Category: business advice

Confidence and open communications

Open communications is essential in a time of change, tech giant EMC finds

One of the big technology industry stories currently is the merger of Dell and data storage giant EMC, which at seventy billion dollars will be the biggest merger in the tech industry’s history.

With fifty thousand employees managing such a change presents a challenge for EMC’s managers and something noticeable attending the company’s EMC World conference in Las Vegas this week is how upbeat almost all the staffers about the impending merger.

In an interview with David Goulden, the CEO of EMC’s Infrastructure division, which is the company’s core business, I asked him how they were keeping staff morale up in the face of changes that will almost certainly cost jobs.

“Change creates uncertainty,” says Goulden. “One thing I’ve learned from this is you cannot over-communicate and that’s true internally and it’s true with our customers. We’ve put an incredible amount of effort in communications so our teams are engaged to go and speak to their customers.”

As change is now a constant in all industries Goulden’s lesson should be noted by all managers and business leaders – clear, honest and open communications with employees and customers is essential in keeping the trust of the markets and workforce.

The old model of restricting information and hoping no-one finds out is increasingly harder to sustain and from a business point of view unprofitable in the medium term as well.

Paul travelled to Las Vegas as a guest of EMC and Netsuite.

Google bets on artificial intelligence

Google bets on artificial intelligence and machine learning as the company deals with the shift to mobile

Breaking with the company’s tradition of the Sergi, Google’s CEO Sundar Pichai writes this year’s founders letter laying out how the search engine giant is focusing of artificial intelligence and the machine learning.

Pichai’s view of the world seems to tie in very closely with founders Larry Page and Sergei Brin with him laying out a vision of making the internet and computers accessible to all.

The challenge for Google is the shift away from personal computers, something that the company is struggling with and a factor that Pichai acknowledges.

Today’s proliferation of “screens” goes well beyond phones, desktops, and tablets. Already, there are exciting developments as screens extend to your car, like Android Auto, or your wrist, like Android Wear. Virtual reality is also showing incredible promise—Google Cardboard has introduced more than 5 million people to the incredible, immersive and educational possibilities of VR.

Whether Google can execute on that vision and manages to diversify its revenues away from depending almost exclusively upon web advertising will be what defines Pichai’s time as the company’s CEO. He has a challenging task ahead.

Closing the DVR transition window

The rise and fall of Tivo is a good example of the transition effect during technological change

A good example of the technology transition effect is the Personal Video Recorder (PVR) where a decade ago relatively cheap hard disk drives started to displace videotape, CD and DVD players.

During that period Tivo was the giant of the PVR industry but it wasn’t to last as the plummeting price of hardware made the devices a commodity while the rise of streaming media changes the industry’s dynamics.

Now Tivo is no more as it is bought out by entertainment company Rovi, a victim of the transition effect.

Getting academics onto the cloud

Discount and free software programs are good for educational programs but they do risk industry wide vendor lock in.

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.

Managing a shrinking company

Ericsson are the latest company to face the reality of needed to shrink as their industry is being disrupted.

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.

The responsibility of choices

Designers have responsibilties to the world and themselves says Mike Monteiro. A line that could apply to all of us.

“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.

Reaping the security dividend

Digital disruption is driving boards and executives into realising the value and importance of cyber security, Cisco claims.

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.

Amazon Web Services and the new rules of business

Amazon Web Service CTO Werner Vogels lists the lessons from a decade of AWS operations. These could be the new rules of business.

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.

Cutting customer support

Uber cuts customer service, a worrying move for consumers

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.

Collapsing unicorns and business basics

The first tech unicorn to collapse, Britain’s Powa technologies, reinforces business basics for tech startups

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.

Disrupting professional services

Stripe’s US business registration service shows how professional services companies are under threat

As Irish immigrants, the founders of San Francisco payments company Stripe, John and Patrick Collison, know too well the difficulties of setting up a US based corporation.

So the company establishing Stripe Atlas, a service to help foreign entrepreneurs set up their US presence makes sense and the payments services bundled into the package may also generate business for the brothers.

The Stripe Atlas service also illustrates the challenges facing professional services businesses as the service automates many of the bread and butter tasks that were good earners for lawyers and accountants.

Until recently it was thought those ‘higher level’ occupations would escape disruption, now it appears software will eat the professions as well.

Thinking differently about Cyber Security

We need to think differently about cyber security in order to protect our networks says a former British intelligence officer.

“I get quite frustrated with the cybersecurity industry” says Andy France, Deputy Director of Cyber Defence Operations at British Intelligence Agency GCHQ. “We have to think differently.”

France was speaking at the Telstra Cyber Security Forum at the company’s Sydney experience centre yesterday where he outlined how organisations are rethinking about protecting their data.

“What we haven’t realised is just like the Bronze Age, the Stone Age, the Industrial Age and the Internet Age, we have to think differently about what that means to in terms of security and privacy. We have to think differently about how we build systems.”

The biggest problem France sees in the industry itself are the lack of skills to build those secure systems, a situation he believes is partly created by the sector’s credentialism gaining certifications is several orders of magnitude more bureaucratic than becoming a fighter pilot.

In contrast the bad guys who France splits into five groups – script kiddies, hacker collectives, crime syndicates, hackers for hire and nation states – have no such concerns about certificates and accreditation.

“You have serial collectors of letters after their names,” he states. “We’re putting an artificial bar against the people with the new thought processes that are going to help us address this problem.”

“It feels like the criteria has been set up to create a nice little market so we can control day rates,” French says, “in a world where we’re screaming out for talent and need people to come along who are interested and challenged by the subject.”

Apart from the trap of credentialism, the real concern for businesses and users should be the integrity of data in France’s opinion. We need to be certain information is accurate, a problem that will be exacerbated as businesses processes are automated around data streams being connected by the Internet of Things.

France suggests three principles should underlie an organisation’s data defences; having systems in place to spot early indications of a problem, obey the five ‘knows’ and understanding your network.

Understanding your network, what France calls the ‘defender’s advantage’, is the most essential task of all for someone protecting their organisation’s data. “Is someone knows your network better than you then that should be a criminal offense,” he states. “To get the defender’s advantage in place you need to understand your network.”

“Technology in itself with not keep you safe.” French says and describes security as being subject to Pareto’s Law where most vulnerabilities are mundane background noise, “we need to have a balance where technology looks after the 80% and we have the people and processes in dealing with the unexpected 20%.”

“It’s certainly not going to get any better,” French warns about the trends for cyber security in 2016. For most companies and system administrators it’s going to be a matter of being alert and having the processes in place to deal with the unexpected.