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[Plexxi Rewind] Don’t be the “We already” guy

For folks accustomed to the original blogs we post daily, our industry is in the throes of VMworld bliss, so we will be running the Best of Plexxi this week. Of course, if you haven’t read this one yet, it’s new for you! Stop by Booth 747 if you are in San Francisco this week, and say hello!

I have argued in several posts that switching has been a well-served market, and that well-served markets will move more for price and convenience than performance and features. This explains why there is so much emphasis on automation and reducing OpEx these days. One of the more subtle implications of a well-served market is switching costs (switch as in change, not as in infrastructure).

As people evaluate new vendors, they need to consider not just the cost of the solution and surrounding ecosystem but also the cost to switch from solution A to solution B. These costs will involve hardware and software, but increasingly, they include peripheral systems like provisioning, monitoring, auditing and change management, and even things like helpdesk solutions. None of this is new.

But along with all these tools and processes, the other thing that potentially gets disrupted when a new solution is introduced is all the emotional investment that went into the original solution. Let me take a somewhat meandering path before I come back to this point.

In business terms, there is a concept called sunk cost. Put succinctly, sunk cost is the amount of whatever (money, time, anything) that has been sunk into a particular direction. These costs are sunk meaning they have already been paid. There is nothing that can bring these costs back.

Now imagine that you have spent the last 3 years working on a project. That project has consumed thousands of man-hours and a small fortune in capital outlays. After 3 years and $16.3M worth of investments, you sit only $200k away from success. Success will bring you $50M worth of whatever it is you were after when you started the project. Meanwhile, a new project with a $200k price tag on it will bring you $51M.

What do you do?

If you choose project A, you finish your project and get your $50M. If you choose project B, you throw away all that investment in project A and you get $51M. Are you willing to walk away from your previous investment?

This is sunk cost. We are tempted to finish out project A because we have made such an investment in it when the return on investment for the next $200k is higher with project B. And you know how this argument goes down. Someone stands up and says, “But we already invested more than sixteen million dollars in this!”

To be fair, when I use an example that is so fabricated, it is easy to get to the right answer. But this type of decision is made daily in enterprises across the globe. As new technologies, companies, and solutions emerge, sales guys around the world get meetings with IT teams. The sales teams throw a couple of slides up on the projector and they peddle their wares. Graphs and charts clearly show that this thing is higher or that thing is lower. And then amidst it all, somebody who has sat there with arms folded the entire time offers up, “We already use Solution X to do this.”

“We already built an architecture based on such-and-such.”
“We already trained our staff on this or that product line.”
“We already built an automation suite around these APIs.”
“We already spent all this time evaluating this other solution.”
“We already… We already… We already!”

That’s not to say that the switching costs (how much it will cost you to do whatever again) are not important – those need to be included in any thoughtful analysis. But the fact that you have already done something merely establishes the starting point. It doesn’t – or at least it shouldn’t – determine what your next steps are. The best thing you can do at any point in time is make the best next decision. However you got here is a detail. Learn from it, but don’t be bound by it.

When teams are driven by the “We already” guy, they essentially lock themselves in. With all this talk about vendor lock-in, who knew that one of the biggest culprits in the entire game was the “We already” guy? To this employee, new trends and technologies are a threat to the status quo. All the years spent learning, designing, and building something will suddenly be worth nothing. Sometimes these people derive their own self-worth from the fact that they have built this thing from scratch. Come in and call his baby ugly? “We already have a solution.”

The fact that you have already done something doesn’t preclude you from taking advantage of new things. Sure, you already have something, but if you don’t want to be left behind, you need to thoughtfully consider the next best decision. Of course you can take this to extremes, constantly changing plans and never executing on anything. The right answer is finding a balance between picking a direction and being open to better alternatives if they arise.

Over the years, I have talked to hundreds and hundreds of customers. Almost everyone has a “We already” guy. Half the time, he doesn’t even know it’s him. Look around the room at your next staff meeting. Who is your “We already” guy? And more importantly, what are you doing to make sure your future is not decided by costs you have already sunk?

The post [Plexxi Rewind] Don’t be the “We already” guy appeared first on Plexxi.

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More Stories By Michael Bushong

The best marketing efforts leverage deep technology understanding with a highly-approachable means of communicating. Plexxi's Vice President of Marketing Michael Bushong has acquired these skills having spent 12 years at Juniper Networks where he led product management, product strategy and product marketing organizations for Juniper's flagship operating system, Junos. Michael spent the last several years at Juniper leading their SDN efforts across both service provider and enterprise markets. Prior to Juniper, Michael spent time at database supplier Sybase, and ASIC design tool companies Synopsis and Magma Design Automation. Michael's undergraduate work at the University of California Berkeley in advanced fluid mechanics and heat transfer lend new meaning to the marketing phrase "This isn't rocket science."