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Natural-born entrepreneurs

News Analysis
Jan 20, 20035 mins
Enterprise Applications

IT executives commercialize tools they developed on the job for previous employers.

After successfully developing and implementing a handheld route-accounting application for Millstone Coffee’s delivery drivers, Kirk Wolfe was set to take another job at parent company Procter & Gamble. But Wolfe didn’t want to give up the application that had consumed much of his life for five years, so he resigned to focus on developing similar software for smaller grocery suppliers.

“There wasn’t anything else that enticed me as much as the mobile environment,” Wolfe says.

Wolfe is just one of several former IT professionals who have become vendors by parlaying something they developed in their previous roles into commercial products.

Although Wolfe knew that eventually he would run his own business, the idea didn’t crystallize until he discovered his mobile software niche. When P&G acquired Millstone Coffee in 1996, the consumer products giant put Wolfe in charge of integrating Millstone’s mobile application with its own infrastructure and eventually developing a route-accounting application for the subsidiary.

Wolfe discovered there was a market for similar mobile applications for smaller suppliers while working on the project. He and Phil Lachmann, a contractor assigned to the Millstone project, formed Enterprise Mobility in 1999. Wolfe joined the venture full-time in 2001 after deciding not to transfer within P&G. The two used their knowledge and experience to develop the EMRoute product.

Dave Ziegler, Millstone’s IT manager and Wolfe’s former manager, says his employee’s departure was a “bittersweet moment.” But he says Millstone benefits because it can outsource programming projects to Enterprise Mobility.

Dick Powers is another IT veteran who went commercial. Powers joined the U.S. Navy in 1958. After serving in several senior IT roles, he was assigned to a study group in 1976 to help determine how the Department of Defense could reduce its 34 distribution centers, which handled more than 27 million transactions per year.

Powers couldn’t find the software he needed, so he assembled three academics to research large-scale optimization. The team created a mathematical methodology that chewed through transaction information to determine the Defense Department could reduce its centers to 16, resulting in hundreds of millions of dollars of savings per year.

Although the Defense Department ultimately took 20 years to implement the measures because of what Powers described as “political in-fighting,” he says other large organizations could use the methodology to streamline their logistics infrastructures.

In 1978, Powers and the three academics each put up $10,000 to form Insight and develop the Strategic Analysis of Integrated Logistics Systems logistics modeling tool.

Powers says the challenge of starting a business is educating the market and winning customers. “That’s the hardest part – getting someone to have faith in you,” he says. Powers and his co-founders eventually landed deals with Baxter Healthcare, Mars and Nestle.

Wolfe has found the most time-consuming aspect of running a business is sales and marketing. Recently, Wolfe partnered with a warehouse management software supplier to sell to a prospective customer. Wolfe was confident he’d win the deal until the customer’s warehouse manager vetoed the sale because the PDA that supports the application used a stylus and end users were accustomed to a full-size keyboard. “We were not prepared for that aspect – being tossed out for things like that,” Wolfe says. “You can have good technology, but there is a certain amount of sales and marketing that goes with it.”

Chris Edden is another user-turned-vendor who was surprised at the effort involved in promoting a product. A former vice president of IS at Wachovia Bank, Edden is now business development director at Silas Technologies. Wachovia formed Silas in 1999 to market Reveille, an applications monitoring tool that Edden’s IS team built to use in-house. “It was interesting for me, an IT guy of 20 years, to find myself in a two-hour meeting to come up with an ad campaign,” he says.

Edden says being an IT vendor within a financial institution has unique challenges, such as convincing some line managers why the bank should sell its software to rivals. “If [the rivals] are going to buy a product like ours anyway, why not spend their money with us?” he says. “A more sensitive issue is how to deal with other vendors that may be selling to Silas or Wachovia. When I was a customer, I could ask vendors anything, but now I can’t.”

Some former IT co-workers resented it when Edden and others were given jobs at the spin-off. However, Edden says prospective candidates from Wachovia were told they’d be expected to work as though they were employed at a start-up, with all the associated risks and opportunities.

“Some people joked that the bank took all the weird people and put them in a group so that it could keep an eye on us,” he says. “That may have some element of truth. The people who populate spinoffs have skill sets that may not excel in large corporations, but are effective in small businesses.”

Above all, Edden says he relished the challenge of jumping from an executive IT position to selling. “In some ways it has been invigorating because many IT people love creating and problem-solving, and this provides an arena for a greater focus than in my previous roles,” he says.