How can enterprises lower their IT spend exponentially?

After attending an event yesterday, I realised that the complexity corporations create themselves, often leads to greatly overpaying for IT solutions and all for no good reason. Let’s analyse what requirements corporates have that make their IT solutions extremely expensive and if there are easier solutions.

Own data centre

Many industrial, financial services, healthcare, telecom, military and other similar companies are saying that they need to "closed-from-the-outside-world" and even air-gapped solutions running in their own data centres. Zero tolerance for installing software on any laptop or mobile. No SaaS allowed which is not offered centrally. Some go as far as requiring no WiFi or Bluetooth connectivity for their devices so no adversaries can access data.

Strangely you never hear Amazon, Google,... talking about closed data centres, laptops without WiFi,... Today Amazon being down or Google user data getting hacked could be more costly than lots of these industrial, telecom, healthcare,... companies getting hacked. Google controls the software 70% of the population carry around in their pocket and all the embarrassing questions they ask to a search engine. Amazon delivers more products than many industries combined.?

So why are they not air-gapping? Probably because they don't want to run a business which thinks that if we make it ultra hard for even our own employees to make changes to production systems then hackers will find it impossible. Unfortunately locking down everything with the idea that employees are good and outside hackers are bad is not effective. Most hacks are done with (in)voluntary help from (ex)employees. Disgruntled employees will know weaknesses which with a lock-the-outside-world-out approach can be circumvented.

Additionally the new tsunami of computer fraud is likely going to be driven by GenAI. So whenever a network card or firewall has a zero day bug [i.e. any bad actor can enter your server without password], you need to be quick to patch it otherwise all your security can be circumvented. Now if you make it extremely hard to install security patches this? means that the AI algorithm has more time to enter the IT systems. If human written ransomware was an issue, just imagine what GenAI ransomware will do. The virus will explore all systems, find the software running on the servers and uses an index of known bugs to auto rewrite itself to exploit whatever vulnerabilities are available for the specific versions it finds.

Finally, private data centres often are an employment strategy for old-school IT directors who don’t want to lose their jobs. If the business massively starts using SaaS instead of Cobol the business only needs a fraction of the current team and for sure not a leader who has no clue about the Cloud.

RFPs by non-users

Have you ever received a message from somebody that told you they were going to buy shoes for you and even if they did not fit you were obliged to wear them each day? Ridiculous? Well what do you think it looks like if a software, you need to use every day to do your job, is picked for you without your involvement. RFPs never have questions like: “From 0 to 10, how happy will our employees be with your software?”, “How liked is your software going to be recommended to others by our employees?”,... Most corporate software gets bought by people who will not use it on a daily basis. They don’t care if the software is hard to use.

These same people are playing “software police” all the time because their employees are all the time trying to use SaaS solutions that are easier to get around the difficult “corporate approved” software. Bad, bad, bad user because you try to use software which is not compliant with our corporate policies!!! Everything gets locked down with the excuse that this is the only way to have a secure system. Many countless days get wasted by employees “smuggling” files through the firewall. Anything from a 100MB promotion video that is needed for marketing to installing a trial version for a pilot.?

The purchasing process is too complex

Executives, procurement, legal, security, compliance experts and others, who are defining the software and hardware purchasing processes, should be sent to work for a startup which has the best solution in the industry and try to sell to their own company. Fill out the 5,000 questions of the RFP, wine-and-dine to find out who this week has the power and influence in their organisation, go through endless demos and pilots where the final decision is already taken because nobody gets fired for choosing …

The end result: hopelessly complex and expensive software??

For this and another thousand other reasons, enterprise software vendors need to charge corporations at least $250K to $1M per year for software which covers functions startups can get for $1K per year.?

The solution: each department or group has its own API

What if each department or group would have its own API. Need to hire somebody, send the HR API a request to open a new position. Need a social media campaign, send the Marketing API a request to launch a Facebook campaign. Need a purchase order, send the Finance API a request to create a purchase order. Need an approval, send the executives API a request for approval. Each department or team has the liberty to define how they implement the API. If the API is not implemented then the default solution will send an email to a common inbox and via manual work the solution can be provided. A reply with the manual solution to the email will respond to the API request.

How would a department API work? First of all, if every company interaction, even if all the work is done manually, is an API call, you can immediately track how long it takes to request anything from one department to another. Secondly each department can now choose which requests it automates and what solution they want to use. Thirdly, some tasks can be considered overhead and as such are free, while others get charged per transaction. However if other departments are unhappy with the cost and time it takes for this department to do the work, then after a complaint which gets unresolved within a reasonable amount of time, they should have the liberty to use outside APIs instead. This will mean that those departments who offer bad or non competitively priced services can get sidelined by other departments. Two departments can even compete against one another on offering a similar service.???

What would be the expected outcome? Those departments who use software to their advantage and offer a very competitively priced and brilliantly executed service are likely not only going to sell their services to the other departments but also to other companies. They might become a profit centre for the company whereas they previously were a cost centre.

Those departments who do not offer great service have two options. Either quickly improve, which means they will probably want to work with software vendors who have easy to use solutions that are not too expensive, or see other departments looking for solutions elsewhere. In either case, costs will be lower to the enterprise going forward.

Conclusion: software is a competitive weapon

The Amazon Web Services APIs were offered first to other departments before Amazon made them available to anybody. AWS is now the profit centre of Amazon with the head of AWS being promoted to CEO a few years ago as the absolute proof that AWS APIs worked for Amazon. Amazon measures everything and by having most of its internal teams behind a measurable API, it has become super easy to see which teams are offering the best services.

Software is a competitive weapon and most overhead departments in large organisations are forced to use clunky and expensive software. If they could demonstrate their value to other departments and other companies, they would offer more value for less.

By giving the IT department the job of being the IT police, companies overspend while being less competitive each year. If IT would be seen as the team that can bring super powers to each department by helping to automate more and more processes because full automation does not mean that all marketing employees get fired, it means they can offer marketing services to other companies as well. Imagine being able to hire the Coca Cola or RedBull marketing department for your next campaign, just like you hire the Amazon IT department.

If you want to see exponential growth in your company, then following the “rules of an industry which is stagnating” is not the way. To grow exponentially, you need to innovate exponentially. Software is eating the world. So it is a great starting point. Happy to help.