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It’s finally official. The US government is now running the two largest mortgage backers. It’s more of a rescue than a takeover, as both institutions were forecast to go insolvent in the coming months. Collectively they back $5 trillion in mortgage debt, about half of the total mortgage debt today.

I was a little surprised when I read the news, as it was looking like Freddie and Fannie might just need a little additional liquidity to operate until the market stabilized. A full government takeover goes much further. To start with, the existing CEO’s of both companies are now removed, and finance heavyweights David Moffett (US Bancorp) and Herb Allison (TIAA-CREF) will be running the firms. Another interesting development is that the institutions charitable contributions will be reviewed.

It appears that the government wants to cut the fat and get these institutions back to doing their core function: providing stability to the mortgage market. All the special terms for acquiring financing may have caught up to the firms, and it once again shows that government favoritism for private entities doesn’t help anyone in the long run.

Watching this all flush out in the coming months will be fascinating. The losers in the end are you and I: US taxpayers. It will likely cost tens of billions before this is all behind us. This fiasco will be another line item on national budget that has an insane negative number with way too many zeros behind it.

Lately I’ve been reading a lot about the recent lack of IPO’s, specifically in the tech sector. There have been only 4 tech IPO’s in 2008. That’s a really low number. Rackspace recently did an IPO, but it tanked. That’s not good news for little tech companies with a big IPO dream they hope will happen in the next year or so.

Most VC’s get into a deal with the hope of an IPO exit. Obviously that isn’t happening. That’s somewhat concerning for young companies like DataSync who need that mechanism to work to keep capital on tap.

It appears private equity has been eating most of the deals. Yes – big, mean, massive private equity firms that will do deals the size of a typical IPO. Is this good news or bad? We think it’s interesting, and not necessarily bad or good. What we do know from our experience in business consulting is that Sarbanes-Oxley is a pretty menacing issue for smaller IPO’s (typical for technology companies). The administrative overhead of being a public company is enough to kill the interest of a lot of companies from undertaking the task.

We think that the market will correct the regulatory requirements eventually, and the IPO market will take a turn for the better. Until that happens, private equity has a bright future in finding value that public investors can’t access.

In my years dealing with Customer Relationship Management (CRM) software, I’ve learned a lot about two highly connected, yet highly diverse areas of life: business and technology.

Naturally I started on the tech side. I came out of the tech field and viewed CRM primarily as technology geared to solve a set of defined requirements. This made my challenge as a CRM implementor simply to execute on the requirements doc.

One problem: there was never a solid requirements doc. Why? Because businesses don’t have a hardline set of rules for running themselves. It’s true: almost every business gets things done by doing them, not figuring out how they actually do things. Almost every business, including our own, is very dynamic and runs on loosly defined proceses.

However CRM runs totally opposite. CRM, in our case SugarCRM, runs on a hardline set of rules for executing tasks and managing information. CRM itself is designed to guarantee that sales, marketing,  customer services processes are run thoroughly and consistently.

Therein lies the issue. Dynamic businesses need defined processes. I have found that the greatest need today isn’t better CRM software or more of it, but instead a complimentary alignment of both systems. CRM must be designed to be loose enough to fit dynamic business. However it must be defined enough to complete business processes accurately and repeatedly.

In my quest to build great software platforms, I am forced to constantly rethink how software is implemented in businesses today. Often software people and business people think very differently, and translating both languages is always challenging. When I completely figure out how both work I’ll let you know

Last week wind energy got another big vote of confidence – T. Boone Pickens. This guy is an oil baron who’s actually putting his money where is mouth is on alternative energy. He’s throwing some dough (right now $2 billion) and a lot of media at the problem of oil dependence. He’s betting on wind as the most viable means to solve our energy problem.

I’m a fan. Maybe it’s because I live in South Dakota where it’s windy all the time, but it just makes sense. Use the wind to turn something, capture the energy generated, and then power the surrounding area without any moving infrastructure. No digging stuff out of the ground, cooking corn that we could eat, or nuclear power plants that tend to leak radioactive uranium.

If I had capital at my discretion I would seriously consider investing in wind. The nation hasn’t really figured out its energy problem just yet, but when we do I think wind will be a big part of it. I actually know a guy who was doing the whole wind thing before it had traction, and he foretold a lot of what’s happening today. He doesn’t see it slowing down, and I don’t either.

I know a lot of people think ethanol is the answer. Ethanol is a good idea, but I don’t think we can grow enough corn and grass to make a significant dent in our energy requirements. Yes, it’s a part of the solution, but I think a pretty small part (under 5%).

So we’ll see if wind does what I think it will. I think you’ll see wind generators dotting the horizon all over the Midwest in the next decade.

Silicon Grassland - Photo taken near Humbolt, SD by Mike Vetter

It’s up! But what is it? Silicon Grassland is a place for cutting edge technology news from the heart of the prairie. I hail from Sioux Falls, South Dakota, not somewhere you first thing of technology. However that’s the irony of it all – we’re living on the leading edge of technology and are located nowhere near Silicon Valley, the traditional place for innovation.

This blog is dedicated to all things relating to technology, business, and open source thinking. I run a tech company called DataSync that builds an open source web platform for deploying business applications. We’re passionate about what we do, and this blog will be heavily influenced by what I’m up to in this venture.

Stay tuned for much about great technology, innovation, and progress.

Regards,

Mike Vetter

Yes, the title means exactly what you read. Less technology is better for small business. Buying and maintaining servers, complicated networks, and worrying about security is expensive and can put a drag on your business. If you’ve had a bad experience with technology in your business, you’re not alone. A typical small business doesn’t have the necessary time and money to build a robust technology infrastructure. The result is a ill-maintained, often crash-prone software system that doesn’t work well and angers its users.

So what’s the solution? Getting rid of internal technology and subscribing to SaaS – or Software as a Service. It’s business software that’s delivered securely over a web browser. All you need is a simple laptop or desktop with an internet connection and a web browser. Tools like financial software, communication tools, project management apps, document management and retrieval are delivered seamlessly through the internet from a secure hosting facility. The tools that power most businesses can now be accessed securely from anywhere you have an internet connection. Because it’s delivered as a service, upgrades are free and included with the package. No more painful upgrades to the newest version that don’t load properly.

This trend is sweeping the industry. The model is built on monthly subscription fee for various tools, and these tools are stored securely in massive redundant data centers. This setup makes software extremely reliable and easy to access from anywhere. The Software as a Service (SaaS) market is forecast to grow to $19.1 billion in the next 3 years – at an annual growth rate of over 30%.

Right now the biggest concern for many businesses is that their information is stored with someone else. The reality is that the data centers used to deliver SaaS are compliant with stringent security standards, and information is vastly more secured than in your closet at work. Multi-site backup systems ensure that data is never lost. It allows even the smallest businesses to feel like a fortune 500 company with bullet proof software systems.

The best part about Software as a Service is price point. Because it’s delivered as a service IT becomes a fixed cost – no big surprises of having to buy a new server when the old one crashes. And for that matter you don’t have to invest $3000 in a server, just pay the monthly fee and have the whole thing taken care of. Most businesses start saving money the first month, and stack up savings as maintenance costs drop and productivity isn’t hindered by outages, backup loss, and configuration problems.

If you haven’t looked at SaaS, I’d recommend checking it out. Quickbooks now has an “online” edition, Exchange alternatives are delivered on the web. Many marketing, sales, and communication tools have web versions that are extremely robust. Overall the need for better tools that are more reliable will drive growth in SaaS in many small business, and maybe even yours.