NexInnovation’s John Kelly enters CIPA Hall of Fame

John Kelly may know and understand failure, but Canada’s oldest IT awards program recognizes nothing but his success after more than three decades in the industry.

Kelly, 64, was inducted into the Hall of Fame at the Canadian Information Productivity Awards (CIPA) Tuesday night. His career

includes the development of many well-known Canadian IT companies, including SHL Systemhouse, JetForm, Why Interactive and NexInnovations, where he remains chairman.

Despite the high praise from his peers, Kelly admits starting new ventures comes with its share of risks.

“”The reality of failure is always going to be there,”” he said. “”Failure may be necessary in the development of full capability . . . what we try to encourage as an industry, relative to innovation, is stretching.”” spoke with Kelly Wednesday about his career to get some advice for future CIPA Hall of Fame inductees. When you were listening to the various projects that won CIPAs, what ran through your mind about how IT management has changed?

John Kelly: In my brief thank-you remarks, I reflected on my first startup in high tech in 1969, with a company called Alphatxt. We were offering word processing services from a service bureau environment over telephone lines to dumb terminals and we would print the output at our offices and send them by messenger to our customer, who would then re-edit them through this telephone connection to our mainframe. The stories last night of how technologies had advanced and the mobile technologies really showed the leap forward from 1969 to 2004 in a very dramatic fashion. It was a good context, quite frankly, for my thinking about the last 35 years, and how pervasive IT has become. I remember trying to explain to people what our startup was doing. That would take literally hours because most people didn’t know what a computer was. Certainly the context of the convergence of telecommunications and IT had not even been considered.

ITB: You’ve helped build a lot of companies. Does it get easier now that the market is a bit more technology-savvy?

JK: I think that entrepreneurship will always have challenges. While there are lots of good and exciting applications of technology, there are more and more people chasing that opportunity. I don’t think that a startup is ever easy, however through knowledge sharing and learning what others have done, you can always be better prepared and develop better strategies, if you like.

ITB: Being a good entrepreneur means being able to identify the right market opportunity. How do you know when you’ve found a winner?

JK: This is trite answer, but it’s when you have happy customers who are paying full value for a product or service. To be making money with unhappy customers — that’s not going to last. I think it’s a combination of satisfied or excited customers, and that you’re viable from a financial point of view.

ITB: The venture capital industry in Canada has often been criticized for a lack of confidence in technology. Do you see any signs of that changing?

JK: I think that it has, like most things, gone in cycles. Early on, at least in my career, finding financing for startups in the IT industry was very, very difficult, because nobody knew about it and angels were not very common at that point. I think since the mid-70s, that has changed, in that there are more angel investors or early-stage investors. But I’m very concerned at the current time, because angels have not been well-rewarded over the last couple of years due to a lack of IPOs. When there’s no liquidity event, there’s nothing sort of keeping the pump going. I’ve invested in a fair number of early-stage companies, and I can barely remember the last liquidity event. As you know, the second-rounders have gotten better deals than the first-rounders, which has further discouraged angel investment.

ITB: We’ve gone through a major downturn in this industry. For young people who have entered the IT industry more recently, what advice do you have to help them survive the occasional slump?

JK: The key issue patience and perseverance. You can’t force-feed some of these problems. And doing that on a realistic basis. It may not be that your idea has no merit, it’s just that the market has been in a downturn. When you don’t see a solution is when you should perhaps abandon (a startup). It’s like the old saying: “”When a horse is dead, dismount.”” I sometimes wish that in some points in my career I would have remembered that (laughs).

ITB: You’ve provided products and services to a lot of IT managers and CIOs. How have you seen that role evolve?

JK: The day of the pure technologist, even controlling the IT industry, is past. I think most people within the industry are more holistic in their thought processes, and realize that business outcomes and total cost of ownership and these issues are actually real and important. But I think, by the way, the change in makeup of the CIO in terms of his or her credentials, has matched the industry itself. There’s a recognition that the traditional IT manager dealing with a black box in a glass-enclosed room — I think we’re way past that.


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