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Eric Schmidt talks 'incumbents' vs. startups

From driverless cars to the new old age to the end of privacy, there doesn’t seem to be a cultural hot button Eric Schmidt, the executive chairman of Google Inc., can’t opine on. He was one of a handful of “mastermind keynotes” at the 2013 Gartner Symposium/ITxpo, but his talk wasn’t all philosophy. When asked what he’s learned in the last couple of years about the needs of the enterprise, here’s how he began his response:

“Let’s talk about incumbents versus brand new startups. If you’re starting a new company, literally as a founder or a small team, you would never have the traditional IT data center room. What you would do is use cloud-based services, which are Workday, Amazon Web Services, Google, Salesforce, Netsuite. And you would build your company out of that. It looks to me like companies up to on the order of 1,000 people can operate that way with pretty reliable systems that are scaled for the level of operations that sized company would have.

It’s not surprising to hear newer, smaller companies are taking a more non-traditional IT route compared to older, bigger companies. And yet I couldn’t help wonder if the real nugget for CIOs was in what wasn’t said: Is the division between new companies and established enterprises getting so big, those large, entrenched and relatively inflexible companies are destined to falter, done under by the weight of their legacy technology? What is the tipping point? When exactly should these incumbents, as Schmidt called them, cut their losses with legacy systems and go the way of the upstarts?

Alas, for the larger enterprise, Schmidt didn’t have much advice beyond “start small.” Here’s what he said: A typical adoption venture for our stuff is either an email replacement because the email systems are inflexible with respect to the existing customer problem … and the other choice is the data sharing model, as in [Google Drive] and so forth. People typically start there and then they expand over time.

Oh, and another thing Schmidt noted about companies that aren’t tied to the traditional IT model: In those kinds of companies, you give the employees a budget and say, ‘Go buy your own computer, and connect it into the Internet and off you go.’ It’s that simple of a model.”

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