Recap: My Turn at the Kobayashi Maru

Why the end of easy money means higher bills for essential software.

This week has been a masterclass in frustration.

On one side are vendors hiking prices 130 percent or more for the same products we’ve relied on for years, offering little that we truly need in return. On the other side are CFOs and presidents who don’t understand why they should have to pay and who sometimes wonder if this CIO just isn’t very good at their job. And then there are CIOs tempted to make reckless moves to save a few dollars here or there. None of these choices looks like a win. The truth is that many of these vendors are essential, but their behavior doesn’t look like a partnership, no matter how loudly they claim it.

I wonder if this is my Kobayashi Maru test, the no-win scenario from Star Trek, where every option ends in loss, and the only question is how you manage through it.

So what’s happening here? Part of my job is to explain to presidents and CFOs that the answer lies in how the world of capital has changed. The end of the zero-interest rate era means debt is no longer cheap and can’t be relied on to float sky-high stock prices. IT firms are increasingly owned by, or operate like, venture capital outfits that demand guaranteed outsized returns. They cut costs by firing lots of employees while squeezing captive customers for steep price increases. Add in the lack of serious antitrust oversight over the last decade, and the result is an industry where what feels like monopolistic behavior goes unchecked. It seems exploitative because maybe it is.

The only real strategy forward is to change the game. That means shrinking the portfolio, treating some products as Toyota and others as Lexus, and getting out of the on-premises software business without adding new costs or risks. The long-term solution is SaaS cloud providers with ten-plus-year contracts and inflation-indexed increases that preserve predictability. But that world takes time to fully materialize, and we will have to pay more for some things than we would like (electricity, anyone?).

The bills CIOs are paying today may feel punishing, but they’re temporary. The real challenge is to keep the enterprise stable while accelerating toward that cloud future, where the ground rules are clearer and the leverage shifts back toward the institutions.