Paul Wallbank | Paul Wallbank - Communications Professional

Reinventing point of sale

Cloud and mobile devices are changing retail systems.

One of the banes of running a business computer support organisation were cash registers.

Retail Point Of Sale (POS) systems were almost always arcane, clunky and difficult to maintain, at PC Rescue we dreaded a call from a shop, pub or hairdresser having problems with their registers.

Frequently this was by design, the POS system supplier would try to lock in their business customers into expensive support contracts.

By making it difficult for anybody without intimate knowledge of the product to actually do anything with it, the retailer was stuck having to hire overpriced custom support.

To make things worse, many of the POS systems ran on outdated hardware which offered the suppliers another opportunity to hit their customers (victims?) with high support costs.

Since the iPad was released, I’ve been waiting for an application using cloud services for a back end that challenges the existing Point of Sale systems and today US online payments system Square has announced their Square Register app.

While only available in the US, Square has been setting the pace for physical payment systems like taxi fares and coffees using online technologies so it’s hardly surprising they are leading this push.

The iPad as a cash register is a logical step for the device and tied in with a robust Point Of Sales platform behind a simple to use app, it will probably make a huge dent in the point of sale market.

It may be the Square service won’t be the point of sale leader – Square is more a payments service than retail platform – which means this field is way open for some savvy operators.

One of the concerns with the Square service, and any iPad based application, is the spectre of vendor lock-in. Being fixed on the iOS platform means there is a risk of being held hostage to Apple’s business plans, also being locked into Square’s payment systems may not be the best choice for many merchants.

The payments and point of sale industry is another that’s being radically changed by mobile devices coupled with cloud computing. It’s not a time for incumbents to rest on their laurels.

When tails wag dogs

Have essential functions taken over business?

A recent Business Insider examination of how patent “aggregator” Intellectual Ventures works is a good example of one of the problems in modern business – essential ancillary processes have overtaken doing business itself.

Intellectual property rights are an important part of doing business, however what should be an adjunct to doing business has consumed many enterprises.

As the Business Insider article point out, Intellectual Ventures has become some sort of modern day privateer, extracting loot from hapless companies that cross its path.

This problem with intellectual property is part of a larger problem with lawyers, where they have been given too important a role in business.

In any civilised society lawyers are essential and carry out an important role but in western society over the last fifty the scope of the legal system has expanded so dramatically that now the legal tail wags the business dog.

Today company directors, business owners and entrepreneurs live under the shadow of breaching some obscure law that they had no inkling existed. Of course, the lawyers can help with this.

A similar thing has happened in the financial world, accountants have also moved from being an essential adjunct of business into being at the centre of most enterprises.

Much of this explosion in lawyering and accounting has been due to the increased role of government in our lives; each time a new law or regulation is enacted it makes it harder for the average person, or business owner, to understand the system.

A cynic can argue this is by design but most government actions are intended to address some injustice or flaw in society. The problem is there are always unintended consequences.

One can also argue that the increased growth in business overheads like lawyers, accountants and patent attorneys is because of fat, prosperous business conditions.

So maybe what western business has seen in the last fifty years has been because of a favorable market place; politicians have introduced a morass of often contradictory financial and legal rules because they know business, and society, can afford it.

Now times have changed and both business and society can’t afford unnecessary overheads it will be interesting to see exactly how our laws and regulations evolve to respond.

Maybe they won’t and we’ll see a black economy develop where whole groups of society ignore the rules, dispense with lawyers and accountants and hope for the best. This would not be good.

Possibly we’ll see legislatures and courts winding back and reigning in some of the more silly and egregious excesses as they recognise society can’t carry the burden and remain productive.

Whatever happens we can be sure the lawyers, accountants and people like Intellectual Ventures will fight hard against any change that reduces their status and income.

Irrelevance and the media

Real problems are ignored as the big boys play games

It’s a shame we weren’t around when dinosaurs became extinct. Then again, maybe we are.

News Limited business commentator Terry McCrann writes about the “Bleakest of views from the shopfronts” in his Sunday column describing the problems of retail.

All of the problems Terry cited are from big retailers – Woolworths, Dick Smith, Harvey Norman and JB HiFi. To make it clear he was talking about corporate issues there’s even a reference to General Motors.

