infoTECH Feature

March 31, 2009

Low Investment Paradigm Makes Life Easier For IT Start-Ups

Reuters had recently reported that information technology start-up companies face easier initiation and break-in periods than before since new cloud related solutions and newer, leaner and more agile planned programming computer languages are significantly and constantly reducing costs.
Another contributing factor is that the rapidly deteriorating economic condition is driving investors away and this is forcing people and companies to search for, innovate and come up with a clutch of low cost or freely available solutions to establish and bolster start-ups and survive any which way they can. Venture capital investment has taken a 70 plus percent free-falling death spiral in January 2009 itself and reports claim that the situation is not likely to improve till the beginning of the fourth quarter of 2009.
"What you're talking about is life or death," said Drew Clark, director of strategy, venture capital group, IBM. "For the best of these companies, this could be the difference. If this had happened three years ago, they'd be gone."
Remote data storage, web based programs and the growing popularity of broadband technologies, as reported by TMCnet, all contribute to drastic cost reduction by neutralizing the need to buy, hire or contract servers, storage silos, network administrators, and annual maintenance contracts.
The report claims that security threats and dependability factors are counterbalanced by the low up-front costs. It substantiates this statement with a couple of testimonials.
"In 2005 we needed 10 to 20 times the money we need today. There was a certain amount that entrepreneurial intelligence couldn't get around. Somehow you had to pay that piper," said James Siminoff (News - Alert), chief executive of Grid.com and Simulscribe.
"Today if I want to start up, it takes me one hour and $50 and I can turn on my capacity from Amazon Web Services from anywhere in the world," said Michael Eisenberg, general partner with Benchmark Capital. He says that in comparison ten years ago he had to pay $10,000 per Sun Microsystems server.
TMC (News - Alert), too, has several significant and impacting views such as open communications and Software as a Service, as reported by TMCnet, being easily accessible and available now than in the past, thereby contributing to enhanced customer experience, visible and quick profitability, lower start-up cost, and extensible and flexible cost structures that allow companies to suitably invest in resources according with their growth and cash availaibility.
Rich Tehrani, Group Editor of TMC, in his article, “Open Communications 101” compared the old archaic closed communications systems with newer open communications and concluded that in the past companies had no option but to structure their businesses around resources and technology available at the time that were made up of, “Extremely inflexible closed systems consisting of proprietary hardware and applications.”
“The business had to accommodate the technology. You could not easily design custom applications on your mini or mainframe. The pool of available programmers was extremely limited and the cost for customization was prohibitively high,” said Rich Tehrani (News - Alert). “As a result, mainframes didn't let you strategically differentiate your business. Mainframes and minis were not competitive weapons; they were tactical tools that, at best, made your company more efficient.”

Vivek Naik is a contributing editor for TMCnet. To read more of Vivek's articles, please visit his columnist page.

Edited by Jessica Kostek
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