Category: Innovation

Why small businesses aren’t using cloud computing

The IT industry needs to understand cloud services and small business

As part of their push into online applications, telecommunications company Optus yesterday released their Digital Ready report examining Australian small business’ use of cloud computing services.

One of the notable results is that only four percent of small business proprietors claim to use cloud computing services and 59% are unsure of what exactly cloud computing is.

Those results are surprisingly poor and indicate businesses don’t see the benefit or value in cloud computing services. There seems to be a number of factors driving this.

Misunderstanding cloud computing

That over 90% of small business owners claim not to be using cloud computing indicates many simply don’t know what these services are. If asked most would admit to using Facebook, web mail or some other online or social media platform that runs on cloud computing.

That’s an education issue and if anything is a criticism of those of us – including myself – who are trying to explain the concept. We can do better as an industry.

Security

Many businesses, big and small, misunderstand technology security risks and have an inflated view of how secure their own desktop, networks and servers are. In many ways the security of cloud services is better than most small business IT systems.

Where the security argument falls down is in the hyperbole of many IT security vendors – every month we hear breathless reports, repeated by gullible technology journalists, of how smartphones, social media or Apple Macs are going to be struck down by a new wave of viruses and each time the “threat” quietly fades away into obscurity.

As long as hysterical fear stories about the security of smartphones and cloud services circulate in the media, it’s understandable that small business owners will be wary of trusting technologies they don’t fully understand.

Sunk costs

Many established businesses have sunk costs in existing software and hardware. For proprietors or managers to justify moving a new service, whether it’s on the cloud or not, there has to be a clear financial benefit in doing so.

Terms of Service risk

Cloud services – whether free or paid – come with a set of terms and conditions. Online Payment, social media and other cloud computing services have shown themselves to be quick in shutting down business accounts without warning, any due process or an accesible way to resolve disputes.

Quite rightly, many business owners are wary of risking key processes or data to services that might cut them off without notice and who often lack a customer service culture.

The reluctant advisors

Business IT consultants struggle with cloud services. Cloud services are a threat to those used to making money from selling servers, software and desktop computers.

For the more far sighted consultants, the thin margins offered by cloud services mean they have to rely on fees for service. If something goes wrong, the client’s first call will be to the trusted advisor and not to the service providers’ helpdesks.

This is a headache too far for many consultants as they know they’ll probably not get paid for the time spent sifting the truth in a blizzard of vendor finger pointing. It’s far less risk and more profitable to recommend a server and desktop solution.

Is cloud computing important?

For businesses, the economics of cloud computing is changing industry dynamics. With lower capital costs, it makes enterprises more flexible and responsive to changing markets.

Cloud services are critical to businesses – for established companies they’ll find themselves losing out if they don’t at least consider the advantages and choose the right online tools.

The onus right now though is on cloud computing vendors to tell their stories better and demonstrate why they can be trusted with key business processes and valuable data.

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ABC Nightlife: The next wave of smartphones

Paul Wallbank joined Rod Quinn to look at where mobile phones are going.

The world of mobile phones is getting busy again as a whole new range of smartphones appear. Paul Wallbank joined Rod Quinn for ABC Nightlife on October 20 to discuss what the new smartphone wars mean for home and business users.

We’ll be going to air from 10pm, Eastern Australian time across Australia on ABC Local Radio’s Nightlife to look at the following questions;

  • Why were people disappointed with Apple’s iPhone 4S that was released a few weeks ago?
  • The big competition are the Google Android phones, what are they doing?
  • What’s happened to Nokia? They seemed to have lost their domination.
  • Microsoft were the other big player, what are they doing?
  • How are the smartphones changing business?
  • Shopping centres seem to be jumping on board with various social media checkins. What are those?
  • There’s been a push to online payments, how are the smartphones affecting this?
  • Are smartphones going to be the big buy for Christmas?
  • What are the best plans for consumers and business?
  • How do people deal with telco disputes?

The podcast from the program is available from at Nightlife website, and some of the information we mentioned can be found here;

Dealing with Telco complaints

We’ll be adding more resources in the next few days, the next ABC Nightlife spot is on 23 November and our events page will have more details. If you have any suggestions for future programs or comments on the last show, please let us know as we love your feedback.

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The agents of change

It’s tempting to think social media and other web tools are driving change, but much deeper things are changing.

