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Tony Greenberg

Tony Greenberg

Posted: May 2, 2010 03:04 PM

Why America Loses the King of IT Throne If We Don't Change

Tony can also be reached here

Trust is a double-edged sword. If you trust in the right things and the right people, you can accomplish much more than you ever could alone. In falling for myths and liars, you fail not only yourself, but also all those who trusted you. Today's subject is how our misplaced trust eats away at the crown jewels of American industry -- putting IT services on the same complacent path that greatly contributed to the last mainstay of the country's wealth: auto manufacturing.

As Michigan faces 20% unemployment and draws its lifeblood from government bail-outs, the U.S. auto industry is facing its mortality without taking us back to the Jetsons' future. Instead of flying Deloreans, we got the Canyonero. The story is a long one, but if you leaf back a bit before Chapter 11, you'll find misplaced trust highlighted and triple-underlined. The UAW and Big 3 trusted in their eternal entitlement to our pocketbooks and banded together to fight challenges to their complacency such as tougher mileage standards and free trade. Consumers trusted that American ingenuity will find a way as long as we kept buying domestically. Voters cheerfully approved import quotas to mask the stench of stagnation and trusted that if what was good for GM wasn't good for the country, it was at least good for Detroit. And everyone trusted that the worst thing was for this failure to be exposed and corrected, hence the subsidies, protections and bailouts that continue to this day.

The question is, will our IT world -- at least the B-to-B side of it -- see the same fate before we see a truly impartial market for it? I hope not, but if we don't want to see Silicon Valley turn into Detroit, we need to sharpen our instincts and stop trusting IT industry myths. As with the auto industry, these myths sprout on all sides:

• Sellers trust that 3 layers of schmoozers and regular injections of Fear Uncertainty and Doubt will keep their cash cow accounts profitable indefinitely, so they can put innovation on the back burner

• CFOs and CEOs trust IT to build a competitive advantage but put sourcing of IT services on par with procurement of paper clips

• Buyers trust in strategic partners, magic bullets, and mystical quadrants despite years of disappointment

And just as with the car industry, the biggest fear is not failure, but being exposed -- exposed as having spent too much or hitched your trailer to the wrong vendor or having fallen behind someone who was too small or too foreign to be a real threat. But although some people have trouble remembering it, being fooled once is okay.

So in that spirit, I'll cop to my mistakes first. I entered the IT business in co-location in '96 with Exodus. Starting from 25 people, we became the darling of industry and analysts once we hit $600 mm and 3,500 people in less than 3 years, to be followed shortly by a spectacular collapse into Chapter 11. Granted, we changed the game and the assets became some of the most important data centers in IT today. I then took another roller coaster ride on the buy side, helping build a forerunner to Hulu and YouTube called the Digital Entertainment Network, which blew $72M in just over a year before imploding. Right concept, wrong time, wrong combination of people.

In both places, I saw layers upon layers of inefficiency, waste, and hype centered around how IT was bought, sold, and provisioned. I thought we could do better, which is why I started RampRate, which has lasted longer than the last 2 gigs combined. So here I am 10 years later with the same pursuit of a fluid trustworthy market. I think we can get our heads on straight and avoid the auto industry's fate, but we still need to slay some dragons, which is why I'm compiling the master list of IT myths that we'll need to overcome. If you want to add to the pile, or learn from mistakes of others instead of your own, or, for that matter, tell me why the good times will never end, come on down.

Tony can be reached at www.tonygreenberg.com.

 

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