In our business, we regularly seek perspective from those who are at the forefront of technology. In this posting, we are looking for some insight from Richard Yoo, founder of Rackspace Managed Hosting (www.rackspace.com), one of the largest private hosting solution providers in the US. As a founder of Rackspace, Richard has had the opportunity to peer into the IT infrastructure and IT challenges of a very wide variety and sophistication-level of companies that outsource application management. Richard is a native Houstonian.
Energy IT (Question): Who is Richard Yoo ("RY")?
RY (Answer): I'm a technologist. I'm an early adopter of new technology... Whether it's a new gadget like a cellular phone or TiVo, or something very abstract like teleportation - I've probably read quite a bit about it or actually played with it enough (if it actually exists) to understand how it does (or may) fit into our future lives.
Also... I'm an entrepreneur - I've started a few companies, one of which [Rackspace] generates over $200 million in annual revenues currently. I find lots of opportunities in the tech sector since I'm exposed to things so early in the game.
Energy IT: Tell us what you're thinking about these days in terms of IT?
RY: Impact.
It's amazing how many companies exist today that don't spend any time thinking about IT. This occurs in both larger and small companies, but I find it the most shocking with the smaller companies since I feel that they need it the most. It's not uncommon for smaller companies to think that spending time and money on IT is for "the big companies"... Particularly since they believe that IT spending is expensive.... But even a simple accounting system like QuickBooks or implementing CRM like Salesforce.com can have a huge impact on both productivity and customer experience.
Energy IT: What opinion/observation do you have currently about IT that is most contrary to popular opinion?
RY: People shouldn't try to build everything from scratch. I'm a huge fan of COTS - "commercial off-the shelf" stuff. Business spends tons of money - and more importantly, years of development time, trying to build tailored systems that need to be rewritten due to changes in the business. There are countless COTS systems available for various problems that are inexpensive and simple to implement. It's true that it won't solve your problems completely, but an 80% solution for 20% of the cost of developing it in-house is huge... And often times, the vendors will take any feedback you're willing to give them to improve their product - which in turn may give you the final features you require for your particular needs.
Of course there are exceptions to the rule - FedEx was the very first courier that implemented such a detailed level of package tracking... So yes, to be first FedEx had to make the huge investment to make such a feat come to life... But if you're a FedEx competitor, it would also be silly to think that such systems aren't available turn-key these days.
Energy IT: What's the most important thing about IT?
RY: IT is the new assembly-line. Back in the day, when Ford started producing cars in a system-like fashion, it changed how people manufactured all sorts of things. Now, it's ridiculous to try to build something without an assembly-line system. These days, all companies need to spend IT dollars to streamline their businesses... Whether it's lead tracking for sales, or inventory tracking for supply chain management... Or even automated reporting for daily snapshots on how the business is doing. Ultimately - anything that can be automated, should be.
Energy IT: Richard - thanks for answering our questions. We look forward to hearing from you in the future.
RY: You're welcome!
Commentary from Energy IT - Regularly we give the world too much credit. Reasoning and common sense suggests to us that everything that could have been automated has been automated. We wonder how a very large company hasn't already done X or Y via software and systems and we approach the investment possibilities with skepticism. Our skepticism is regularly toppled with the facts. Early in my venture capital career I was informed by a highly successful veteran software salesman that...."a lot of money has been made off of adequate technology." The subtext of Richard's comments regarding automation seem to jibe with our experiences...there is tremendous greenfield opportunity to automate business process to increase productivity. IT is a large component of that opportunity within the energy sector that is just now embracing general IT en masse.
Energy IT (Question): Who is Richard Yoo ("RY")?
RY (Answer): I'm a technologist. I'm an early adopter of new technology... Whether it's a new gadget like a cellular phone or TiVo, or something very abstract like teleportation - I've probably read quite a bit about it or actually played with it enough (if it actually exists) to understand how it does (or may) fit into our future lives.
Also... I'm an entrepreneur - I've started a few companies, one of which [Rackspace] generates over $200 million in annual revenues currently. I find lots of opportunities in the tech sector since I'm exposed to things so early in the game.
Energy IT: Tell us what you're thinking about these days in terms of IT?
RY: Impact.
It's amazing how many companies exist today that don't spend any time thinking about IT. This occurs in both larger and small companies, but I find it the most shocking with the smaller companies since I feel that they need it the most. It's not uncommon for smaller companies to think that spending time and money on IT is for "the big companies"... Particularly since they believe that IT spending is expensive.... But even a simple accounting system like QuickBooks or implementing CRM like Salesforce.com can have a huge impact on both productivity and customer experience.
Energy IT: What opinion/observation do you have currently about IT that is most contrary to popular opinion?
RY: People shouldn't try to build everything from scratch. I'm a huge fan of COTS - "commercial off-the shelf" stuff. Business spends tons of money - and more importantly, years of development time, trying to build tailored systems that need to be rewritten due to changes in the business. There are countless COTS systems available for various problems that are inexpensive and simple to implement. It's true that it won't solve your problems completely, but an 80% solution for 20% of the cost of developing it in-house is huge... And often times, the vendors will take any feedback you're willing to give them to improve their product - which in turn may give you the final features you require for your particular needs.
Of course there are exceptions to the rule - FedEx was the very first courier that implemented such a detailed level of package tracking... So yes, to be first FedEx had to make the huge investment to make such a feat come to life... But if you're a FedEx competitor, it would also be silly to think that such systems aren't available turn-key these days.
Energy IT: What's the most important thing about IT?
RY: IT is the new assembly-line. Back in the day, when Ford started producing cars in a system-like fashion, it changed how people manufactured all sorts of things. Now, it's ridiculous to try to build something without an assembly-line system. These days, all companies need to spend IT dollars to streamline their businesses... Whether it's lead tracking for sales, or inventory tracking for supply chain management... Or even automated reporting for daily snapshots on how the business is doing. Ultimately - anything that can be automated, should be.
Energy IT: Richard - thanks for answering our questions. We look forward to hearing from you in the future.
RY: You're welcome!
Commentary from Energy IT - Regularly we give the world too much credit. Reasoning and common sense suggests to us that everything that could have been automated has been automated. We wonder how a very large company hasn't already done X or Y via software and systems and we approach the investment possibilities with skepticism. Our skepticism is regularly toppled with the facts. Early in my venture capital career I was informed by a highly successful veteran software salesman that...."a lot of money has been made off of adequate technology." The subtext of Richard's comments regarding automation seem to jibe with our experiences...there is tremendous greenfield opportunity to automate business process to increase productivity. IT is a large component of that opportunity within the energy sector that is just now embracing general IT en masse.
1 comment:
Richard's point is pretty important. We're in the marketing communication business and over the years, we've had a lot of software companies as clients. Competing with the in-house IT departments is almost always a huge challenge for these clients. We always tell them they have to be able to demonstrate Richard's 80/20 rule: an 80% solution at just 20% of the cost. (Although we've never had that precise terminology. So thanks, we're going to start using it.)
The problem is, the demonstration and the presentation is a lot of work. Yet it's the core of a software company's business. If you're not prepared to do the hard work of marketing, you can forget helping your salesforce to be successful.
Barrett Rossie
Clarity 05 Partners
San Francisco
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