It’s understandable technologists see technology as driving change. Often it’s true – technologies do build or destroy businesses, alter economies and collapse empires.

Sometimes though there’s more to change than a new technology changing the economy and while it’s tempting to credit innovations like the web, social media and cloud computing with many of the changes we’re seeing in the world, we have to consider some other factors at work.

The end of the 40 year credit boom

In the 1960s, the United States started creating credit to pay for the Vietnam war; they never stopped and after the 2001 recession and terrorist attacks the money supply was kept particularly loose.

The worldwide credit boom allowed all of us –Greek hairdressers, Irish home borrowers, Australian electronics salesmen, US bankers and pretty well everyone else in the Western world – to live beyond our means.

In 2008, the start of the Great Recession saw the end of that period and now the economy is deleveraging. Consumers are reluctant to borrow and businesses struggle to find funds to borrow even if they want to.

Any business plans built on the idea of almost unlimited spending growth are doomed. The era of massive consumer spending growth driven by easy credit is over and the days of expecting a plasma TV in every room are gone.

The aging population

An even bigger challenge is that our societies are getting older, the assumption we have an endless supply of cheap labour is being challenged as a global race for talent develops.

The lazy assumption that economic growth can be driven by building houses and infrastructure to meet increased demands will be found wanting as the Western world’s populations fail to grow at the rates required to power the construction industries.

Our societies are maturing and increased economic growth and wealth is going to have to come from clever use of our resources.

Innovations in computers and the Internet – along with other technologies like biotech, clean energy and materials engineering – will help us meet those challenges but they are tools to cope with our transforming societies, not the agents of change themselves.

Had  tools like social media come along in the 1970s or 80s they probably would have been massive drivers for change, just like the motor car and television were earlier in the 20th Century. In the early 21st Century they have been overtaken by history.

Smart businesses, along with clever governments and communities, will use tools like social media, local search and cloud computing with the demographic and economic changes, but we shouldn’t think for a minute the underlying challenges will be business as usual.

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Do you really want help from the government?

Should a business spend time looking for government money?

Pity the public servant who stands up in front of a room and asks a bunch of business owners, executives or managers what they want from government.

While there will be plenty of comments about improved procurement, less red tape and reduced fees you can be sure there’ll be plenty of demands that the government ought to subsidise something – anything – that business does.

It’s notable how free enterprise, small government and low taxation loving business people will  drop their copies of Atlas Shrugged and barge their way to the feeding trough and the slightest scent of taxpayer money wafting in their direction.

But is government money really good for a business? In many cases it isn’t.

You run a business, not work in a government department

“Who pays the piper, calls the tune.” The whole idea of running a business is that you are the boss, so why do you want to answer to a government department?

If you’re self employed or just opened a startup, one of the main reasons for doing so is because you decided you no longer want to work for the man. A government grant may well open up a whole new world of paperwork that leaves you wondering why you ever left the cubicle.

The dependency culture

One of the dangers of government funding is if you are successful, you’ll find yourself hooked on it. Quickly you become better at filling in funding applications than delivering products your customers want. The Aussie film industry is a good example of this.

Governments are behind the innovation curve

Public servants are not employed to take risks, this is a good thing as it’s our money they are handling.

Because governments are risk adverse they’ll only recognise an industry – or a problem – long after it has become established.

If you find you are on the government’s help list, it might be time to consider an exit from a troubled industry.

Do you really have a business?

Many new business owners expect the government should do something to assist them in their start up phase. This is a common complaint from under capitalised proprietors.

Given the massive subsidises given out to the banks and other big corporations since the start of the great recession, this attitude can almost be excused but we can already see how well that strategy works.

If you really need a subsidy to run your business, then it’s time to consider whether you should be in business at all.

This isn’t to say all government funding is bad; well thought out programs help viable businesses with things like export assistance, skills development and employing young or disabled workers. There are many of these although the process of identifying what a viable business is usually eliminates the newest and smallest enterprises.

What is notable with the successful government programs is they address a specific need, they don’t have onerous paperwork and they are no substitute for a healthy, living cashflow and profit.

Overall though, if you really want government money then take a job with the public service. It’s a lot easier than scrabbling for grants.

