Tag: change

Are IT workers the new loom weavers?

Transition changes hit the technology industries once again, and many aren’t happy.

“There are IT workers who can’t put food on their table,” complained an industry representative at an outsourcing conference.

It’s true – there are hundreds of once well paid project managers, technicians and support staff staff who can’t get work in their industry as some tasks go offshore and others are supplanted by new technologies.

None of this is new, we only have to think back to the heady days of the Dot Com boom when any punk with a basic knowledge of HTML could pull down six figures a year.

Just like the loom weavers of the 17th Century who became the Luddites, the HTML coders of 1998 and the project managers of 2008 have had a short period of affluence before been overtaken by change.

It’s something that today’s hot shot coders should keep in mind, bubbles burst and technology changes.

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The Death of the IT Guy

The IT support sector is being disrupted as cloud computing service shake up what was a settled industry.

Until recently the cottage industry of computer repairers was thriving, having been born with the massive take up of computers by homes and businesses in the 1990s.

Over the years, things got better for the local IT guy as businesses and then homes became networked. Some of the smarter technicians started selling and supporting servers and things got better.

The arrival of the Internet, the approach of Y2K bug and, in Australia, the introduction of the GST made even more business for the local computer tech and the Windows virus epidemic of the early 2000s guaranteed plenty of work for anybody who knew how to wield a screw driver and a boot disk.

As the industry matured, maintaining office servers and looking after the regular glitches in desktop computers was a steady, reliable source of income for most support companies.

Every few years businesses or homes would upgrade their computers and that would trigger a cascade of costs as data was migrated and older peripherals like printers, serial mice and ADB accessories had to be replaced.

Then all came to a stop with the arrival of cloud computing services where many of older computers could access online applications just as well as newer computers.

For IT organisations with a business plan based up customers upgrading systems every three to five years this was a disaster.

These businesses were already feeling the pinch with the late arrival and market rejection of Microsoft Vista and now their customers could sit on older XP machines and happily use the latest online applications.

Sensible IT folk have understood the change and the good support companies now have an armoury of cloud based services for their customers. These businesses know the IT hardware and support spend of most businesses is shrinking and taking the market with it.

Unfortunately there are a few holdouts trying to keep the old business model alive who have a hundred reasons why cloud services are no good for their customers.

To be far to those fixed on the old IT model, this attitude is probably even more prevalent in corporate IT departments and among CIOs with cloud services seen – probably rightly – as a threat to their power and income.

One of the biggest risks to those support folk who aren’t at least evaluating cloud services for their clients is that shrinking IT spend and eventually there won’t be much money, or customers, left for the old model.

A similar thing is happening to bookkeepers and accountants as newer businesses and those with younger owners or managers are moving to cloud based software while the older ones are wedded to their legacy systems.

The older accountants who won’t move to the newer systems are finding their businesses growth stagnant while their younger colleagues are picking up the work from new businesses.

Computer support was always a business based upon the transition to a digital workplaces, similar to the men employed to walk in front of early motor cars with red flags.

Now workplace technology has matured, there’s less work for the IT guy. Hopefully most of them will make the change and not get run over like the guys clutching red flags.

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On being a Luddite

Being skeptical about technology isn’t the same as being a Luddite.

“I’m a Luddite”, magazine editor James Tuckerman proclaimed as Master of Ceremonies for Microsoft’s Asia Pacific Bizspark Summit this week.

James was referring to an article in Australian Anthill in the 1990s where he predicted businesses would never use the Internet for research.

Being a Luddite isn’t a bad thing, James contends. In his view being skeptical about technology enables business owners to better evaluate technology as Luddites “think like a layman, don’t know the limits and think commercially”.

None of this is true though – being a skeptic is not the same as being a Luddite.

The original Luddites in the English Midlands weren’t anti-technology, they were opposed to the technology that would put them out of work.

At the beginning of the 19th Century, mill workers were a highly skilled and extremely well paid trade but the new automated loom technology meant those skills were no longer needed.

To protect their livelihoods, the loom workers started smashing the new machines and burning down factories. Eventually they were viciously suppressed by the British government with some being executed while others were transported to Australia.

What drove the Luddites was the loss of their income and who is to say we would have behaved any differently if we were faced with being unemployed and destitute in the harsh conditions of 19th Century England.

However we shouldn’t equate being skeptical about technology with being protecting one’s turf.

Today’s Luddites are those businesses who don’t want to move with the times – those who have grown fat on easy credit or lazily clipping the tickets on state sanctioned monopolies.

Some of those Luddites are going broke as consumers stop buying electrical goods or cars, while others lobby their friends in government to protect their privileged and profitable positions.

In the early 1800s the Luddites eventually lost, we can only hope that when history repeats itself two hundred years later today’s Luddites haven’t damaged the economy too much.

James Tuckerman isn’t a Luddite and that’s why he’s part of the future. I just wish he wouldn’t call himself one.

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Hubris and risk

Technology brings benefits and risks, we need to understand both

Today is the centenary of the Titanic’s tragic sinking. In many ways, the RMS Titanic described the 20th Century conundrum; a blind faith in technology coupled with a struggle to deal with the consequences of those innovations.

