Category: Internet

Tightening the screws

Cloud computing changes business IT economics, but it isn’t a magic pill.

Google had a big boost this week with Spanish bank BBVA announcing its 110,000 staff will switch to use the cloud based productivity software.

This wouldn’t be good news for Microsoft as their struggle to retain their almost monopoly position in corporate desktop applications and will undoubtedly mean reducing licensing fees and accepting tighter margins on their products.

BBVA’s move is interesting on a number of fronts although there’s a few myths among the trend towards cloud computing services and office productivity.

Cost saving myth

Part of the focus of selling these products is on cost and the head of Google Enterprise apps in Europe, Sebastien Marotte, said that his corporate customers on average achieved cost savings of between 50% and 70%.

The cost aspect is interesting, I’ve posted before about exaggerated claims for cloud computing savings, and Marotte’s statement deserves a closer look.

It’s highly likely the claimed cost savings are based on licensing – the standard Google Apps cost of $50 per user per year is substantially less than even the discounted rates large corporations receive on Microsoft licenses.

While the licensing cost is a serious line item, particularly when you have 110,000 employees, it isn’t the whole story; there’s training, maintenance, disaster recovery, security and a whole range of other issues.

Cloud computing services address a lot of those costs, but nothing like the order of 50 to 70%. In fact, it would be hard to find an enterprise that had the sort of slack in its IT operations to achieve those sort of savings.

In one respect, this is where its disappointing that cloud computing vendors tout those sort of savings – not only does it commoditise their industry but it perpetuates the myth amongst executives that IT staff spend the bulk of their time playing video games.

While there are real savings to be made for businesses switching to cloud computing, any sales person claiming a 50% or greater saving should be asked to justify their claims or shown the door.

Clean slate

Another interesting point with BBVA switching to Google is how the bank wants employees to leave all their old email and data in their old systems. Carmen Herranz, BBVA’s director of innovation, says we “want to start from scratch… don’t want to carry across old behaviours”.

Not migrating data is an interesting move and how BBVA’s users deal with retrieving their contact lists, dealing with existing email conversations and how staff will deal with feature differences like document revision tracking – an area where Microsoft Office outdoes Google Docs.

Internal use only

BBVA are only applying the Google services to internal documents as well which means the bank will be using other software – probably Microsoft Office – for corresponding externally.

This makes it even more unlikely the touted cost savings of 50 to 70% are achievable, and may actually increase support costs while reducing productivity as many customer facing staff will have to deal with two systems.

Having one system for use inside the business and another for external communications seems to be a European trend – before Christmas French company Atos announced it was abolishing email within the company but still using it for outside messages.

Both abolishing email and moving to cloud based office packages are really about improving productivity in a business while cost savings are nice, the main focus on adopting cloud computing – or any other new technology – should be on freeing your staff to do more productive work.

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Blinking

Sometimes a business has to change, despite customer opposition

A while back I wrote about leaving customers behind. As a business grows or evolves some customers are left behind.

That’s not to say those customers are wrong or bad, just that they are not the right fit for the long term objectives of your business.

Sometimes those customers are raving fans and passionate patrons are important; if you can meet your clients’ business and emotional needs then you, and your customer, are in a great place.

But not always, sometimes those fans are a boat anchor to your business.

In 1998  Steve Jobs announced he was ditching the Apple Desktop Bus (ADB) standard for Mac computers and moving to the USB standard for new computers. Thousands of outraged Mac fans swore they would never buy an Apple computer again.

Henry Ford is quoted as saying if he’d asked 1890s what they wanted, he’d have built a better horse cart rather than a motor car.

Sometimes customers don’t know what they want and sometimes those who do know what they want aren’t the customers you want.

If you have to make that decision, it has to be firm – blinking in the face of opposition doesn’t work. You’ve shown you’ve blinked on one thing and you’ll be blinking on more. You’re now owned by your customers and the most conservative, risk adverse ones at that.

Once you’ve given ownership of your business to your most conservative customers, you’ll have to fight to regain control.

