software | Paul Wallbank - Communications Professional

Building the post-agile workplace

Yammer founder Adam Pisoni believes the Microsoft owned business could be then next phase of the industrial revolution.

“I personally believe we haven’t seen a major change in how companies work since the industrial revolution,” says Yammer co-founder Adam Pisoni. “We’re, I think, on the brink of a change as large as that.

Pisoni was speaking at Microsoft’s Australian TechEd conference on the Gold Coast and gave an insight into how Yammer’s development philosophy is being implemented at Microsoft since the smaller company was acquired last year.

He believes all businesses can benefit from collaborative, cloud based tools like Yammer however software companies like Microsoft are the ones being affected the earliest from their adoption.

“We sometimes joke that Yammer’s development methodology is post-Agile, post-Scrum” says Pisoni. “Because they were not fast enough and don’t respond to data quickly.”

Understanding modern workplaces

This will strike fear into the minds of managers who are only just coming to understand Agile and Scrum methodologies over the traditional ‘waterfall’ method of software development.

“We focused primarily in the past on efficiency,” states Pisoni. “In many ways things like scrum attempt to make you more agile but still focus on efficiency. Everyone is tasked based and hours and burn down points and all that”

“The name of the game now is not efficiency, it’s how quickly you can learn and respond to information.”

“Yammer is less of a product than it is a set of experiments running at all times. We take bold guesses about the future but then we try to disprove our hypotheses to get there.”

“So we came up with this ‘post-agile’ model of a small, autonomous, cross-functional teams – two to ten people for two to ten weeks who could prove or disprove an hypotheses based on the data.”

“This lets us quickly move resources around to double down on that or do something else.”

Flipping hamburgers the smart way

Pisoni sees this model of management working in areas outside of software development such as retail and cites one of his clients, Red Robin burgers, where the hamburger chain put its frontline staff on Yammer and allowed them contribute to product development.

The result was getting products faster to market – one burger that would have taken eighteen months to release took four weeks. The feedback loops from the customer and the reduced cost of failure made it easier to for the chain to experiment with new ranges.

With companies as diverse as hamburger chains, telcos and software developers benefitting from faster development times, it’s a warning that all businesses need to be considering how their employees work together as the competition is getting faster and more flexible.

It remains to be seen if this change is as great as the industrial revolution, but it’s now that can’t be ignored by managers and entrepreneurs.

Paul attended Microsoft TechEd Australia as a guest of Microsoft who paid for flights, accommodation and food.

Security by obscurity’s false promise

Suppressing public knowledge of security flaws is not the way to fix a software problem.

Yesterday’s post looked at how security needs to be a fundamental part of connected systems like cars and home automation, an article in The Guardian shows how auto manufacturers are struggling with the challenge of making their products secure.

In the UK, Volkswagen has obtained an injunction restraining a University of Birmingham researcher from divulging security weaknesses in Porsche, Bentley, Lamborghini and Audi cars.

A mark of desperation is when a company has to go to court to suppress the details of a software security breach, it almost guarantees the bad guys will have the virtual keys while the general public remain ignorant.

Over time it backfires on the company as customers realise their products aren’t secure or safe.

The real problem for Volkswagen is a poor implementation of their security systems. It was inevitable that a master code would leak out of repair shops and dealerships.

While the law is useful tool, it isn’t the best way to fix software security problems.

Australia’s software disadvantage

What does Australia’s high software prices tell us about the nation’s economy?

This morning ABC Radio 702 asked me to comment on Adobe, Apple and Microsoft being summonsed to appear before the Federal Parliament’s IT Pricing enquiry.

As has been widely reported, the committee has asked the software giants to explain why there are such price differentials between Australian and overseas prices.

By way of example, Adobe Creative Suite 6 is available on the company website for $1299 US which is AUD 1263 on today’s exchange rate. The listed Australian price is AUD 1974 – a mark up of 56%.

This is not new

Australia has long been an expensive place to buy things, I remember my parents in the 1970s asking relatives to send over Marks and Spencer underwear as prices in Melbourne were so expensive.

Books and music have long been overpriced, the publishing industry openly printed the price of books in various countries and the Australian price has always been substantially higher than UK and US charges given prevailing exchange rates.

The high exchange rate has focused attention on the high prices, while the Aussie dollar was low consumers were tolerant of the rip-off. With the Aussie dollar high, consumers are wondering why the prices of many imported goods, particularly software, has remained so high.

A lack of competition

One of the biggest reasons for Australians being overcharged for many items is the lack of competition in the domestic marketplace. Most distribution channels are dominated by one or two players which lends itself to price gouging in areas ranging from technology to food.

A good example of this is the brewing industry, a revealing Fairfax article examined the Australian beer sector and exposed the failings and lack of competition in the market which results in the multinational duopoly extracting five times the profits of local retailers.

The conservative nature of Australian consumers is their own worst enemy as locals, including corporations and governments, prefer to buy major brands rather than experiment with local or lesser known providers.

Where alternatives exist, the price differentials rapidly fall. The price differential for an iPad is far less than the software apps that run on it. The reason for this are the range of alternatives available to the Apple product.

If Australian buyers were to explore open source alternatives, smaller suppliers or locally developed products then the prices of imported goods would fall.

Structural weaknesses

The pricing inquiry illustrates the structural weakness in the Australian economy where the nation has become a price taker both in the domestic consumer sector and bulk export industries.

