Apr 262016
 
group collaboration on a project

Offering free products to students and academics has long been a tactic used by software companies to build their market presence. The current fight for dominance in the cloud is seeing the same tactics being used.

Last week I had the opportunity to talk to Amazon Web Services’ Glenn Gore about his company’s academic support program.

Part of that conversation ended up in a story for The Australian about how researchers are now using cloud computing services and it’s worthwhile looking at how AWS are using this program to cement their products’ market positions.

“We work with the majority of universities across Australia,” Gore said. “It’s part of an international focus around how we support the education sector in general.”

In some respects AWS’s behaviour isn’t new, for years Microsoft, Autodesk and Adobe have had programs offering free or deeply discounted products for academic or student use. The success of those schemes in becoming defacto industry standards is no small reason why these companies have dominated many sectors.

Microsoft themselves have the similar Bizspark program for tech startups and it’s easy to see how that initiative is helping push Azure’s adoption into a field that has been dominated by AWS.

One of the drawbacks though with cloud computing services is the risk of ‘sticker shock’ where customers end up with big bills. One of the universities I spoke to in researching the story recounted how 0ne of their faculties was presented with a huge AWS invoice because their engineers didn’t provision the services correctly.

This is where AWS’s team steps in with advice for researchers, “in the case of Koala Genome Project use the on-demand model, the standing pricing model for the cloud,” recounts Gore in pointing out the nature of their work could use spot-pricing to take advantage of cheaper prices in off-peak times. “As a result of making that one change they were able to do eighty percent more research.”

Getting more research time is always attractive for researchers and Dr Rebecca Johnson who leads the Australian Museum’s part of the koala consortium was particularly effusive about the support from AWS staff,

“What we have been able to access via this partnership with AWS is compute time and compute capacity that we just would not have had access too,” Dr Johnson said in a media release. “It would have cost us thousands and thousands of dollars to create and we just would not build such a computer system these days. You would not create your own computer infrastructure as we would only use a fraction of it anyway. So, it is great for us to piggy back off these already built systems.”

Being a relatively small institution, the Australian Museum is a good example of how cloud computing can work for those without the resources of big universities or corporations in the same way small businesses and startups can access resources formerly only available to enterprises.

Amazon’s programs though show the Microsoft model of getting students and startups onto their systems early pays dividends. It’s good for academic institutions but one wonders whether it’s also another form of vendor lock in.

Apr 232016
 
How do mobile phone users reduce costs

It isn’t just software companies and telcos that are facing a changing, less profitable, world. As margins decline for their enterprise customers, equipment vendors are facing the squeeze.

A good example of this is Sweden’s Ericsson which last week announced declining sales as China’s Huawei displaces them in market and their enterprise and telco customers tighten budgets in the face of declining margins.

For Ericcson this means finding new opportunities but for them, like Cisco and Microsoft, most of the promising markets offer nowhere near the profits they have been used to in their traditional businesses.

Managers in these industries face a difficult dilemma in explaining to shareholders their company needs to be smaller and less profitable than previously which is something few want to hear.

Not to admit that painful reality risks killing the company as margins continue to shrinks, sales shrivel and desperate managers engage in increasingly desperate stunts in the hope on stumbling on another river of gold.

It’s an ugly place to be for staff at these companies but it shows that fat profits can never be considered to be given in any industry.

Apr 172016
 
engineer plans

“Making rich people richer is not disruption, it’s the same old bullshit” says design guru Mike Monteiro in a speech given last June at the USI Conference in Paris.

Monteiro’s point is telling at a time when much of the tech industry’s business model is based upon solving the problems of rich white men, attracting investments from funds run by rich white men and then selling the venture to a corporation run by rich white men — what this blog calls the Silicon Valley Greater Fool model.

“How Designers Destroyed the World”, is Monteiro’s call to arms for the design industry. In it, he lays out four fundamental responsibilties that should guide how designers work; a responsibility for the world we live in, a responsiblity to the craft of design, a responsiblity to clients and, the most important of all, a responsibility to yourself.

“The work you do defines you,” says Monteiro about that responsibility to yourself. “I found when I started saying ‘no’, the clients listened. When I lost a bad job, a good job appeared.”

Monteiro’s view is designers are in a position of power. In truth though, we may all have a small degree of power in what we choose to do and choose not what to do.

“Responsibility is not a burden for you to carry, it’s a privilege.” Monteiro states. The presentation is well worth watching not just for designers, but for everyone.

Apr 142016
 
knightscope-k5-robot-security-guard

Boards and executives have finally got the message about security John Stewart, Chief Security and Trust Officer at Cisco.

For most of the computer era security has been seen as an inhibiter to innovation and speed to market, but now with most businesses finding they face a three year time frame to transform in face of digital disruption Stewart says corporate managments now see security of their products as being a valued feature.

Stewart bases his view on an online survey, Cybersecurity as a Growth Advantage, where Cisco polled 1,014 senior executives with extensive cybersecurity responsibilities in 10 countries and 11 in-depth interviews with senior executives and cybersecurity experts.

