Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • A dog fight in the clouds

    A dog fight in the clouds

    “Productivity is our life blood,” says John Case, Microsoft’s Corporate VP for the company’s Office product line. “It’s part of the company that we say is our mission.”

    Case was speaking at a media briefing ahead of Microsoft’s launch of their Australian Cloud Solution Provider program for resellers with the company making the case for integrators and IT support businesses to sell the Microsoft Cloud Services.

    For Microsoft this is part of the evolution from the 1990s “PC on every desk” strategy to a mobile and cloud first service.

    This shift doesn’t come without pain for Microsoft and it’s resellers, the cloud is a fiendishly competitive space with Amazon regularly dropping prices and Google steadily eating into the productivity suite market.

    Making matters worse for Microsoft are that Google are moving into their hosted server space with the announcement that Google’s Cloud Platform now supports Microsoft Server.

    Case though is sanguine though about the threats from Google, particularly the increased commissions being paid to resellers which will only put more pressure on Microsoft as resellers consider the options.

    Probably the toughest part of the shift for Microsoft are the reduced margins – although for resellers the change is far more wrenching as the profits from cloud services are far lower than installing servers.

    For Microsoft the key to success in the cloud depends upon the confidence of customers; security and trust are going to make and break all cloud services, something that Case acknowledges.

    Ultimately though Case sees Microsoft’s network of resellers and partners as being the company’s best defense against Google and the shift to the cloud. Whether that network is strong enough to overcome a structural shift in the market place remains to be seen.

    Productivity may be the lifeblood of Microsoft’s business but as margins erode, it may be that that market is not longer lucrative enough to sustain a $400 billion dollar business. Microsoft’s fight for survival is on in the cloud.

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  • The incredible declining IT services industry

    The incredible declining IT services industry

    Earlier today I was at a media briefing with Microsoft describing their move to cloud services. Among the various case studies were two principals from IT support companies describing how the online products were good for their businesses.

    The truth is there is little good news for the industry — the IT support industry in the US has shrunk 1.2% each year for the past half decade and the prognosis is things aren’t going to get any better.

    It’s been two major factors that have hurt the sector; the first was the end of the PC upgrade cycle upon which many support businesses based their models while the shift to the cloud has reduced the need for inhouse servers.

    While many companies, like the two profiled today, have switched to reselling cloud products they are finding the margins on both the products and the associated services are nothing like those of the old PC and server business.

    Overall it’s a tough place to be and the companies that do survive will be nowhere near as profitable as their equivalents two decades ago. It’s one of those businesses that’s doomed to decline.

    All of us need to think if our industry could be like the PC repair business. If margins are collapsing due to technological change, then you need to get out.

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  • A need for cultural change

    A need for cultural change

    On Sunday the Murray Report into the Australian Financial System was handed down with a range of recommendations on ensuring the stability and future of the nation’s banking and finance institutions.

    Choosing David Murray, the former CEO of the nation’s biggest bank, was controversial but it turns out he and his team have delivered a sensible overview of the opportunities, risks and challenges facing Australia’s financial sector and economy. Many of the recommendations though require a change in both the culture of banks and that of the country’s population towards investment and savings.

    A key part of the review is identifying the lessons learned from the Global Financial Crisis of 2008 in an attempt to reduce the country’s vulnerability to external economic shocks and limit the taxpayers’ exposure to any consequential bank failures.

    In proposing ways of strengthening the nation’s banks against similar future shocks The report identifies a cultural problem in the finance industry.

    Culture of financial firms

    Since the GFC, a persistent theme of international political and regulatory discourse has been the breakdown in financial firms’ behaviour in failing to balance risk and reward appropriately and in treating their customers unfairly. Without a culture supporting appropriate risk-taking and the fair treatment of consumers, financial firms will continue to fall short of community expectations. This may lead to ongoing political pressure for additional financial system regulation and the undermining of confidence and trust in the financial system.

    Interestingly, exactly this sentiment is echoed by last week’s World Of Business on BBC Four where host Peter Day reported from the recent Drucker Forum spoke to various economists, bankers and market commentators.