Nowhere does Terry talk about smaller businesses or those challenging the big guys, folk like Ruslan Kogan or the Catch of the Day team. It’s all about the big end of town.

Terry’s article illustrates the problem of relying on incumbent mainstream media commentary; that it is Big Media talking about Big Business and Big Government.

“Small”, “ordinary” or “average” has no place in their conversation, if you can call the pronouncement of mainstream media commentators a conversation at all.

We can understand this – for a journalist, it’s good for the ego and career to look like a “heavy hitter” in big business. For the politician, small business and community groups can’t pay the speaking and consulting fees paid by corporations to supplement their meagre retirement benefits.

Increasingly what happens in the corporate board rooms or the once smoke filled rooms of political caucuses is out of touch with the real world.

This has become particularly acute since the responses to the 2008 crash proved to the management classes that their bonuses and perks will be protected by government bailouts regardless of how many billions of shareholder wealth they manage to destroy.

In the United States we see this in political controversies being focused on contraception – an issue settled forty years ago – while the country faces fundamental challenges to its economic base and the basic welfare of its citizens and industries.

While in Australia the media ‘insiders’ rabbit on about pointless internal party politics and soothing articles on how everything else is fine, we just need to be more optimistic. Yet the real questions about how we take advantage of the country’s greatest export boom, position the economy for the next 50 years and the nation’s dependence on the Chinese economy are being ignored.

Terry McCrann’s story is emblematic of just how out of touch Big Media, and their friends in Big Business and Big Government, are with the real world.

All we can do is let them get on with it and not take them too seriously.

Why we should give Gerry Harvey a break

Big retail’s problems could be ours as well

Gerry Harvey’s been having a bad year. This time last year he was moaning about the Internet stealing his business and now his profits are down.

In Mark Fletcher’s Newsagency Blog, Gerry gets a serve for dragging the entire retail channel down.

Mark quite rightly points out that Gerry’s problems are of his own making and his chain’s difficulties aren’t necessarily those of the rest of the industry or even shared by individual franchises within the Harvey Norman group.

While I’ve been as critical of Gerry as anybody else, maybe it’s time to give him a break.

It’s worth considering how Gerry made his billions. When he started in business in the late 1950s, it was tough for the average person to get credit. At best working families could get something put aside at the local store or enter into an Encyclopedia Britannica style subscription plan.

Gerry and his generation of retailers changed that. They made credit available to the masses who could suddenly afford to buy household appliances and electrical goods without years of savings.

I remember my parents buying things from Norman Ross, Waltons or the ACTU’s Burke Street store (Bob Hawke once stepped on my mum’s foot while she was shopping for a sofe) because working class people could get credit there.

Gerry was at the beginning of the consumer revolution that defined the second half of the Twentieth Century.

In the late 1980s financial deregulation changed the game again and Gerry’s business took off as credit became even easier to get with new providers entering the market. First we saw three month interest free offers and by the mid-2000s six year interest free deals were available.

These deals were so good that Harvey Norman franchisees often made more money selling the credit deals than on the actually product that the ‘no interest’ loan had been taken out to buy.

For Gerry, this was insanely lucrative as his business was able to clip the ticket at almost every level of the retail and distribution chain while moving much of the risk and capital cost onto franchisees and landlords hungry for high traffic anchor tenants.

In 2008 this entire model changed as the credit boom came to a crashing halt and consumer spending with it.

Business models based on cheap credit now have to find something else that works and this is what Gerry Harvey is now struggling with.

To complicate matters, the Internet has changed the distribution model that worked for Harvey Norman and other bricks and mortar retailers. All of them are now having to make a major shift in the sales cultures.

Adapting to this new world is tough for everybody and we should have some sympathy for Gerry Harvey as our businesses and jobs are being affected by exactly the same forces.

How Gerry adapts, or doesn’t, could be a bellwether for our own industries.

The clique

Who is putting your interests first?

A Fortune story about the inner workings of social media service Facebook reportedly claims the business is increasingly dominated by friends of the Chief Operating Officer.