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The mobile payments revolution

Paying bills through a smartphone is going to radically change how we do business

Ten years ago when I was running a computer support business we spent a lot of time trying to find an mobile payment service for our on-site technicians to process payments.

At the time there were plenty of options but they were all expensive, asking 6% in merchant fees at a time when our bank merchant facility charged us 2.75% to accept Mastercard, Visa and Bankcard. Interestingly, the cut the mobile providers wanted to take which was the same commission as American Express and Diners Club.

We’d long before decided Diners and Amex were too expensive and it was easy to make the same decision about mobile payments. The technicians were given a manual card swipe to carry around and they phoned through authorisations. It was messy and time consuming but a lot cheaper than the then high tech alternatives.

Given that history, I was keen to get along to the Australian Information Industry Association’s “Mobile Payments – Cooperate, Collaborate, or Abdicate” breakfast panel held in Sydney last week to see what has changed in the mobile payments space.

The rise of smartphones – and the developing SoLoMo trend among consumers which brings together social, local and mobile technologies – should have meant the era of online payments should have arrived and it’s puzzling why it hasn’t happened.

It isn’t for a shortage of operators; one of the panel members, Oliver Weidlich of Sydney’s Mobile Experience mentioned a number of the services such as Square, developed by one of Twitter’s founders that are changing mobile payment overseas.

Interestingly it was the audience questions that gave the answers to why online payments haven’t taken off in Australia. The key question from the floor was “which authority handles disputes should a phone be lost or stolen”.

As a customer, one hopes it’s the bank that takes responsibility as the idea of a telco – particularly their mobile phone divisions with their attitude towards billing customers – having control over your credit card or bank account would make most consumers’ blood run cold.

The point was well made though as it saw the panel’s bank, telco and credit card representatives all ruminating over the question of ‘who owns the customer’.

Oddly, while they argue about whose property the customer is, all of them may lose out. While services like Square and built in payment features on social media and mobile apps such as Foursquare or Red Laser may take a slice of the market, there is a bigger competitor already making huge inroads.

The day before the AIIA event, Internet payment giant PayPal announced a series of deals with various group buying sites and online applications. Their press release pointed out PayPal’s mobile payments, or mCommerce as they call it, is growing at over 400% a year

While it might not be correct to say PayPal were the elephant in the room at the online payments breakfast, it isn’t unfair to say Big Ears was just outside scoffing the morning tea while the incumbents argued about who would have first dibs on clipping the tickets of both merchants and customers.

It’s too early to say the banks, or the telcos, have lost the market but players like PayPal, Google with their wallet service and possibly even Apple – should a Near Field Communication (NFC) equipped iPhone appear in the near future – are going to make the mobile payment sector far more interesting and competitive.

For businesses, we need to keep a close eye on the mobile payments market as it is promising to offer a lot more options in banking and transactions that what we’ve been used to in recent years. The days of 6% merchant fees are well and truly over.

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Digital art is more than iPod wielding basket weavers

What is the future for the arts in the digital economy?

This is a transcript of the digital arts opening keynote for the Digital Culture Public Sphere conference discussing the Australian government’s cultural strategy.

Thank you Senator Lundy. A little bit more about me, as well as being a writer and broadcaster on change I spent 18 months with the NSW Department of Trade & Investment setting up the Digital Sydney project.

Digital Sydneyis a program designed to raise the profile of Sydney as an international centre of the digital media industry.

One of the problems with Digital Sydney was that it was very inner Sydney centric and this is a perennial question we face as to where does Australian culture, and art, spring from? The first idea I’d like to throw to the room is that ‘digital’ frees us from many narrow geographic boundaries.

When we add the term ‘digital’ we hit another problem, that almost every aspect of our lives – be it in art, business or our personal lives – is being affected in some way by the Internet and digitalisation. In reality all art is becoming ‘digital’ in one way or another.

As broadband becomes more pervasive, particularly as the National Broadband Network is rolled out, we’ll see art and the creative industries become even more digitised.

In many ways we are today at the point in history not too dissimilar to that our great grandparents found themselves a hundred years ago. In 1911, our forebears couldn’t imagine the massive changes the century ahead would bring and we’re in a similar position in the first decades of the digital century.

The first half of the Twentieth Century saw radio start a cultural shift which was accelerated in the second half as television radically changed and redefined our culture. Today the Internet is doing exactly the same in ways none of us quite understand.