It’s much better to make a calculated, informed decision and go for it  – if you’re right, your business is going to be stronger without those risk adverse and often low margin customers.

A lot of people decided they wouldn’t buy Steve Jobs’ or Henry Ford’s products again. Eventually they did.

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Strategic lessons from a security breach

What businesses can learn from Stratfor’s data lapse

2011 has been the year of the IT security breach. Big and small organisations around the world ranging from major corporations like Sony through to smaller businesses such as security analysts Stratfor found their customer data released onto the web.

The frustrating this is most of these breaches are avoidable and “hacking” is often giving too much credit for the security used by the targeted companies.

While the ‘hackers’ themselves may be skilled, the compromised organisations are often easy targets as they don’t follow the basic rules of protecting their data.

Standards matter

Customer payment account details are covered by the Payment Cards Industry -Data Security Standard (PCI-DSS) operated by the PCI Security Standards Council.

The PCI Security Standards Council helpfully has a range of information sheets for merchants of all sizes and if you are taking payments off the web you should make yourself aware of the basic requirements.

For most businesses, the cardinal rule is not to save customer’s card details. Once the payment is approved, you have no business retaining the client’s credit card or bank account numbers.

In Stratfor’s case, they were almost certainly processing payments manually and credit card details were being saved on customers’ records in case of errors or to make renewals easier.

Call in the professionals

There’s no shortage of payment companies, ranging from PayPal through specialist services like eWay to your own bank’s services. Choose the one that works best for you. If you have no idea, call in someone who does.

One of the arguments for using outsourced services, particularly cloud computing, is how data security is a complex field that requires professional and qualified expertise. The internal systems of Sony, Telstra and Stratfor were not up to the demands placed upon. A professional service is better equipped to deal with these issues.

Size doesn’t matter

A major lesson from the last year’s security breaches is that it’s not just the local shop or garage e-commerce business that is careless with data. Some of the world’s biggest companies and government agencies have been compromised.

If anything, Sony’s experience has shown the double standards at work in the application of security rules; there’s no doubt that had a local computer shop been as thoroughly compromised as Sony were, they would have been shut down on the second breach and the management would have been carted off to jail well before the twelfth.

For the management of Sony, there seems to have been little in the way of sanctions of the people nominally responsible for this incompetence. This has to change both within organisations and by those charged with enforcing the rules.

The lesson for customers is you can’t trust anyone with your data; don’t assume the big corporation is any more secure than the serving staff at your local sandwich shop.

Passwords matter

Every time one of these breaches happen we hear about password security, with “experts” pointing out that some of the subscribers were using passwords like ‘statfor’ or ‘password’.

For customers, this actually makes sense if you can’t trust third parties with your details so specific, disposable passwords for each site should be used. There’s little point in having a complex password if some script kiddie is going to post your login details onto 4Chan.

Naturally your passwords for banking and other critical websites should be very different and far more secure than those you use for sites like Stratfor and the Sony Playstation Network.

Will 2012 be any different?

Given the data embarrassments of 2012 for businesses and government agencies, can we expect lessons to be learned in 2012?

While many businesses are going to learn specific lessons from these breaches, there’s a management cultural problem where any spending on information systems is seen as a cost that has to be minimised.

This cost cutting mentality lies at the core at many organisations’ failure to secure their systems properly and until a more responsible culture develops we’ll continue to see these lapses.

Good managers and business owners who understand the importance of guarding their organisation’s and customer’s data are those who are ahead of their competition. Over time, these folk who will have the competitive advantage.

For customers, the sad lesson is we can’t trust anyone and a layered approach to security along with keeping a close eye on our bank accounts and credit card statements is necessary.

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Lords of the digital manor

How free content and expensive management can’t live together

There is something fundamentally wrong with AOL’s media business states a Business Insider headline.

What is fundamentally wrong is quite basic to anyone who has owned or managed a business – money.

The problems at AOL illustrate the deep flaws in the “digital sharecropper” business model of putting free or cheap content on the web to harvest online advertising.

