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IT vendors have spent more time and money helping to inflate the tech bubble than on building succes

Storage Bin: For a few years, the IT vendor world spent more time and money helping to inflate the tech bubble than on building successful products. When the bubble burst, it put us in a hole that we're only now digging our way out of.

Tech bubble behind them, IT vendors are getting back to business

Some called it the "new economy," but in the words of that great social commentator Cindy Lauper ...

MONEY CHANGES EVERYTHING. Remember when you bought a cup of coffee and the lady behind the counter would ask, "Do you want sugar with that and what do think about Yahoo?" Remember when every meathead you met thought they were Gordon Gekko because they'd just parlayed $1,000 into $10,000 by buying into I do. I remember because for a few years the IT vendor world stopped caring about building successful products and companies, and chased the rainbow--which put us in a hole we're only now digging our way out of.

When "How can we spend money faster?" is the most important thing to vendors, R&D will suffer. Who cares about solving problems and creating products when you're in a death match with for that overpriced building near the Highway 101 off-ramp? Isn't it more important to hire people than to have a reason to hire them? We're lucky the tech bubble burst or we'd have the worst product quality since the Russian revolution.

So while would-be CEOs had visions of private jets in their heads--and their brilliant venture capitalists judged them by how much money they could spend in the shortest amount of time--we stopped innovating. We stopped caring about running a sound business, providing a sound work environment and attracting talent.

We certainly stopped caring about the customer, especially since 95% of the rich and famous never had customers. Back then, people went public for zillions of dollars based on the promise of having customers some day.

What we have now is an extended post-bubble hangover. During the bubble's heyday, data rates grew astronomically and never abated. During and after the bubble, our overburdened IT folks were told to deal with more data, while the vendor side of the equation took a three or four year hiatus.

But the bubble is behind us and most of us now realize that we aren't as smart as we thought. The good news is that the remaining vendors have had to go back to basics. They've had to re-tool their "missions" to become viable entities, build products that solve real problems and deliver them in a profitable, sustainable way. Anyone who still clings to the IPO outcome of the past is delusional. Good companies accepted their fate and did something about it.

NSI Software sold tens of thousands of Double-Take replication licenses, yet somehow spent $1.10 for every $1.00 it took in. Not anymore. With a new CEO and a new way of thinking, NSI has been profitable for a while and its prospects look great. Ditto Softek Storage Solutions. It had the luxury of spending Fujitsu's money during the bubble, but it has since spun out. President and CEO Steve Murphy has injected a big dose of reality into the joint, turning the company profitable and cash flow positive, while growing revenue across the board. These are just a couple of examples of folks willing to concentrate on building a business that solves real problems.

My favorite story is about Asigra, a family-owned remote backup company in Canada. For 19 years this father/ son team has only invested their own money in the operation. They bypassed the allure of quick money during the bubble only to withstand the downturn and make money every quarter. Now they can't hire people fast enough to keep up with all the deals going their way. That's a problem we should all be lucky to have.

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