On Sheryl Sandberg and the circle of friends she has brought into the company: “There’s a term spoken quietly around Facebook to describe a cadre of elites who have assumed powerful positions under the leadership of Zuckerberg’s chief operating officer: They’re FOSS, or friends of Sheryl Sandberg.

Most tellingly is the quote, “‘You can’t really cross a FOSS,’ says one former senior manager.”

While this may not be true at Facebook – the reporters are quoting anonymous sources so their story can’t be taken as gospel – when a small, interconnected clique runs an organisation things usually don’t turn out well.

It’s bad enough when it’s a government agency like a police force or a not for profit like a charity, but in big and small business things are usually worse.

The main imperative of clique is to protect its members regardless of the damage they do to their organisation or even the global economy, as we saw in the banking crisis of 2008.

Inside the clique, you often have incompetence, corruption and almost always a strong thread of nepotism. None of this makes for an effective organisation or efficient business.

As investors, employees, suppliers, customers and taxpayers we have to be on guard against these cliques as they rarely act in the interests of those outside their circles.

It may not be the allegations at Facebook are true, but this is happening at other organisations right now. It’s probably happening in your government as well.

Omni Channel Buzzwords

Can nice phrases save a declining business?

Retailer entrepreneur Gerry Harvey yesterday unveiled his strategy to arrest the declines in his home goods chain’s sales.

One of the key points in his investor presentation was “continued investment in strengthening our Omni channel strategy”.

When asked exactly what an “omni channel strategy” is, Gerry reportedly admitted that until last week he had no idea what it was.

For an entrepreneur whose business model is suffering badly in the face of changed markets, Gerry seems to be remarkably flippant about how he and his team are going to react to the challenges.

Gerry lack of understanding is bad news for his team, because appears there is no management commitment to the major changes Harvey Norman, and many other incumbent retailers, are going to have to make in order to recover the sales and margins they have long been used to.

The “omni channel strategy” is an interesting beast, which was described by Myers CEO Bernie Brooks last April on ABC’s Inside Business.

We’re building our own omni-channel approach, which will include everything from kiosks in store right the way through to being able to provide very good office online up to 250,000 items, free delivery.

What’s interesting with the retailers’ talk of “omni-channel” is the talk of service. Both Myer and Harvey Norman claim customer service is the centre of their strategy but their emphasis in the past has been to reduce customer service.

The reduced emphasis on service has been part of the decline of the both chains; Harvey Norman could get away while consumers were happy committing to “no-interest for 72 months” finance plans, while Myer steadily declined as their key difference with discount chains like K-Mart and Target was eroded.

Hopefully both Gerry Harvey and Bernie Brooks will get their omni channel strategy strategies working, though it will be interesting whether both can get their management teams to re-discover the meaning of “customer service”.

Without getting the service right, their “omni channel strategies” will just appear to be another management buzzword in a declining business.

Competing in a high cost world

Business can compete when costs are high and currencies are strong

It’s often said that Australian businesses can’t compete and the nation can no longer can support manufacturing or high tech industries.

With the high Australian dollar, many economists, business leaders and politicians have said industries have to adapt to being an expensive economy. Interestingly, few of these experts explain how businesses should, or can, adapt.

At the recent Kickstart forum I had the opportunity to meet two Australian companies succeeding with high tech products and using the high dollar to their advantage.

David Jackman of Pronto Software, a thirty year old business intelligence company, is proud of the fact the business he leads does most of its development in Australia. As business owned by it’s employees – Pronto had an employee buy out in the late 1990s – he sees his role as building the business to last centuries like some European businesses.

Linus Chang developed his Melbourne based business, Backup Assist, when he discovered the data backup tools built into Microsoft Windows weren’t very good. Taking the basic Microsoft products, he added the features that made these tools usuable at a fraction of the cost of bigger companies’ data backup software.

Today Backup Assist is sold in 124 countries with the US as the biggest market.

Both Backup Assist and Pronto find keeping the bulk of the software development in house in Australia makes sure they are producing high quality, effective products.

Software development isn’t the only sector dealing with the high cost evironment, David Jackman says Pronto has many customers in the Australian manufacturing industry who have adapted to a high cost environment with niche and high value added products.

Identifying these opportunities is where the challenge lies; what do our businesses do well that customers in international markets are prepared to pay for?

