Jan 302015
management and executive training, workshops and keynotes for technology

Once every workplace had a tea lady; usually a happy friendly woman who cheefully dispensed tea, buscuits and office gossip around an organisation.

During the 1980s the company tea lady vanished as companies cut costs and changing workplaces made the role redundant, is it now the turn of the CIO to go the way of the tea lady?

Yesterday research company company Frost and Sullivan hosted in a lunch in Sydney outlining their views on the growth of cloud computing based upon their 2014 State Of The Cloud report.

The report itself had few surprises with a forecast of the cloud market growing 30% each year over the next five years, a statistic that won’t surprise many watching how users are moving away from desktop applications.

Shifting procurement

One of the key trends though is how cloud services change the procurement process and lock IT managers and Chief Information Officers out of decision making. As the report says;

Half of all organisations feel that the decision making process is shifting from that of the CIO and IT department to the individual business unit for implementation or updates of cloud applications such as HR, payroll, collaboration and conferencing.

While the report puts a positive spin on what it describes as the “evolving role of IT within organisations”, Mark Dougan – Frost & Sullivan’s Managing Director for Australia and New Zealand – mentioned that often the decision to adopt a cloud service were made by executive management and then the CIO was told to implement the technology.

This illustrates how CIOs’ already tenuous grip on being a senior management role has slipped. With the rise of cloud services, it’s become easier for executives to make choices without considering the technological consequences.

Probably the business that best illustrates this shift has been Salesforce where many corporations find they have dozens of subscriptions being charged to sales managers’ credit cards, much to the chagrin of company accountants and IT managers.  Salesforce and similar businesses have driven the trend so far that many consulting firms predict marketing departments will control more technology spending than IT managers in the near future.

That shift predates the coining of the word ‘cloud’, the term “port 80 and a credit card” was used to describe the Salesforce model of sales people signing up to what was then described as Software As A Service (SaaS) earlier in the century.

Does IT matter?

In 2003, writer Nicholas Carr predicted IT as a discipline would cease to matter within most organisations as technology became ubiquitous and taken for granted, just as electric power and railways did in the nineteenth and twentieth centuries.

The electricity and railway industries remain huge employers and are essential to modern business but most for most companies the products are taken for granted – few companies have a Chief Electricity Officer sitting on their executive team despite power being an essential service.

For those IT managers hoping for a senior c-level position or even a seat on the board, the move to the cloud is terrible news. Rather than getting the corner office, the CIO could be heading the way of the tea lady.

Jan 282015

The stunning quarterly results of Apple announced yesterday compared to Microsoft’s indifferent performance illustrate how the fortunes of two different business cultures have changed.

Apple yesterday announced a spectacular result for its quarter finishing at the end of last year with  revenues up 30%, profits by 38% and Earnings Per Share just short of fifty percent.

The announcement was an emphatic vindication for Tim Cook and his management team who made some big bets on the larger form factor iPhone 6 which paid off spectacularly with shipments growing 46% to 74.5 million and revenue reaching $51.2 billion, over two thirds of the company’s total sales.

One notable aspect of Apple’s success is the difference with Microsoft’s and this shows how different business cultures come in and out of fashion.

The Triumph of the MBA

For two decades Microsoft’s licensing business model was dominant and this confirmed the MBA view that companies should do everything they can to move design, research, manufacturing and distribution out of their operations – the virtual corporation where there was no inventory, few costs and even fewer risks was the ultimate aim of the modern manager at the turn of the century.

Microsoft encapsulated this philosophy with its licensing model, while the company made massive sales with huge margins – as it still does – all the business risks in the computer market were carried by resellers and equipment manufacturers. For many years the markets loved this.

Apple tinkered with the licensing model under John Sculley in the mid 1990s during Steve Jobs’ exile but was never really serious about giving away its hardware capabilities and in 2001 moved into retail with the opening of the first Apple Store.

