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Calling All Entrepreneurs: California Needs You

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In my last post, I discussed how the gap between the web and enterprise-computing worlds has narrowed. Some of the Valley’s developers are now building web-based systems that make old-world transaction processing seem like child’s play. After all, Twitter processes more transactions per day (in the form of messages) than the systems of many large corporations process in a month. Applications that would take years to design and develop can now be built in weeks.

I called on Silicon Valley entrepreneurs to rescue the California government—to help rebuild its legacy systems. I also went out on a limb and “bet” that an unemployment check-processing system that California State had budgeted $50 million to upgrade could be rebuilt from scratch for a tenth of the cost, in a fraction of the time.

To my surprise, Joanne Moretti, Senior Vice President of Product Marketing at software giant Computer Associates, posted comments saying I was naïve and clueless. Her demand: “don’t kick something you know absolutely squat about”. It was clear that my post had angered her. But what I think was behind these comments was the need for her to defend her aging product stream. She claimed that CICS/IMS (tele-processing monitors developed in the ’60s), “are two of the fastest transaction engines in the world, and could very well be valuable pieces of a well designed well integrated environment”. (Joanne, no hard feelings, but I don’t think that you’re going to sell any CICS/IMS systems in the Valley. And please ask your CEO, John Swainson, about my background. During his days at IBM, he licensed my technology to provide the backbone for IBM’s large-scale client–server systems-development tools).

But on the flip side, two entrepreneurs agreed to step up to the challenge. Jeff Whitehead, CEO of Real Time Matrix (who I had mentioned in my post), wrote:

We accept the challenge.

Real Time Matrix will make a $5 million bid to produce a 100% non-proprietary system to process California’s unemployment checks upon receipt of detailed specifications, and we’ll deliver the solution in less than a year.

I invite the State to reach out so we can help to free you from the strangle hold that companies like CA [Computer Associates] have been exerting. We’re here, able and willing to help.

Disclosure: Jeff worked at both of my startups. He has a reputation for delivering more than he promises. So I take his words very seriously.

Another entrepreneur who agreed to take the challenge is Scott Broomfield, CEO of Veeple, which provides cloud-based online video support. Here is part of what he wrote:

I will also rise to the challenge (along with Jeff) of delivering a solution to process CA’s unemployment checks, subject to seeing the detailed specification for $5M within one year of the sign-off of the system spec or FRD.

Note the qualifier in my acceptance of the challenge; that we could do it within 1 year of the time the FRD (Functional Requirements Doc) is signed-off. We would build it using COTS tools and databases and deliver the solution securely in the ‘Cloud.’ As some have noted in this amazing thread, often the issue with time and cost has more to do with government processes and regulations than with the technology. That said, as long as we have access to the State’s databases and as long as we can read AND write to those databases, we will do it for $5 million.

Scott is rightfully nervous about government bureaucracy. But he and his CTO, Craig Sproule, too have a solid track record of building large-scale enterprise systems. I believe they too can deliver what they promise.

To be clear, we’re talking about a system that processes payments for fewer than 1 million individuals. One reader wrote that he believes he could run the entire system from his laptop (and fit the database on a 32GB flash drive). I’m sure the system is much more complex than this. But I have little doubt that a new, stand-alone system could be developed for less than $5 million. I suspect that Jeff and Scott see this as a good alternative to raising venture capital and that that’s why they’re throwing their hat in the ring.

Does anyone else want to bid? Do I hear $4 million? ….

I also wanted to reach out to California State CIO, Teri Takai, and CTO, P.K. Agarwal. Teri/P.K.: I know you’re doing your best to modernize the legacy you inherited and that you have made great progress. How can we balance the scales so that entrepreneurs like Jeff and Scott have a chance to take on the giant state contractors who win all the bids and reap the fortunes? I think you’ll agree that we can save taxpayers many hundreds of millions of dollars and greatly improve public services if we get this one right.

Photo credit: Flickr/Matthew Smith.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

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