We also have an advantage in being a relatively open economy with first world standards. This is another reason why investment in new infrastructure like the National Broadband Network is important.

One thing is for sure, selling low priced commodity products with small margins is not where the future lies, even if the Aussie dollar collapses.

We have success stories and businesses adapting to being a high cost economy, it’s a matter of understanding how our industries can add value while do this.

Understanding the virus epidemic

Computer viruses, malware and Trojan Horses are evolving in an era of social media.

Researching last weekend’s post about the Mac Flashback Trojan, I stumbled across a bunch of articles referring to John Gruber’s 2011 “Wolf” post looking at nearly a decade of Mac malware security false alarms.

One of the rebuttals titled Hey Gruber, You Might Want to Reconsider Crying Wolf is typical, stating;

Fact is that the day will come when Macs, iPhones, iPads become equal opportunity targets for malware and all those other nasties out there and no amount of quote stuff into a quasi post by John Gruber will change that.

Nine months after that article was written the Mac malware tsunami is still being breathlessly awaited for by the Big Target school of security experts. Just as it has been for a decade.

Origins of an epidemic

The theory that the Mac, along with smartphones, tablets computers and Linux systems, were spared the virus epidemic that plagued Windows users last decade is a based on a misunderstanding of the problem.

What caused the Microsoft malware epidemic was laughable security in Windows 98, ME and the early versions of XP.

Users running Internet Explorer with no firewall in Administrator mode – which is how these versions came out of the box – could be infected in minutes. I once saw a Windows XP system infected within six seconds of going on the net, although that was partly because of the ISPs lousy security practices.

Despite the fantasies of some security “experts”, other software companies like Apple didn’t follow Microsoft’s lax security attitude of the late 1990s.

Microsoft itself has moved on. After Bill Gates’ Trustworthy Computing memo, the company tightened its security practices and the later versions of XP along with subsequent versions of Windows like Vista were far better protected.

Big target fallacies

This is why we won’t see similar malware epidemics on Windows 7, Macs, Linux, smartphone and tablet computer systems regardless of how big the targets become.

What “Big Target” advocates also overlook is the nature of crime and vandalism; most of it is opportunistic. For every bank that gets robbed by a gang of skilled, patient safecrackers there a millions of old ladies who get mugged for the change in purses.

Yet according to the “Big Target” folk, there should be a queue of cunning bank robbers standing outside every branch because, as Jesse James said, “that’s where the money is.”

What Internet users should understand is the nature of the virus threat has changed, today malware writers are looking at using well crafted social engineering scams that trick us into allowing them access into our systems and bank accounts.

One of the big concerns are rogue apps that plug into our social media services, smartphones or tablet computers – particularly those which ask permission to access our data or share logins.

A great example of this is a reported piece of malware for Android phones that uses fake Facebook requests to trick users into installing it on their phone which will then dial premium SMS numbers.

We are the weakest link

No system is truly secure and usually we, the users, are the weakest point. Serious discussions about computer security look at today and tomorrow’s threats and don’t try to spin past experiences.

The need for speed

What do we need fast Internet for anyway?

I’m at the Kickstart Forum for IT journalists on the Gold Coast this weekend talking to various companies and technology thought leaders on the direction of the industry.

For the forum’s opening keynote, opposition spokesperson and former Optus telecommunications executive Paul Fletcher described his concerns about the Australian government’s National Broadband Network.

Many of Paul’s objections to the project are based on the failure of former attempts to build telecommunications networks – citing Aussat, the NextGen fibre network, OneTel and international disappointments like WorldCom and Global Crossing.

The other main concern is that no-one will use it. He cites a Parliamentary committee that where eHealth providers said their service could be adequately provided by a 512Kbit connection, a tiny fraction of the 100Mbit speed promised by the NBN.

Previous failures aren’t a good indicator of the success or otherwise of the NBN, but what’s more important is what a poor job industry’s doing in explaining how high speed Internet can help their businesses.

The big challenge for NBN advocates who believe this project is the essential infrastructure of the 21st Century, is to articulate the benefits and potential. We’re not doing a very good job at the moment.

What’s your view on how high speed Internet can help your business or community?

Pro Bono

Exposure rarely pays the bills.