Coupled with the App Store, Apple have come to control the entire customer journey from marketing, design, purchase and ongoing revenue after the product is bought.

King of the new Millennium

While the 1980s and 90s were the time of triumph for the Microsoft model, the 2000s have been good to Apple as shown by the revenue and profit figures.

Apple and Microsoft Revenues 2000-2014

Apple and Microsoft Revenues 2000-2014

Apple and Microsoft Profits 2000-2014

Apple and Microsoft Profits 2000-2014

The key inflection point in these charts is, of course, the iPhone’s release in 2007. Apple caught the wave of change as computer use switched from personal computers to smartphones and is now the dominant vendor.

For Microsoft the success of Apple is bittersweet; the company had a smartphone operating system in Windows CE but it was too early to the market and the devices vendors went to market with were, at best, substandard.

Microsoft’s failure with the smartphone was also echoed with tablet computers and exposed the licensing model’s reliance on vendors to supply and support decent products, even today Microsoft’s hardware partners struggle to release decent tablet systems.

Cloudy on the web

Another problem that exposed Microsoft’s weaknesses was the rise of the web where hardware and operating systems really did matter so much any more. Along with pushing out personal computer lifecycles it also had the consequence of allowing other systems into the marketplace, notably Linux and Google Android.

With OS X, Android and Linux systems no longer hampered with the compatibility issues that irritated non-Windows users in the 1990s the market was open to adopting those systems. While the PC market has remained quite loyal to Windows, although the Apple Macs are showing serious growth as well, Microsoft’s system has barely any marketshare in other device segments except servers which are also declining as business increasingly move to cloud services.

Apple have shown in the computing and smartphone business that controlling the hardware products is as important as supplying the software, a lesson that Microsoft now acknowledges with its restructure into a ‘Devices and Services’ company under former CEO Steve Ballmer.

The problem for Microsoft is its margins for hardware are a fraction of its own licensing operations and weak compared to Apple’s returns. Microsoft makes 14% profit on its phone operations while the iPhone is estimated to deliver over 60%.

Under current CEO Satya Nadella Microsoft is focusing on cloud services which also aren’t as profitable as its legacy operations but see it competing with companies like Amazon and Google who don’t boast the profits from their online operations that Apple makes from its hardware.

Microsoft aside, the lesson Apple gives the technology is pertinent for its competitors in the smartphone space as well; companies like Samsung, LG and the army of Chinese handset vendors are going to find their markets tough unless they can take control of their software development and distribution channels – relying on Google for Android and telcos to get their phones to customers leaves them exposed in similar ways to Microsoft’s partners in the last decade.

In the battle between business models, Apple is the current winner and shows throwing all of your business operations over the fence to partners and licensees is a risky strategy. How those lessons are applied in other sectors will test the limits of both management philosophies.

Photo of Steve Jobs and Bill Gates by Joi Ito through Flickr

Jan 222015
Cell phones in use

It’s a bit late in the month for New Year’s resolutions but with the work year now fully underway it’s not too late to do a quick health check of your company’s mobile presence.

Two years ago we passed the point where smartphone sales overtook those of personal computers and increasingly customers are expecting not only to find a business on their phone but also be able to read the company’s website on a mobile.

So the new years resolutions are simple; look at your company’s website on some smartphones and check the listings in Facebook and Google My Business are correct.

The Facebook and Google listings are simple and if it turns out they are out of date or wrong can be quickly and easily fixed. These are probably two of the most cost effective marketing things you can do for your business.

Should the website look dreadful on a smartphone then things are bit trickier and you may have to contact your web designer to enable a responsive function on your site. Responsive design detects the device a visitor is using and adapts to suit. Some older sites and platforms don’t support this and if that’s the case you need to start planning and budgeting for a redesign immediately.

If the site is based on modern platforms like WordPress or Drupal there are plugins that will do most of the work automatically while services such as Blogger and Wix have responsive features built in, although you may have to tweak the site’s template to give prominence to important information on a smaller screen.

