There is an industry to be disrupted...
- jerry5 18y ago
  I have a vague idea what you mean by the 'inefficiencies'. I am wondering whether these would have manifested in the first place if IT had been given a more central role. It's a lot about motivation too, the 'central' people in a business are usually motivated by being shareholders as well as employees at the same time. If you treat IT as just another accountant they will find endless means and ways to drag their feet and just generally pursue their own interests which are generally opposed to that of the business. Being linked into the flow of information, i.e. high level senior management decisions, is important too for efficiency.
  - LarryV 18y ago
    Jerry, I totally agree that things could always be better and that incentives are the key to this. There is a business concept from the 80s called 'open book management' where everyone in the company sees where all the money goes. This is more transparency than even public companies have. I think it could be a technique that would get everyone from accounting to IT more involved in the business. I also think there needs to be much shorter expectations of how long someone will work for a company. Hollywood is on to something with the way they bring together small teams to make a film that then disband and reform in a new configuration for the next film. I wonder what would happen if every person in the company had to choose each year whether they want to continue with the company. They would in effect have a one year job. This might make their sense of urgency and priority for the 52 weeks within that year much more focused. It might also form a company with much more dedicated people who really want to be there.

ghs 18y ago

"The biggest problem I see is that hosted apps are great, but these guys need the software to be up all the time." I was the Director of IT for a $250mm startup, a little under 5 years old. We started, as almost all valley startups do, using quick books for our financials. Very quickly issues like Purchase Orders, Expense Reports, became more important so we looked to move to an online SAAS financials system - we chose Netsuite. Our internet connectivity grew as the number of our employees grew, until today, at 120 employees, we have a finance/procurement department of 10 people, and a 3 Mbit connection to the internet. Our Financial software has been on the Internet somewhere for the last 4+ years, and has never gone down. I used to be impressed that our DSL link was as reliable as our T1, until an ISP explained to me that they were probably both landing on the same equipment on the back end - just one of them was coming at me with T1 Framing. This is just a long way of saying that Internet connectivity can be assumed now. Large (very large) companies don't think twice of oursourcing their business critical functions, and, in fact, as we transition from Netsuite to Oracle Financials, we didn't even consider hosting it ourselves - found a third party and paid them $5500/month to host it for us - access over a L2L IPSEC link. Anybody want to form a YC company - don't worry about the Internet Part - unless you are building a real-time/nuclear/medical/navigation/flight safety product/etc..., hosted apps are the way of the future.