Lords of the digital manor

Sites like Demand Media and Huffington Post can’t make money from content if too many staff expect to get paid. Chris Anderson illustrated this in a rebuttal to Malcolm Gladwell where he examined the economics of his GeekDad blog and the work of its manager, Ken;

So here’s the calculus:

  • Wired.com makes good money selling ads on GeekDad (it’s very popular with advertisers)
  • Ken gets a nominal retainer, but has also managed to parlay GeekDad into a book deal and a lifelong dream of being a writer
  • The other contributors largely write for free, although if one of their posts becomes insanely popular they’ll get a few bucks. None of them are doing it for the money, but instead for the fun, audience and satisfaction of writing about something they love and getting read by a lot of people.

It’s almost touching to picture the modern day digital serf touching his flat cap and murmuring “thank you m’lud” on receiving a ha’penny from the lord of the digital manor before scampering back to working on becoming a well read, but unpaid writer.

We don’t pay writers

The business model of the Geek Dad blog or the Huffington Post relies upon these unpaid writers donating their work and time –the digital sharecroppers as described by Jeff Attwood.

Low paid or free labour is essential to the success of these site, when the bulk of advertising income goes straight to the proprietors the digital aristocrats – Lord Chris of Wired or Duchess Arianna – can live well.

The business model falls apart when management starts taking a cut of the profits; install a highly paid CEO and management team with their squadrons of Executive Vice Presidents or Group General Managers with the Medici-esque perks and entitlements these folk demand and the profits disappear.

AOL’s problem is it has too many highly paid managers extracting wealth from the company’s cashflow.

This is exactly the same problem print and television media empires have, once the rich rivers of gold allowed them to build up well paid management castes that are now crippling the businesses as revenues can’t support their financial burden.

Paying for digital media’s future

Over time, online media revenues are improving. As Morgan Stanley analyst Mary Meeker pointed out in 2010 that U.S. consumers spend 28 percent of their media time online, yet in 2010 only 13 percent of ad spending goes to the Internet. As advertisers follow consumers, publishing on the web will become more profitable.

The risk for big media organisations is their money will run out before the digital renaissance arrives and when it does, they may have squandered their natural advantages by shedding quality journalists, experienced sub-editors and good editors in an effort to prop up executive bonuses.

AOL’s management problem is part of a much bigger problem across markets and industries, we can call it managerialism – there are too many highly paid managers getting in the way of the writers, engineers, scientists, artists and tradesman who add real value to their organisations.

Strangely, it may be Chris Anderson’s “free” model that kills the managerial culture as enterprises that can’t afford to pay product creators certainly won’t pay an Executive Vice President’s entitlements.

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Quitting our email addiction

What can we do to reduce the size of our electronic inboxes?

This post originally appeared in the Xero Accounting Blog on December 9, 2011.

With 74,000 staff, you’d expect the CEO of French technology company Atos to be buried in email, but Thierry Breton hasn’t sent an electronic mail message for three years.

As the US ABC news service reports, Atos and Breton are implementing a zero email policy for their employees, steering them to use instant messaging and collaboration tools that reduce the need to send attachment heavy messages.

Breton claims only one in ten of the 200 messages his employees receive each day are useful and 18 percent is spam which – given some security companies estimate over 90% of world email traffic is unsolicited messages – shows Atos has a pretty good spam filter.

Email has been one of the main applications of business technology for the last twenty years, so how feasible is it really to move away from the inbox as being the first and last thing you check each day?

Instant Messaging

The ability to send quick messages between computers has been around since they were first networked in the 1950s but consumers and business largely ignored these clunky features until they were made popular in the late 1990s by the web based AOL and MSN Messenger services.

Most business communications platforms like Microsoft Office, Google Apps and  Novell Groupwise have an Instant Messaging (IM) tool built in which can be easily turned on.

None of this is new technology and it’s probably one of the most used business features in the Skype Internet telephone service.

A downside with IMs is they generally demand immediate attention and can distract someone from their work. They also leave detailed logs so don’t for a minute think your rant about a customer or staff member hasn’t been recorded.