That important information includes contact details, address, opening hours and a concise description of your business, the quicker customers can find these, the more likely you’ll win them. If you’re in hospitality then linking your location to Google Maps will help guests find you.

While these three tasks are simple things, and by no means a full digital strategy, they are probably the quickest, easiest and cheapest things you can do to get in front of customers in an increasingly demanding and crowded market that expects to find you on their smartphones.

Jan 132015

On many measures Google are in trouble, but one analyst thinks we’re panicking and his view is the lead of today’s links of the day. We also look at how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.

Does Google’s future lie in R&D?

“Google is down but it’s not out” is the warning of this analyst’s report on the company’s earnings and strategy. Interestingly Google outspends Apple by $4bn a year on research and development, but both of them are dwarfed by Microsoft’s spending, which indicates R&D investment doesn’t guarantee success.

The origins of the name ‘Silicon Valley’

Last Sunday marked the 44th anniversary of the first time the label ‘Silicon Valley’ appeared in print. The US Computer History Museum looks at how the name came about and no-one will be surprised it was a marketing person who coined it.

Why does solar power keep getting cheaper

A few years ago putting solar cells on a building was expensive, now in many parts of the world the price of PV panels is becoming competitive with mains power. Vox Magazine looks at the factors driving the price drops and finds that economies of scale are now the main factor affecting the falling cost of installed solar power systems.

RIP Urbanspoon

One of the earliest food review platforms was Urbanspoon which was founded on the basis it would only grow as a bootstrapped company. In 2009 the founders sold out to a larger company who have now sold it onto an Indian business who is going to shut the name down.

Startups who’ve fallen off the map

Business Insider lists 17 formerly hot businesses who’ve fallen out of the public view this year, while some of them haven’t disappeared, it’s a list that reminds us that most new businesses, particularly tech startups, fail.

Dec 302014
walking the shop floor is important to business management

“Uber-mania reflects a profound turn in the way the global economy is organized,” writes Fortune Magazine’s editor Alan Murray.

That’s a bit of stretch as Uber’s simply an application of the technologies that are changing business and the economy;  those technologies are having a more profound effect on the role of managers in the modern workplace.

Along with services like AirBnB and Task Rabbit, are the result of the new breed of cloud, mobile and big data tools that make it easier to deploy new business models which in  themselves threaten traditional industries and their executives.

Uber’s success is in finding an industry that in much of the world has been ripe for disruption for decades; in most Western cities cab services have been regulated to protect plate holders’ incomes and often to protect corrupt local cartels.

What Uber’s disruption shows is how those tools can be deployed against cosy incumbents.

Probably the cosiest group of incumbents of all have been corporate managers; over the last thirty years businesses have been downsized, workers have become more productive and many functions have been outsourced or offshored.

Management however has largely remained untouched as the need to supervise business functions has remained.

Now those tools – particularly the smart algorithms that run companies like Google, Facebook and Uber – are coming for managers in many industries. Added to the manager’s dilemma are improved collaboration tools that allow workers and machines to communicate and make decision autonomously without the need for supervision.

Possibly the greatest change in business over the next decade will be the disappearance of the manager as software takes over.

Dec 182014
How can we save costs using cloud computing and online tools

One forecast about 2015 that’s very easy to make is businesses with high costs are in for a tough time.

As competition steps up, global forces puts pressure on prices and technological change allows new competitors into marketplaces, the companies that aren’t flexible and keeping an eye on where they are spending money are going to find 2015 will not be a happy year.

For the tech industry the predictions for next year are easy – there will be more security beaches, governments will want more powers to access our data while proving they can’t be trusted with what they already have, a new hot social media network will appear, well known brands will collapse, the net will get faster, more devices will be connected to Internet of Things and prices will continue to fall.

It’s the falling prices that will be what defines business in 2015 as we enter deflationary times; not the economists’ nightmare of prices falling in the face of collapsed demand – although that’s not out of the question – but in the more positive sense of business inputs being cheaper.