Given the massive disruption and technical advances we’re going through we need to be cautious about being too prescriptive as we can’t foresee many of the new technologies that will become normal to us over the next decade.

This provides a challenge for government agencies supporting the arts as the established gatekeepers such as galleries, production studios and regional organisations become less relevant as the means of distribution evolve and become easier to access.

We’re already seeing the traditional model of government support to big producers; be they factories, movie producers or games studios suffering as economic adjustment undermines many of their business model. The old economic development models are becoming irrelevant as history overtakes them.

It may well be that the role of governments over the next decade is to create a framework that allows new mediums, creation tools and distribution channels to develop.

One area we should be careful of when looking at the digital future of the arts is not to follow the UK’s Digital Economy Act where the protection of existing rights holders took precedence over the creative process.

It is important that governments create legislative frameworks that balance the rights of all stakeholders, consumers and new content creators with the objective of encouraging new works and innovations to evolve.

In an Australian context we need to acknowledge and develop our diverse population and the opportunities this presents. Our indigenous and immigrant communities with their artistic and cultural traditions give our national economy advantages that many other countries lack, this is one thing I regret I wasn’t able to push more in my role with the NSW government.

Education is another critical area, this isn’t just in the arts but right across Australian society and industry as new entrants into the workplace are expected to spring forth with the skills making them as productive as experienced workers, this is clearly a flawed idea, particularly when many of the tools business expects students to be skilled in weren’t invented when the students started their studies.

Over the next decade we’ll also have to confront one of the great Twentieth Century conceits; that artists are a separate breed from scientists, Engineers and business people.

Prior to the beginning of the last Century it was accepted a tradesman or inventor could also be an artist and this damaging idea of silos between creative and so called ‘real’ industries, suited only to a brief period of our mass industrial development, will have to forgotten. This will be a challenge to our governments, educators and training providers.

The digital arts are not about iPad wielding basket weavers, they about giving today’s workforce the creative tools and flexible, imaginative thinking to meet the challenges our mature, high cost workforce faces in a world where the economic rules are changing as fast as our technology.

We have a great opportunity at events like today to determine how we as a nation will benefit from the next decade’s new technologies that will change our arts communities and society in general.

The great challenge to policy makers will be dealing with the rapidly changing and evolving world that the digital economy has bought in the arts, in business and in society in general.

Today I’m sure we can bring together ideas on how we, and our governments, can meet these challenges.

Thank you very much Senator Lundy, Minister Crean and Pia Waugh for giving the community an opportunity to contribute to the development of this valuable policy.

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Price points

Amazon’s new range of Kindle e-book readers illustrate how important price points are to winning consumer confidence.

It’s no coincidence Amazon’s media release announcing the new range of Kindle e-book readers was headlined introducing the All-New Kindle Family: Four New Kindles, Four Amazing Price Points.

The $79 price for the base model has authors excited, and quite rightly too as this will guarantee sales of the e-readers and spur sales of e-books.

Once a product’s perceived as being affordable by the market, sales take off. The classic is Josiah Wedgwood selling bone china at prices affordable to the 18th Century English working classes. The basic product was similar in all but the decoration to the ornate wares Wedgwood sold to Europe’s royal families and the then new methods of mass production guaranteed a quality product to all customers.

Just over a century later, Henry Ford did a similar thing with the motor car, meeting the price points that made the horseless carriage accessible to the middle classes in early 20th Century United States.

In more recent times we’ve seen similar trends happen; the under $2,000 personal computer in the 1990s, the sub $500 netbook in 2008 and the affordable smart phones of recent years.

We can add broadband Internet and budget airlines as other examples of how demand has exploded when the cost has dropped below a certain price point.

As technology becomes affordable, we use more of it. A point that’s often lost monopolists and established players in industries.

This is the real opportunity Amazon are now offering with the cheap Kindles and we’ll see e-books boom as people are prepared to make a small investment in the devices.

Almost certainly this will open new markets and unforeseen opportunities for entrepreneurs and writers. The resulting pressures on competitors like the Apple iPad and the various Windows or Android tablet devices should increase innovation as well.

In our own businesses we need to ask what those price points are and what is stopping us from meeting them. As other price busters have shown, if you can meet these price points, the riches are there for the taking.

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