My Comments on Box Blog

Photo by Mark Baker

We’ve only begun to scratch the surface of what is possible using cloud technology. It will be very interesting to see how products evolve and how they are adopted by both business and individual users. I have explored many services, and now use Box on a regular basis for business collaboration.

It was a privilege to have Wipfli featured in a Box “Customer Stories” blog post on how businesses can use technology to improve efficiency and service delivery. See Wipfli CIO On the Intersection Between Business and Technology. I welcome your comments.

Microsoft’s Reboot

imagesAs many know, I haven’t been a fan of Microsoft in recent years. This interesting article (from Vanity Fair, of all places, complete with an Annie Leibovitz photograph) puts the “financial model” angle more front and center in my thinking. Perhaps with Nadella’s leadership, Microsoft will move faster and transform themselves.

In the end, Microsoft’s pricing model that makes many of us wonder why we pay so much may be a key factor in allowing Microsoft to sustain the path to reinvention and stability that we need in this turbulent cloud environment. Will upstart cloud solution providers (, Salesforce, Workday, etc.) that are running at significant losses and depend on successive venture capital rounds (or very patient stockholders) be able to find a sustainable business model? Or will they succumb to being purchased and then be subject to a turbulent integration period? Alternatively, do we in the SMB space have the skill, patience, investment ability and lead-time to make our own “best of breed” decisions to have our own ecosystem of solutions?

Perhaps the recycled “IBM” mantra of the 70s and 80s goes something like, “Nobody ever got fired for waiting for Microsoft.”

Here is a more negative slant on Microsoft’s relevance.

See also my previous comments from April 2014  on Teaching Microsoft to Dance.

Pathways to Success

Recently there have been major write-ups on tech companies that have pursued very different strategies to achieve their desired financial results. The contrast between blue chip IBM and Software as a Service (SaaS) pioneer is remarkable., one of the newer cloud storage and file sharing services, is charting yet another course.

Image courtesy of cooldesign /

Image courtesy of cooldesign /

Why IBM is in Decline. IBM, under the realm of CEO Samuel J. Palmisano from 2002 – 2011, doubled earnings under a plan called Roadmap 2010 and is on schedule for a repeat with Roadmap 2015. This extreme focus on profitability and wooing investors has left a trail of wreckage for new CEO Ginni Rometty, who, inexplicably, seems committed to follow the same path. Catastrophe may be looming for one of America’s greatest brands. The singular and narrow focus on quarter over quarter, year after year earnings may not be sustainable in the long term. There are many cycles in the economy and in business that may not fit this smooth curve approach. Also, while meeting short-term profit goals, IBM is paying the price in terms of low employee morale, suffering customer service, lack of innovation and lagging technology.

Understanding SaaS: Why the Pundits Have It Wrong. At the other end of the spectrum, there are many SaaS companies or cloud providers that lose more money annually than they earn in revenue.  One example is, one of the early pioneers (founded in 1999) of cloud-based CRM systems.  They incurred a net loss over the past couple of years due to their focus on growth rather than margins. It’s a vicious cycle: to fuel growth, they spend a lot to acquire customers, which negatively impacts margins. See Salesforce Q1’15 Earnings: Revenue Growth Strategy Continues To Trim Margins to learn more.

Tech companies like spend more on marketing than they generate in revenue. has the dubious distinction of having a financial profile that it is out of line even compared to other SaaS companies. THE BOX IPO ANALYSIS: This Company Is Burning Twice As Much Cash As Any Comparable Company is enlightening. Customers and employees alike will pay a significant price if one of these companies implodes. 

What is the right balance?  How do mature companies continue to fuel innovation and growth while also serving their shareholders?  How do you allocated monies in your budget for innovation and growth while also delivering bottom line results?  Is there a balance of investments in people and customers to achieve long-term sustainable success?

A moderate approach that may serve both maverick and mature companies equally well is based on the patient use of capital and a balanced portfolio. Companies that plan seeds now for growth that will be ready for harvesting in three, five or ten years will experience some ups and downs, but the overall trend will be positive.

In the end, only time will show which path is sustainable.