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68% of the Fortune 100 Are Clueless

By J.R. Storment on September 24, 2011

Last month, 37Signals noticed that they were getting lots of emails and signups from people with Fortune 500 email addresses. They dug around and found that Basecamp was being used at:

What’s notable about this is that 37Signals employs no salespeople and doesn’t take anyone at these companies out to expensive dinners.

This is a brilliant example of a theme we obsess over:

The Cloud is democratizing IT, and the adoption of cloud services (or “tools that just plain work”) is being driven by end-users, not by IT policy or management.

I ran into a startling example of this a couple of weeks back when I was at a party with a number of people from the same startup. I asked the guy who runs their IT how much they spend on the Cloud a month. His response: next to nothing, maybe two hundred bucks.

Not ten minutes later I ran into one of the developers for that same company. I asked him the same question. His response: Close to $5,000.

This crazy ride we’re all on— the growth of the zero cloud to ubiquitous cloud— is not being driven by any policy … it’s just viral. Why? Because it’s easier to sign-up for the services you really need at the moment you really need them rather than go through official channels and wait.

All good, right? The second part of the theme is where things get sticky. 37Signals again:

We often hear from folks inside these companies. They’re beyond frustrated with the software/solutions they’re supposed to use. So they turn to our products because they just plain work. Sometimes they expense them, but often it seems a team or department head just pays out of their own pocket. The cost is insignificant compared to the productivity they receive in return.

And there it is. These brave insurgents, these idealistic rebels who are bypassing the tyranny of corporate policy are signing up for needed cloud services … and are paying for it themselves. The problem is the cost isn’t insignificant. 37Signals is right; Basecamp is well worth the $49. But so are the other ten services the department head has on his personal credit card.

It’s obvious why this is a problem for the department head. But let’s talk about why it’s a problem for his employer. If said department head is simply expensing these costs, the company who is ultimately paying for them has a severely limited ability to accurately attach these ongoing (and often scalable) costs to meaningful items in their budget. Nobody wins. The frustrated department head ends up floating a bunch of cash each month and the company’s CFO—who is probably paying a consultant to evaluate this “cloud thing”— has no idea she is already up to her pocket protector in cloud payables.

So my reaction to 37Signals blog post was mixed. I’m a firm believer that the Cloud is the best choice for many companies so it’s exciting to see bloatless products like Basecamp “sneaking” into big companies. On the other hand, the current model that has cloud insurgents paying for their own services and leaving the company in the dark isn’t working.

We need better tools that let companies understand and budget for the Cloud money they are already spending while at the same time letting end users sign up for the services they need to do their jobs.

Being in the know feels great