Tag: disruption

The cost of the cloud: How the disrupters are being disrupted

Cisco, Autodesk and Microsoft’s cutbacks and pivots show technology companies are not immune from disruption

A common factor when talking to tech companies is their talk of disrupting industries, they themselves are not immune from change though.

This week networking giant Cisco announced they would cut seven percent of their workforce, nearly 5,500 employees, as the company deals with the shift to software defined networking equipment continues.

Industry commentators are warning Cisco are not alone as software and cloud based services change the tech industry with Global Equities Research’s Trip Chowdhry estimating the sector may shed up to 370,000 positions this year.

Today I had the opportunity to ask Autodesk’s Pat Williams, the company’s Senior Vice President for Asia Pacific, about the challenges facing companies transitioning to the cloud. At the beginning of the year Autodesk announced they would be cutting ten percent, over 900 jobs, as part of a structuring plan.

“I think there was a model that we had that as we moved to a subscription business that said we would see a bit of a drop in revenue and we realised our gross margins would be pressed,” he said.

“What we were trying to do was right-size the business,” Williams continued. “Sometimes you need to do that. It was a very intentional forward looking move we made.”

Autodesk and Cisco are far from the first tech companies to suffer from the software industry’s shift to the cloud. Microsoft have been probably been the business most affected by the change.

Cisco themselves have been dealing with this shift for a decade as well, with a major restructure in 2011 that saw 6,500 jobs cut.

What is clear in a transitioning industry is that Microsoft, Cisco and Autodesk are far from alone in making cuts. As Autodesk’s Williams points out, it’s probably best for managements to be doing this proactively rather than waiting for the changes to force their hands.

The stories of Cisco, Autodesk and Microsoft show all industries are facing changes. Assuming you’re safe in any sector is brave thinking.

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Embracing business disruption

Pam Murphy, the Chief Operating Officer of software company Infor believes businesses have to embrace change in order to survive today’s period of disruption

“A lot of companies are trying to figure digital disruption out,” says the Chief Operating Office of Infor, Pam Murphy. “For many companies they are seeing all this stuff and thinking ‘oh my god, what on earth do I do?’. They know they need to evolve and they know they have to evolve.”

Murphy, who joined Infor in 2011 after over a decade at Oracle, has seen a lot of that change. Infor itself embraced the cloud and in the company’s has been on an acquisitions spree as it seeks to expand its product offerings.

Having dealt with so many acquisitions – eight since Murphy joined five years ago – the company has become adept at absorbing new businesses. “It does require a lot of thinking that you’re going to be respectful of that,” she says. “A lot of stuff is easy to standardise but culture is difficult.”

Another area that Murphy doesn’t see as being standardised is in developing talent. “You have to be open minded,” she says in answer to my question about encouraging women into senior roles and increasing the diversity of senior management.

Murphy’s main advice to business leaders is not to shy from the business world’s shifts, “embrace the change.” She says, “don’t think of it as being something that’s scary and threatening, get ahead of it. Embrace the fact we’re in a completely different era.”

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IBM and the era of cognitive computing

IBM CEO Ginni Rometti describes the future of business being cognitive computing – but will her customers be part of that future?

“If you’re digital now, you’ll be cognitive tomorrow” says Ginni Rometti, the head of IBM.

Rometti was talking at the Sydney IBM Think forum today where she laid out the vision of IBM’s role in the data rich organisation of the future,

IBM’s pitch is that services like their Watson artificial intelligence platform is a key part of business as companies try to differentiate themselves in the new economy.

While Rometti’s view is correct, the question is whether IBM are the company to do this. The audience in Sydney were largely incumbent corporations and government agencies, it was almost sad that some of the panelists citing their digital smarts were from Australian businesses that have been tragically leaden in responding to changes to their markets over the last two decades.

In the first panel Rometti was joined by Andrew Thorburn and Richard Umbers the respective CEOs of the National Australia Bank and the Myer department store chain.

