Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • Why cloud computing isn’t just about savings

    Why cloud computing isn’t just about savings

    “Billions of IT savings in the Clouds” trumpeted the Australian Financial Review last week in a front page article on cloud computing that claimed moving services online could “slash technology costs by up to 80 percent”.

    If nothing else, those lines lead any IT industry veteran to rise a wry eyebrow; a business that adopts a new platform, technology or vendor solely on the claim of massive cost savings is in for a world of pain, disappointment and heartbreak.

    There’s no doubt that cloud computing and software as a service are the IT industry’s growth areas and there are many benefits for the businesses that adopt these technologies. Reduced costs is one of the attractions, but it isn’t the only factor a businesses should consider.

    Other aspects are the flexibility of not locking yourself into specific hardware and technology platforms, reduced capital and labour commitments along with improved security, reliability and data protection.

    This last point is probably the killer reason why you shouldn’t be looking for 80 percent cost savings with any product. As we discussed a while back, to go onto the cloud you have to trust your supplier has the utmost competence and integrity. A provider who offers nothing but slashed costs will struggle to provide peace of mind.

    It’s likely in a few years time only the biggest of the biggest companies will have inhouse IT staff and servers as most business IT operations will run over the internet and through web browsers. Most businesses will think having IT staff on the payroll is as unusual as employing a full time plumber or electrician in the office.

    Although we probably won’t get to bank those savings — as we’ve found with the roll out of IT services in the last 20 years, new industries will develop that will soak up the labour and create new cost centres. While today’s services may be 80% percent cheaper, just as today’s computers and mobile phone are 80% cheaper than those of 20 years ago, we’ll be using other services and the price of those will soak up a lot of those savings.

    A bigger concern is for the cloud and software as a service industries themselves. If online services are identified as merely a cost cutting product, then these markets are going to be rapidly commoditised with a race to the bottom not dissimilar to what we’ve seen in the PC industry. Which will perversely mean security and reliability conscious businesses will keep their IT in house rather than risk it to a cheap charlie data service.

    History’s shown that selling and buying cheap in technology is a mug’s game. So don’t get seduced by claims of ridiculous savings with any technology; be it cloud computing, telecoms services or any other line item. All too often that cheap price or massive saving hides some nasty traps.

    Because of the compelling benefits cloud computing is the way businesses will go over the next few years but those who choose a platform simply because it appears 80% cheaper probably won’t be around to tell us about it.

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  • Does innovation scare customers?

    Read Write Web reports the 2010 American Customer Satisfaction Index found Facebook in the bottom 5% of trusted US companies. The article goes on to quote Larry Freed, CEO of ForSee Results, as saying “it’s clear that while innovation is critical, sometimes consumers prefer evolution to revolution”.

    There’s no doubt Facebook’s many user interface and privacy changes have upset consumers however can this be blamed on “innovation”?

    Perhaps Facebook’s problems were because those “innovations” largely didn’t benefit the site’s users and the few that did were poorly communicated.

    For innovations to be accepted by the market they have to provide some benefit; generally people don’t like change and the old saw “if it ain’t broke, don’t fix it” applies. If something is working fine, then why make a change that isn’t going to benefit the people who use it?

    An overlooked angle with social media platforms like LinkedIn, MySpace and Facebook is how their business model is more like a free to air commercial TV station where the users, or viewers, are not the customers; the advertisers are.

    So to put Facebook’s recent mistakes in context perhaps we should be looking at how their innovations were aimed at improving things for their customers, the advertisers, but had the unfortunate effect of upsetting users who are the reason advertisers buy space on the site.

    Perhaps Facebook’s changes didn’t upset their customers and, given users have stuck with Facebook despite their fall in reputation, it shows their innovations have actually delivered.

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  • How the iPhone 4 could become Apple’s Vista

    Kevin Turner, Microsoft’s Chief Operating Officer, suggested at Microsoft’s Worldwide Partner Conference that the iPhone 4 could become Apple’s Vista.

    That’s a pretty cruel jibe coming from Microsoft, given that Vista was so bad even Microsoft’s own executives struggled with the product and while the iPhone may have problems, they certainly aren’t of the scale faced by Vista users.

    Despite Vista’s flaws, Microsoft’s biggest blunder was pretending there was no problem. For months Microsoft maintained the fiction there was nothing wrong with Vista while customer complaints mounted.

    This is the risk that Apple are now running. Every day they remain silent on the iPhone’s signal problems makes the resolution more damaging and expensive. Some analysts are claiming each week of delay by Apple could cost them $200 million in lost sales.