From this, Cisco found a third of businesses now sees security as being a competitive advantage.

Digital disruption drives the shift

Stewart puts this down to boards and senior executives realising how widespread digital disruption is, “it’s highly unlikely Weight Watchers saw the disruption coming from Fitbit,” he muses. “In fact it’s hard to see how anyone could have seen that coming.”

As a consequence of these widespread and often unexpected disruptions, corporate leaders are trying to shore up their existing positions against unforeseen competitors by shifting to digital platforms as quickly as they can.

“We have to do digital and if we are going to do digital we have to have strong cybersecurity controls,” says Stewart in explaining why cybersecurity is an important part of this strategy.

Security as a cornerstone

“By making cybersecurity a cornerstone of their businesses, security-led digital organizations are able to innovate faster and more effectively, because they have significantly greater confidence in the security of their digital capabilities,” Stewart says.

Certainly managers are worried about the risks of going digital with Cisco reporting many businesses have put projects on hold due to concerns about security risks, “a lack of cybersecurity strategy can cripple innovation and slow business, because it can hinder development of digital offerings and business models.”

According to Cisco’s findings, seventy-one percent of executives said that concerns over cybersecurity are impeding innovation in their organizations. Thirty-nine percent of executives stated that they had halted mission-critical initiatives due to cybersecurity issues.

Encouraging moves

While the possibility that corporate leaders are taking cyber security seriously is encouraging, that change is yet to be seen in the marketplace, particularly in the consumer Internet of Things market where being first trumps security, design considerations or even basic safety.

The real test for how important cybersecurity really is remains in the marketplace — will customers pay more for secure products?

One sense that in Cisco’s marketplace of enterprise customers where security failures could have expensive, embarrassing and possibly catastrophic consequences, customers will pay more for trustworthy devices. In the consumer field it may well be different.

Probably the most important finding from Cisco’s survey is that businesses are now understanding security has to be designed into products and processes rather than being bolted on as an after thought. If that is true, then we have come a long way.

Mar 122016
 
Networks and computers connecting to the web

The one company that has driven both the adoption of cloud computing and the current tech startup mania is Amazon Web Services.

Later this week AWS celebrates its tenth birthday and Werner Vogels, the company’s Chief Technical Officer, has listed the ten most important things he’s learned over the last decade.

The article is a useful roadmap for almost any business, not just a tech organisation, particularly in the importance of building systems that can evolve and understanding that things will inevitably break.

Importantly Vogels flags that encryption and security have to be built into technology, today they are key parts of a product and no longer features to be added later.

Most contentious though is Vogels’ view that “APIs are forever”, that breaking a data connection causes so much trouble for customers that it’s best to leave them alone.

Few companies are going to take that advice, particularly in a world where changing business needs mean APIs have to evolve.

There’s also the real risk for businesses that their vendors will depreciate or abandon APIs leaving key operational functions stranded, this could cause major problems for organisations in a world that’s increasingly automated.

Vogel’s commitment to maintaining APIs may well prove to be a competitive advantage for Amazon Web Services in their competition with Microsoft Azure, Google and an army of smaller vendors.

Werner Vogel’s lessons are worth a read by all c-level executives as well as startup founders looking to build a long term venture, in many ways they could define the new rules of business.

Mar 082016
 
uber-hire-car-app-disruptions

One of the greatest mistakes made by companies is cutting customer support. Nothing shows more a management focused on KPIs and financials than reducing its service staff.

According to Buzzfeed, this is what Uber is doing as the company struggles to contain costs and compete in China.

The ironic thing in Uber’s actions is the startup was so successful because in many cities the incumbent taxi operators had a culture of dire customer service.

It may be that having seen Uber win the battles, the poor consumer is about to lose the war for better transportation services.

Should that be the case, then Uber’s customer service woes shows the new generation of tech startups isn’t so immune to the old rules of business after all.

Feb 262016
 
which investment choices right for your business

UK e-commerce service Powa Technologies, once valued at £1.8 billion went into receivership after the lead US investor called in the £200 million loans it had made to the business.

It turns out most of 1200 corporate clients the company had claimed as clients were actually expressions of interest in the service rather than firm orders.

Powa now has the distinction of being the first of the tech unicorns to go broke – although it’s almost certain 2016 will see many of the companies with private billion dollar valuations join them.

While the focus on Powa’s demise will be the deceased unicorn aspect, the company’s story illustrates some business basics.

The key one is that sales only count when the money is banked, all too often cashflows, profits and valuations are inflated by booking income long before it’s received – if ever.

Another aspect is valuations are not cash in the bank, Powa may have been valued at £1.8 billion but it only had raised £250 million in capital along with a similar amount in loans. This was not enough to keep the business going at what must have been a spectacular burn rate.

While tech startups have unique aspects, the basics of business remain constant; Cashflow is king and adequate capital is essential. These are aspects managers, investors and employees need to watch closely.