Thornburn’s comments about NAB being an agile fintech company were somewhat at odds with the reality of Australia’s housing addicted banking sector but Umbers’ view that Myer is leading the way in customer experience is almost laughable given how his company has missed almost every development in retail over the past twenty years.

Leaden corporations are Rometti’s core customers however – it still remains true that no-one at companies like Myer and NAB gets sacked for buying IBM.

“We’ve been part of your past, and I hope we can be part of your future” was Rometti’s conclusion of her keynote. It remains to be seen whether her customers are part of the future.

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Subverting the house rules

An Arab Spring seems to have come to the US Congress as members occupy the chamber and stream their own video footage.

It seems the Arab Spring has come to the US Congress where Democrat representatives protesting the house’s refusal to vote on gun control legislation have occupied the house.

House speaker Paul Ryan, a Republican, ordered the chamber’s TV cameras to be shut off but the occupying members responded by streaming their own media feeds through Facebook and Periscope.

Once again we’re seeing how new media channels are opening up with the internet. While they aren’t perfect, they do challenge the existing power structures and allow the old rules to be subverted.

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A constancy of change

One constant about the technology sector is change, and a visit to Silicon Valley’s Computer History Museum emphasises just how much the industry has changed over the years.

One constant about the technology sector is change, and a visit to Silicon Valley’s Computer History Museum emphasises just how much the industry has changed over the years.

Notable are all the gone and forgotten brands that were in their day giants of the industry along with the efforts by various countries, Britain in particular, to compete with the US in computing.

But most striking are the old roles that rose and fell as technology evolved over the past century, from the Morse Code operators whose skills were essential for safe shipping and telegraph communications through to punch card operators and the ‘tape apes’ of the 1980s.

Most of those roles rose, became lucrative and then disappeared as technology evolved, just as the loom weavers’ jobs did in the eighteenth century.

Like the loom weavers and the companies that employed them, history and technology overtook them. Something that today’s business giants and high paid occupations need to keep in mind.

No industry is static and few jobs are safe in today’s rapidly changing world. It’s why we need to be making the investments in the skills and technologies that will define the future economy.

We can’t assume today’s jobs will be those of tomorrow.

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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.

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Politics enters the age of disruption

Modern politics is being disrupted by change as greatly as any business

One of the key features of modern western nations is how stable politics is with very few major parties being less than fifty years old and many boasting a history lasting back a century or more.

Now in the US and Australia we’re seeing the slow motion implosion of the established parties of the reactionary side of politics – it would be misleading to describe the schoolboy ideologies of most American Republicans or Australian Liberals as being ‘right wing’.

Tony Wright in the London School of Economics blog asks What Comes After the Political Party?

Wright’s view is political parties are doomed to extinction as their memberships dwindle and this is an opinion shared by many watching the declining participation in formal politics over the last fifty years.

One result of that declining participation has been the steady increase in power of the machine apparatchiks who’ve increasingly replaced boots on the ground with corporate funding.

The consequence of that increase in power has been a steady disconnect between the concerns of the electorate and the priorities of the party leadership.

In the US that disconnect resulted in the Republicans blindsided by the rise of Donald Trump and the Australian Liberal Prime Minister increasingly looking like Grandpa Simpson as his party shuffles towards what increasingly looks to be a ballot box disaster.

Both parties are likely to rip themselves apart as the contradictions of the modern reactionary movement – dismantling public services while increasing government powers – come home to roost with the ideologues and pragmatists within the organisation fighting bitterly.

The truth is political parties are no more permanent than businesses, or indeed nations, and in a time of economic change it isn’t surprising old parties die and new ones are formed.

While political parties won’t cease to exist, the new political parties that will rise from the wreckage of today’s will be different in both their philosophies, organisation and membership.

Parties that were formed in the horse and carriage days or the early era of newspapers and radios are always going to find the internet era to be a challenge, that they are being run by men whose political theories haven’t moved for fifty years only guarantees their demise.

In many ways, what’s changing politics is exactly what’s changing business. However the politicians and their supporter seems far more oblivious to change than their commercial counterparts.

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