2. The Rise and Fall of the IT
Cartel
Peter Coffee
VP for Strategic Research
salesforce.com inc.

3. 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

4. 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)

5. We lived in little
bubbles of
computation
and connection
Going “outside”
was a risky,
specialized skill
Connectivity Used to be Scarce…

6. Connectivity Used to be Scarce…
…but today, not so much

7. Price Plummets; Demand Soars

8. 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

9. 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?

10. 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.

11. Because Carrying Dead Weight…
…Is Not a Good
LookIt’s a connected planet: breathe the air around you

12. Thank You
Peter Coffee
VP for Strategic Research
salesforce.com inc.
pcoffee@salesforce.com
@petercoffee
in/petercoffee
Creative Commons Attribution-NoDerivatives 4.0 International