Social media

Many of the social media tools have their own built in instant messaging with LinkedIn, Facebook and Google+ having their own services with Google’s service offering the Hangouts feature to create impromptu video conferences.

By definition Twitter is an instant messaging service offering both public and private channels. The Yammer platform is a grown up corporate tool that offers all the social media functions for a business environment.

The downside with using social media platforms as mission critical business tools is their reliance on the best efforts of external providers that can raise security and reliability issues.

Wikis

Atos makes specific mention of their company wiki. Simply put, a wiki is a website that can be easily updated by anyone with permission to do so.

It’s possible to lock wikis, restrict access or to undo any changes that aren’t suitable so all the information is controlled and subject to review. These can be run on your own office server or hosted on an outside cloud service.

Wikis are a fantastic tool for building a corporate memory and developing standardised procedures and policies across an organisation.

Collaborative tools

One of the big changes in the modern office is the rise of cloud office software services like Google Docs, Basecamp and – of course –Xero Accounting that allow people to work together on the same files at the same time.

In the past, office software has locked individual documents while one person used them and that aspect alone has probably been responsible for many of the emails spinning around corporate offices.

Another benefit of the new breed of collaborative tools is they make it easy to control documents as all team members are working only one version of a file, meaning there’s no uncertainty of who has the latest version.

External risks

There are some outside risks with some of these services as they are cloud based so Internet access is important and there can be some questions of security and reliability with trusting processes to outside providers.

Email itself is evolving into a cloud based commodity as many businesses move to Gmail or hosted solutions rather than running their own email servers.

If those external risks are a concern, then it is possible to run these services on your own networks although most businesses are comfortable with outsourcing their technology.

Discovery

One of the first things that jumps to mind from a business IT point of view is that moving to a non-email environment reduces the risk of having to provide masses of data in the event of a legal dispute.

Many organisations have been caught out by a “smoking gun” message hidden within the pile of emails sent within an organisation every day.

The reality is that instant messaging, wikis and collaborative tools all leave their own “digital fingerprints” and if anything the non-email platforms may make it harder to hide evidence from a determined investigator.

Outside parties

Atos aren’t banning electronic mail with outside parties though, with a company spokesman quoted saying their goal is focused on internal emails rather than those from outside the company.

This makes sense as email is still a key business communication tool and not using it to talk to suppliers and customers wouldn’t make sense. For most organisations such a ban would make it impossible to send invoices.

Email is a key part of business and probably will continue to be, what we are seeing though is an evolution of how it is used in the workplace as new tools are developed.

The last word goes to Thierry Breton who said when announcing the policy, “We are producing data on a massive scale that is fast polluting our working environments and also encroaching into our personal lives”. He has a point.

How are you managing your business email and would you abolish it if you could?

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The dying Yelp of Sensis

Can a social review site save a fading directory company?

This story originally appeared on Technology Spectator

Fifteen years ago Sensis, the directories arm of Telstra, was untouchable. A listing in the Yellow and White Pages was essential for every business and Sensis’ monopoly was a true river of gold.

Sensis’ launch this week of an Australian partnership with the US based review site Yelp is Telstra’s desperate throw of the dice to survive in a market where its directories business has become irrelevant.

Attempts to stay relevent

There have been many attempts by Sensis to overcome this erosion of its core maket including purchasing an IT services business and unsuccessful forays into publishing and online search with Trading Post and CitySearch.

Probably Sensis’ lowest point was the squandered millions of dollars and years of management time wasted in trying to compete against Google after Telstra CEO Sol Trujilo made the sneering comment of “Google Schmoogle”.

Declining values

At the time of Trujillo’s comment in 2005 Sensis was valued at $10 billion as a stand alone company. After last week’s disappointing results that saw revenue drop 18 per cent for the year, the value of the division is an optimistic $5 billion.

Yelp itself is unlikely to help Sensis’ revenue woes. Despite filing for a $100 billion public offering, Yelp has never made a profit in its seven years of operation. Although licensing their service to failing directory companies around the world might prove to be a handy revenue stream.