It’s worthwhile reflecting on the hubris of those who believed their technology made a ship unsinkable, or those who believed their shipyards would never close and – probably most relevant today – those who believe the sun never sets on their empire.

Technology can liberate our lives which is shown by the fact the average American, European or Australian lives far longer and better than even kings did two centuries ago. But we should never assume these improvements don’t come at a real cost to ourselves, the environment or the ways of life we take for granted today.

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Why VCs hate Amazon

How cloud computing is changing investment and entire industries

“Venture capital investors hate us” said Dr Werner Vogels, CTO of Amazon.com at the April Sydney FED, “once you needed five million dollars to launch a new technology business, today you need $50,000 and a big box of ramen.”

Dr Vogels was talking about the Amazon Web Services (AWS) platform that underpins many of the cloud computing and social media sites which are redefining how we use computers and the web.

What’s really interesting with the doctor’s comment is it’s only part of the story; for businesses outside the tech sectors –say retailers or service companies – they get cheap or even free access to the cloud computing services running on AWS or its cloud competitors like Windows Azure.

For those businesses, it’s possible to start an idea for nothing but the founder’s time; rather than putting fliers up at the local bus stop or shopping mall an entrepreneur starting an online store or neighbourhood computer repair business now can create a website and all the local search profiles without spending a cent.

Being able to start up a business with little, if any, capital means we’re seeing a new breed of innovators and entrepreneurs entering markets.

At the corporate level, or in the $50 million dollar VC investment field, the opportunities for exploring Big Data without buying big supercomputers is another benefit of the cloud computing services.

Services like ClimateCorp which insures farmers against extreme weather couldn’t have existed a few years ago as the processing power to analyse historical rain and drought data was only available to those with insanely expensive super computers.

Today, the combined power of millions of low powered cheap computers – the definition of cloud computing – delivers the processing grunt of a supercomputer at a fraction of the cost.

Access to cheap computing power means innovations can be bought to market quickly and at a fraction of the cost that was normal a decade ago.

We’re in early days with what the effects of super cheap computing means to most industries, but it is changing industries as diverse as agriculture, banking, logistics and retail quickly.

Cloud computing is giving big business the tools to understand their markets better and small business the ability to grab customers from bigger competitors who are too slow or don’t want to face what their clients really think.

These are the forces that are changing the way business is being done; if you’re in business it’s time to start paying attention.

In reality, Dr Vogels is pulling our legs – the smart VCs aren’t hating Amazon, they are rubbing their hands at the profits that are going to be made in disrupting cosy industries.

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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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The business of denial

Denying market realities is rarely a good business move

Denial is a powerful sedative, it allows us to trundle dozily along a well worn patch oblivious to the reality our comfortable world has changed.

Last week’s claim that youth is fed up with the iPhone by Nokia’s Niels Munksgaard – who has the wonderful title of Director of Portfolio, Product Marketing & Sales – is a great example of how far and how long denial can continue while there’s still money to pay executive bonuses.

Canada’s beleaguered Research In Motion, manufacturers of the Blackberry phone, showed the same delusions when they released their Playbook tablet computer with the declaration Amateur Hour Is Over.

The only amateur hour was in the hubristic minds of RIM’s marketing team.

While profits keep flowing big organisation can afford delusions – Google can indulge their social media fantasies while the Adwords rivers of gold continue to flow ever faster and Microsoft can continue to indulge their delusions while their Windows and Office products remain immensely profitable.

Microsoft’s “droidrage” campaign, designed to embarrass Google’s Android mobile phone platform, is part of that delusion; for Microsoft’s campaign to work they have to prove there is a widespread Android malware problem, show their system isn’t prone to the same flaws and – most importantly – have enough product on the market to sell to those disillusioned Google customers.

Such a negative campaign has many fallacies – it assumes there are widespread security problems in Android, that Microsoft will pick up disaffected Google customers and there are enough Microsoft based products to grab those sales.

Probably Microsoft’s biggest problem is the assumption that customers actually care about that stuff – for years Windows dominated its market despite being riddled with computer with security holes and malware.

Microsoft succeeded because their competition was delusional; the best example being WordPerfect claiming graphic systems like Windows were a fad at a time when an inferior Microsoft Word was gobbling up their markets.

By the time WordPerfect realised their error and released a truly dreadful WordPerfect for Windows it was all too late, like a stagecoach company realising the motorcar is here to stay.

The problem for businesses in denial is that reality eventually does bite; plenty of people in the newspaper industry believed their advertising based model was secure and profitable – indeed many of the cosseted managers in that sector still believe it is – which now leaves them struggling in a changed world they thought they could ignore.

Denial among incumbents is a great opportunity for newer, more flexible players; for years mobile phone and tablet computer manufacturers were in denial about the usuability of their product – Apple proved them wrong and now commands the most profitable chunks of those markets.

Being the village blacksmith or a buggy whip maker was a good business to be in at the beginning of the 20th Century. Thirty years later those block boys and saddlemakers who hadn’t made the jump found themselves out of work.

It’s going to be interesting to see will be this century’s buggy whip manufacturers.

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