    Apple need to show they are listening to upset customers and get a fix out now, the simplest and quickest resolution is to admit there can be problems with the antenna and give away free perimeter bumpers, according to Infoworld’s Robert X. Cringely this would cost around $45 million.

    The real damage is being seen as not listening. In today’s economy, not listening to your customers and critics is probably the most damaging thing any business can do.

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  • Preparing for the industries that don’t yet exist

    In 1999, the then Clinton administration Education Secretary, Richard Riley, said “We are currently preparing children for jobs that don’t yet exist…”

    Last week’s COSBOA conference in Brisbane showed another aspect to that statement; in the next decade most businesses will be operating in industries that don’t yet exist and all organisations will using technologies yet to be thought of.

    The day’s conference sessions reflected this with the topics consistentently coming back to technology; for instance, discussions on taxation coming around to e-tax and marketing covering e-commerce and social media.

    In many ways, the emphasis on social media is a bit unfortunate because these tools are really yesterday’s news; Twitter has been available for three years, Facebook for six and blogs since the establishment of the World Wide Web in 1993.

    The mobile Internet, location based services and augmented reality are the current frontier as described by Ben White, Optus’ Director of Strategy and Corporate Development in his keynote to the conference.

    Darren Alexander of Launceston based company Autech emphasised this change later in a later forum by describing how his business has evolved over ten years and where technology was taking regional businesses. If you doubt the value of the National Broadband Network, have a chat to Darren sometime.

    Also on that technology panel Mike O’hagan of mini movers  described how outsourcing and crowdsourcing has changed his, and others, businesses. This is something we’ve covered previously and discussed how this presents challenges to many established businesses.

    While this means we’re in a great era of great opportunity, it’s also a time where the slow movers will fall by the wayside. When nearly 50% of businesses don’t have a website and where retailers are ignoring their customers moving online, you can’t help but think many of these enterprises are heralding their own doom.

    On a national level this is clear as well. While I’ll leave the commentary on the politicians’ promises to small business at COSBOA to others, it should be pointed out that accelerated depreciation and small business ministers in cabinet are nice, but without an overhaul of the tax system that puts investment in Australian businesses and innovation on the same footing as passive investments like housing and shares then Australia’s investment structure is going to remain unbalanced and much of our business and intellectual potential is going to go untapped.

    Australia’s national obsession with property and our dependence on raw commodity exports to finance a private debt habit put us in the same position as the business without a website. We need to be thinking properly about the future and equipping ourselves with the skills to deal with tomorrow’s technologies and the 21st Century world economy.

    While in our own lives and businesses we can’t change national policy, we can prepare for the changes by being aware of the trends, experimenting with them and making the financial and management investment in today’s tools that are creating tomorrow’s industries.

    Are you prepared to be part of the future?

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  • Is digital different?

    Two recent columns, Anand Giridharadas in the New York Times and Stilgherrian on ABC Unleashed explored the idea that the digital world is different. But are things really different online?

    Stilgherrian argued that Australia’s “digital elites” are politically naive in the way they are opposing their government’s proposed Internet filter. While it may well be true Australia’s tech communities are politically naive, but the real question is do these folk qualify as an “elite” or even as a separate group from the general community at all?

    Are the digital elites the coolest, smartest kids in the room? Does being able to setup a Twitter account or use an iPhone make you superior to the bulk of the population?

    Surely the whole notion of a “digital elite” is flawed when the bulk of jobs and households are now, to varying degrees, reliant on digital technologies — we’re all digital.

    On a similar vein, Anand asks if we need a digital philosophy to deal with the unique issues of an online, connected world. This assumes the issues are unique and societies haven’t had to deal with worlds where privacy is difficult is difficult to find, think of a mediaeval village where no secret would be safe.

    Does being able to tweet across the planet 24/7 mean you are excused from the general standards of behaviour? Or does it hold you to a higher level of accountability? Perhaps it’s the latter.

    It could be we returning to older standards of behaviour where we were accountable to our immediate community. That immediate community could now as easily be on the other side of the world as much as across the street.

    One feature of Post World War II  Western life has been our ability to insulate ourselves from the outside world as we became more materially affluent and isolated in our suburban, car dependent, households. To make our isolation complete we relied on the distorted prism of the mass media for our information on what was happening in our society.

    The digital media is changing that, suddenly we find we find we are accountable to our peers and the old rules of responsibility are reasserting themselves, just as they did in the pre suburban communities.

    Could it be that being far from an elite, as we become more connected we also become more accountable? Does this mean older standards of responsibility and ethical rules will start to reassert themselves?

    Perhaps we may learn much about the future from the experiences of our great grandparents.

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