That lack of profit – on North American revenues that are tiny compared to Sensis’ Australian cashflow ­– shows the fallacy in the social media business model that many of the popular online services are faced with.

Users of social media services like Yelp are looking for a community of trustworthy and relevant referrals. The directory sale model is based on displaying the biggest advertisers prominently, which is exactly what social media users don’t want.

Yelp also comes into a marketplace already crowded with competing, established services like Word Of Mouth Online, Eatability, and the faster moving social media platforms like Foursquare.

Competitors’ Missed Opportunities

In many ways Sensis has been lucky in that most of the competition has been from smaller upstarts while their bigger competitors haven’t capitalised on the market opportunities.

Google Places, the biggest competitor to the world’s Yellow Pages directories, is mired in bureaucracy and isn’t doing a good job in telling business its story while Facebook’s local search function isn’t getting much traction either.

Of the local Australian incumbents, ninemsn isn’t interested in local business with its international partner Microsoft not offering an Australian product and the local team preferring to deal with big spending advertising agencies, while Fairfax squandered its early advantage and eventually sold the CitySearch service to Sensis.

News Limited’s True Local is having limited success while it struggles with the transition from print to online. At News’ recent launch of its new digital platform, the company’s executives stated they expected journalists to develop a “digital mind”.

Lacking a Digital Mindset

That “digital mindset” is the key to the problem at companies like News Limited, Fairfax and Sensis. In a marketplace where customers, advertising and readers have moved online it requires management, not just the lower workers, to “think digital”.

Sensis’ key problem is its management structures – and more importantly its sales teams’ commissions and KPIs – which are still based around its traditional business models that will make selling services like Yelp difficult.

The phone directory business model is a product of the 1920s and in many ways Telstra and the other Yellow Pages franchisees around the world should be grateful it has lasted so long.

Whether the phone directories that have been so profitable for phone companies can make it to their one hundredth birthday is an open question. One thing is for sure, bolting on an unprofitable and late to market social media service isn’t the answer.

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Cloud Computing Explained: 702 Sydney Weekends

This month’s 702 Sydney Weekend spot looks at cloud computing.

What on earth is cloud computing? Is it just another IT buzzword or something that you can use in your home and business?

On the November 20 ABC Weekends show, Paul and Lex Marinos discussed what cloud computing is and how it can help you.

We also helped out listeners with various computer and tech questions, including the following;

Malware

Sue was caught out by the DNS Changer Trojan that was recently busted by the FBI. Probably the best fix for this is downloading and running the free Malwarebytes software.

Our IT Queries site has instructions on the somewhat convoluted process for removing this Trojan and other viruses from your computer.

Synchronising an iPhone with iCloud and Google Calendars

One advantage we have with the cloud is that it means you can use devices anywhere, however there is a bug where iPhone calendar functions aren’t synchronising with Google Calendar.

Unfortunately the problem is the iCloud and Google services aren’t compatible on the iphone so one has to be turned off.

If your preference is to use the Google services, then you will have to turn off the iCloud services through the iPhone’s settings app and turning off all of the calendar and contact settings.

You may then want to check your Google services are being synchronised through the iTunes settings.

Sharing data between laptops.

One of the advantages with networking is that you can share data between computers. Sonya wanted to know how she can setup her windows 7 laptops to share data to an external drive.

The best option is to use a Windows 7 compatible Network Area Storage device that sits on the network.

For the setup to work, the network name has to be the same on all three devices, Microsoft has instructions for setting Windows7 network name and the hard drive will have the instructions included for setting it up correctly.

It’s also worthwhile using Microsoft’s Active Sync software to synchronise machines as well so you have files stored on your computer.

If you missed Sunday’s ABC program, there’s more details at Netsmarts’ Cloud Computing explained and The Networked Business, we’ll also be running a Demystifying the Cloud webinar on the Australian Businesswomen’s Network at the end of November.

That will probably be the last ABC 702 Weekends spot for 2011 unless there’s something else that comes up.

Subscribers to our newsletter get early notice of any upcoming programs and other useful information on getting more value online. Don’t miss the next program.

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