User co-op shares intellectual property to reduce IT costs

Last week I wrote about the growing trend of IT departments taking control of their own fate.  From asserting more influence over software contract negotiations to shunning commercially developed software, IT is enjoying a bit of “power to the people.”  One of the more interesting programs I mentioned is Project Avalanche.  If you’ll pardon my use of an over-exposed phrase, I believe this is a real paradigm-busting concept that is worth further investigation.

Project Avalanche is officially called the Avalanche Corporate Technology Cooperative.  The organization describes itself this way:

“The Avalanche Corporate Technology Cooperative is a for-profit initiative, chartered by a group of companies, to reduce the cost and increase control over mission-critical software.  Members of the Cooperative share intellectual property and collaborate on projects that generate intellectual property.  Our subscriber agreement enables intellectual property to be shared by and between the Cooperative and our members, and collaborations to be pursued, without legal liability risks.  The Cooperative was incorporated under Minnesota Cooperative Statute 308B.  Consultants, as well as hardware and software vendors, may also become members.”

When I first read about this in “The Wall Street Journal” a few weeks ago, I had one of those “ah ha!” moments that told me this is going to be big.  Andy Grove of Intel calls moments like these “inflection points” – times when the IT industry takes a big turn in a new direction, and we just don’t know it yet.  As the Journal put it:  “If their Project Avalanche is a success, and it’s hard to imagine it failing, it will be the biggest thing to hit the technology scene since open-source software like Linux. And just as with Linux, Avalanche threatens to be enormously disruptive to many of the tech industry’s big players.”

While the executives at Microsoft, Oracle and other big software companies probably aren’t losing sleep yet over Avalanche, the potential is there.  It took Avalanche three years to get all the legalities of sharing intellectual property figured out, but now that it has, the cooperative is ready to roll.  (Look how long it took Linux to gather momentum.)

Avalanche is the brainchild of two corporate IT executives:  Scott Lien of ePredix, and Andrew Black of Jostens.  Both men lead computer operations at their respective companies.  As they talked one day about the power that big commercial software companies hold over them, they thought, “Why don’t we do it ourselves?”  With the backing of other big-name companies (Best Buy, Cargill, Medtronic and others), Lien and Black moved to establish the legal entity that Avalanche is today.  The group hired a CEO and hung its shingle out for business.

Member companies pay $30,000 a year to the co-op’s kitty.  This entitles them to the full use of all intellectual property under the co-op’s control at no additional cost.  Avalanche’s Web site describes the intellectual property in this way: 

“The software we focus on ranges from tools and utilities to full applications.  The primary focus will be on horizontal infrastructure and business applications that many companies would have a need for.  However, software is not the only IP that will be shared; any IP that corporate IT uses can be shared.  For example, project plans, code templates, standards document, and estimating tools are all examples of IP that the Cooperative members are sharing.”

The Web site cites one instance where a member company saved $30,000 – the price of admission – by using a project plan for upgrading Oracle software in the enterprise.  The plan had already been field-tested by the contributing company, so they knew what worked well and what didn’t.  Think about how many times your own company has to start from scratch to build plans for an enterprise roll-out of a new applications, or a wholesale migration from, say, Windows 2000 to Windows 2003.  Extensive plans like these take many manhours to develop, and you don’t know the shortcomings until you get into the execution phase. 

Though it comes from humble beginnings, Avalanche expects to grow its membership ranks to include hundreds of corporations, consulting services providers and even hardware and software vendors.  Maybe your company could be one of them.

Linda Musthaler is vice president of Currid & Company.  You can write to her at mailto:Linda.Musthaler@currid.com