Things are going to get cheaper

A few weeks ago I wrote of futurist and academic Andrew McAfee speaking about the accelerated rate of change in business at the Gartner Gold Coast Conference. One of the immediate effects of that changing world McAfee describes is that a lot of thing are going to get cheaper.

Part of this is driven by newer cheaper sources of energy and labour, other driving factors are increased automation in fields where wages have historically been the biggest cost and  manufacturing processes are putting pressure on prices for most goods. The commodities prices collapse may also be a key factor in 2015.

For some industries, such as the IT industry, falling prices aren’t a new concept. Any computer superstore or local PC repairer who holds inventory gets a nasty reminder of the sector’s economics every time they do a stocktake. However many businesses operate on the assumption prices will always rise overtime, a not unfair assumption given the inflation we’ve seen over the last fifty years.

Getting costs down

With falling prices, it means businesses have to be more aggressive in cutting costs; whether it’s telephone or power bills through to professional services or banking fees, the onus is now on managers to squeeze as much value for the dollar as they can.

In the technology field the targets are obvious; are your old computer preventing you from using new software? Do cloud services offer a better deal than your old server based systems? Are your service providers charging too much?

For the wider business looking at how newer technologies affect your workflow could well prove rewarding, it may well there’s whole range of areas your company can become more efficient through adopting new systems.

A good candidate for slashing costs and improving flexibility is transport where too many companies are still paying Cabcharge’s overpriced fees when apps like Ingogo or Uber are cheaper and better. Why have company vehicles when car sharing services like GoGet can offer more value. Do you still need an expensive Yellow Pages listing when a free Google My Business entry will get you in front of more potential customers, particularly on the all important mobile platforms?

Then there’s the whole outsourcing question where it’s becoming easier to hire knowledge workers on an as needed basis through the various online platforms like O-Desk and Freelancer.

Over the break, it’s worthwhile reviewing your operations and seeing where you can use technology to cut costs and become more flexible in face of a rapidly changing marketplace. One prediction is certain; those with bloated costs and inflexible management are in for a tough 2015.

Dec 142014

One of the longest running large scale 3D printing projects is based at the UK’s Loughborough University where since 2007 researchers have been working on developing the technology’s applications to the construction industry.

Loughborough’s technology, named Freeform, offers faster and more flexible ways of casting concrete and building structures using a computer controlled concrete pouring system. For property developers the attraction is cheaper buildings while for architects the technologies offer more innovative structures.

In late November the team announced a venture with Swedish building company Skanska SA to develop the world’s first commercial concrete printing robot.

The venture, which will include collaborations with companies including iconic UK architects Foster and Partners, Buchan Concrete, Scandinavian contracting giant ABB and Lafarge Tarmac, aims to have the first commercially available robot printer available by mid 2016.

Competing with the European venture is Chinese company WinSun who earlier this year showcased its 3D printer capable of producing ten houses every 24 hours. An interesting aspect of WinSun’s project is that the printing rig was build out of existing parts and controlled by an off the shelf Computer Aided Design and Manufacturing software system.

While the Chinese results are relatively crude, they show the potential for the technology. The economics of the WinSun project are enhanced by using waste building site material for the concrete which only increases the attraction of these machines to cost conscious property developers.

The Chinese and British are not just the only countries working on these technologies, in the Netherlands the 3D Print Canal House shows how techniques and materials are being developed while in the United States the University of Southern California’s Contour Crafting project is looking at how to use large scale 3D printing in a range of construction scenarios including building space colonies.

While using moon dust to build structures in space is some way off, both Freeform and WinSun show what will become commonplace on building sites in the near future.

These technologies promise to radically change architecture and the building industry with ramifications for jobs and the economics of building structures.  3D printing buildings is another example of how industries and employment will be very different by the middle of this century.

For businesses, it’s another example of how managers have to prepare for very different marketplaces.

Builder image courtesy of thesaint through Freemimages.com