    Breaking the debt culture

    A key point raised in Day’s story was best expressed by Gary Hamel, Management expert and professor at The London Business School who said; “I think what the global financial crisis revealed — in addition to a lot of mendacious bankers who had lost touch with their social role — was the fact we’d been sustaining living standards through debt. I think that overhang is still there.”

    The Global Financial Crisis was a warning the late Twentieth century model of using debt to sustain living standards was coming to an end, of all the western countries Australians had been one of the most enthusiastic nations about using debt to underpin consumption and that debt obsession had allowed the nation to skirt the worst of the GFCs effects.

    With personal debt still at astronomically high levels it’s unlikely Australia will be able to avoid the next global financial shock and part of Murray’s recommendations are aimed at making both the economy and the banking sector more resilient to those shocks.

    A fall in income

    For the bankers this means lending less money and stricter financial controls; it almost certainly will mean their incomes will fall and it will be harder for millions of Australians to borrow money for easy speculation in the property market.

    Creating a more resilient economy will take a culture shift in more than just highly paid bank staff, it will require a change in the way all of us think.

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  • Protecting the world’s soil

    Protecting the world’s soil

    One of the speakers at the recent Economist World in 2015 event in Sydney was National Geographic photographer Jim Richardson who described the challenges facing the world’s agriculture industry.

    Much of Richardson’s presentation was taken from his series of photographs featuring farmers with their soil and National Geographic’s Feeding Nine Billion People feature.

    A striking comment Richardson made in his presentation was how a poor rice farmer in South Asia is actually able to feed from people from their small landholding than a US broadacre farmer. This speaks volumes about how we’ve organised our food supply chains and raises questions on how sustainable our practices are.

    In Agriculture, as in many other fields of our life today, we’re looking at major changes to the way we organise production and distribute goods. Richardson’s presentations are well worth considering in how the western world maintains it’s own standards of living while the rest of the planet looks at how it improves their’s.

    Despite being essential to our very lives, the quality and availability of arable soil is one of the most neglected aspects of our global development. Jim Richardson’s photos remind us of its importance.

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  • Uber’s ride into the future

    Uber’s ride into the future

    Having just raised $1.2 billion in funding, Uber’s CEO Travis Kalanick has written of the company’s next steps.

    Kalanick flags the Asia Pacific as being the focus for the company with the latest fund raising which values the business as currently being worth over forty billion dollars.

    That valuation is a massive achievement for a five year old business, with the growth pains involved being one highlighted in Kalanick’s post.

    This kind of growth has also come with significant growing pains. The events of the recent weeks have shown us that we also need to invest in internal growth and change. Acknowledging mistakes and learning from them are the first steps. We are collaborating across the company and seeking counsel from those who have gone through similar challenges to allow us to refine and change where needed.

    One of the big challenges for a high growth business is managing that growth; systems that work well for a ten person organisation with a few hundred clients fall over when you have a hundred staff, thousands of contractors and millions of customers.

    Probably the biggest challenge for businesses like Uber is privacy; what’s clear is the ‘God View’ that allowed the company’s staff to monitor customers and drivers has been abused and is too easily accessed by employees. Tightening data security is going to be one of the major tasks for business.

    Fortunately, taking swift action is where Uber shines, and we will be making changes in the months ahead. Done right, it will lead to a smarter and more humble company that sets new standards in data privacy, gives back more to the cities we serve and defines and refines our company culture effectively.

    ‘Giving more back to cities’ flags what could be a new strategy for growth in places where regulators and governments have been hostile to Uber. One of the reasons for Uber’s success in Sydney for example has been the utter disgust the general population and business community has for the local taxi companies, showing Uber as a good corporate citizen could help in more hostile European markets.

    While Kalanick identifies the Asia Pacific as being the big growth market he doesn’t identify in what fields; it’s hard not to think Uber’s software has more potential in logistics than hire car dispatch and this is an area where the company could find more  opportunities to expand the company’s services.

    Regardless of the direction Kalanick decides to take Uber, the company is cashed up and ready to expand. As long as management keeps the confidence of investors, the business’ fate is in it’s own hands.

    Uber is probably the most fascinating and complex of this generation of tech startups, Kalanick’s post shows it’s story has a long way to play out.

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