“Could you write a guest post for our corporate blog?”

“Sure, I’d be delighted. How much are you paying?”

“Sorry, we don’t pay. You’ll be getting a lot of exposure.”

This organisation had a profit of over five billion dollars last year. Imagine how much the outfit would be making if the managers and executives contributed their time for free in the hope of getting some “exposure”?

It’s nice to be recognised as an expert, but if you’re not going to make a living then it’s just an expensive, time consuming hobby.

Navigating the Internet jungle

When we’re in the wild, we need to keep our wits about us.

I usually don’t pay much attention to stories about Apple malware given that most hysterical stories about Mac viruses are written by charlatans spruiking third rate security products.

The story of the Flashback Trojan is an interesting one though, not because the malware is particularly original or that it comes with the usual hysterical claim of being part of the coming wave of viruses that will wipe the smug smiles off Mac users’ facers.

Flashback’s interesting because it combines all the tactics of a modern computer virus or malware, bringing together unpatched vulnerabilities and some social engineering with the intention of stealing user passwords.

These are risks regardless of what type of computer, smartphone or tablet you use. It illustrates how the security risks have moved on since the first epidemic of Windows computer viruses just before the beginning of the century.

Similarly, the motivation for writing viruses and malware has evolved. Where it was once an intellectual exercise for bored, highly skilled young code cutters, today it’s a lucrative criminal enterprise aimed at getting access to victim’s bank accounts and other assets.

Which is the reason why it’s a good idea to have different passwords for various online services – no more using the same password for your online banking, Minecraft and Facebook accounts.

Having the latest security patches installed is also important, particularly with third party products like Adobe Flash, Java or Microsoft Office, so don’t ignore those warnings as a caller to one of my radio slots boasted.

We also need to keep our wits about us online and watch out for the sneaky tricks used to fool us into opening malware, it’s a jungle out here on the web.

The battle for big data

Customer information is now our biggest asset. Are you prepared to fight for it?

Information has always been a key part of doing business – having an intimate knowledge of customers and suppliers is one of the traits of a successful entrepreneur.

As Internet access becomes taken for granted and computer processing power becomes cheaper, the nature of how business data is used is changing.

Earlier this week the iStrategy digital marketing conference was held in Sydney. Much of the talk at the event was about how marketers can use the data being generated by the Web.

At the opening panel representatives from PwC, Google, Expedia and News Limited showed how Internet businesses are gathering data.

Nicholas Chu of Expedia went through the journey of a family to Disney Land, describing how they are integrating search and social tools into the experience of organising a holiday online and catching up with friends.

Lucinda Barlow of Google told the story of how a doting father’s baby photos were saved after he lost his phone, luckily it was all synched in the cloud with Google+ and Picasa services.

All this data is being collated, saved, mined and processed. Companies like Google and Expedia – not to mention Facebook or Apple – see this information as their businesses’ major asset.

One of the other panel members, Stuart Spiteri of News Limited, raised the problem with this when he asked if everybody in the room really understood the consequences of giving their data to intermediaries like Apple or Facebook.

For businesses this is a problem, we’ve become used to the free platforms given to us by Facebook and Google while the easy distribution systems like iTunes mean it’s easier to give Apple a 30% cut than sell products ourselves.

In the travel industry it means Expedia or any of the other dozens of travel planning sites like Tripadvisor or, again, Google know more about our customers and the patterns affecting our business than the local hotel, restaurant or tourist attraction does.

That easy booking service suddenly looks expensive when it becomes clear it could be offering different holiday or meal options to your customer whose likes and preferences it now intimately knows.

When the web first came along many of us, myself included, believed it would get rid of the middle man. We were wrong.

The web has affected the businesses of existing middlemen like department stores, newspapers or travel agents but in their place a whole new group including companies like Amazon, Google and Expedia have taken their place.

Whether these middlemen add more value than ones they replaced will be seen, but we can be certain the new breed are much better at collecting and analysing data about our customers.

One of the big battles for the next decade is going to be for customer data. Smaller businesses may find themselves marginalised as the big Internet companies fight to grab information about consumers.

It’s worthwhile treasuring what you know about your clients and considering exactly which of the online gatekeepers you’re sharing these vital assets with.