Where Australia finds itself is an expected consequence of a generation of economic policies which favours debt driven consumer spending underpinned by selling assets and raw commodities.

Hopefully Australians are realising the price of software is just one of the consequences of current policies and start demanding the nation’s political and business leaders have a clear vision for what the country’s role will be in the 21st Century.

If that vision for Australia is a quarry with a few retirement homes clinging to the edge, then we’re well on the way to achieving that. At least software prices will be the least of anyone’s worries.

What happens when software is wrong

A phone company software glitch puts one man’s life and the safety of thousands at risk. It reminds us that computers are not always correct.

The Las Vegas Review Journal yesterday told the story of Wayne Dobson, a retiree living to the north of the city whose home is being fingered as harbouring lost cellphones thanks to a software bug at US telco Sprint which is giving out the wrong location of customer’s mobile devices.

While it appears funny at first the situation is quite serious for Mr Dobson as angry phone owners are showing up at his home to claim their lost mobiles back.

Making the situation even more serious is that 911 calls are being flagged at coming from his home and already he has had to deal with one police raid.

While the local cops have flagged this problem, it’s likely other agencies won’t know about this bug which exposes the home owner to some serious nastiness.

That a simple software bug can cause such risk to an innocent man illustrates why we need to be careful with what technology tells us – the computer is not always right.

Another aspect is our rush to judgement, we assume because a smartphone app indicates a lost mobile is in a house that everyone inside is a thief. That the app could be wrong, or we don’t understand the data to properly interpret it, doesn’t enter our minds. This is more a function of our tabloid way of thinking rather than any flaws in technology.

The whole Find My Phone phenomenon is an interesting experiment in our lack of understanding risk; not only is there a possibility of going to the wrong place but there’s also a strong chance that an angry middle class boy is going to find himself quickly out of his depth when confronted by a genuine armed thief.

For Wayne Dobson, we should pray that Sprint fixes this problem before he encounters a stupid, violent person. For the rest of us we should remember that the computer is not always right.

Apple’s 2am blues

Apple has a silly daylight savings bug.

Should a Sydneysider or Melbournite wanted to set their iPhone alarm to 2am or 2pm today they were plain out of luck.

It appears iOS6 no longer likes 2am or 2pm if your location is set to the parts of Australia that switched to summer daylight savings this morning.

While it’s understandable you can’t set your clock to 2am Sydney, Melbourne or Hobart time as the clocks jumped an hour you also can’t set it to 2pm.

Although if you already have a timer set, it still appears as 2am, or 2.30am in the case of my phone.

It’s just a dumb bug and switching to Brisbane time, or any other part of the world that didn’t go over to Australian daylight savings time this morning, fixes the problem.

Had I known about this yesterday I’d have turned on that 2.30am wake up call just to see what would happen. Then again, maybe not.

While it will undoubtedly fix itself tomorrow as the transition day passes, it’s pretty clumsy and embarrassing. Moreover it doesn’t bode well for Apple’s attention to detail in the post-jobs era.

UPDATE: As expected the bug has passed the following day — we have our 2 o’clock back although that such a silly bug could have slipped past Apple’s quality control is still a worry.

Beating the first mover advantage

Not being first to the market doesn’t mean your product is too late.

Twitter founders Biz Stone and Ev Williams can’t be accused of standing still, along with having founded the Blogger service that made creating websites easy which they sold to Google, their company Obvious Corporation has been working on various new projects.

Branch and Medium are their two latest releases.

At first glance Branch is similar to the Quora service where people ask questions and followers. While Quora is reasonably successful, it hasn’t gained traction outside of the tech community.

Medium is a new blogging service, which superficially appears similar to Tumblr or even the Blogger service Ev and Biz founded in 1999.

It’s tempting to dismiss both Branch and Medium as they aren’t doing things that are new. both are iterations of older services but that doesn’t mean they can’t succeed. When Facebook was launched there was plenty of competition in services like Friendster and MySpace, the upstart blew them both away.

The same is true of the iPod, Windows and Google – all entered markets that were already crowded and well catered for. All of them succeeded because they were better than what was on the market.

In the tech industry is that the first mover advantage is illusionary at best, unless you have a compelling position in the marketplace your product is vulnerable to a smarter, slicker upstart. This is particularly true if the existing services have serious flaws.

Should Branch avoid falling into Quora’s trap of silly policies and overzealous administrators – the same trap that doomed the open source directory DMOZ and threatens Wikipedia – then it may well succeed.

Medium could also disrupt the blogging industry, Blogger is being neglected by Google while WordPress is becoming increasingly complex and difficult to use. The success of services like Tumblr, Instagram and Posterous shows people want an easy way to publish their ideas or what they are doing onto the web.

While it’s too early to say if Branch or Medium will be a success remains to be seen, but writing them off as being unoriginal would be a mistake.

So you think services are easy?

The differences between service, hardware and software businesses shouldn’t be understated.

ZDNet columnist Ed Bott is possibly one of Microsoft’s closest followers and among the few to defend Windows Vista, Ed though can’t be faulted for doing the hard yards including reading Microsoft’s stock market10-K filings.

In their most recent filing, Ed finds Microsoft has used the word “service” 73 times as opposed to 44 appearances last year.

A key phrase in the filing is “a growing part of our strategy involves cloud-based services used with smart client devices.”

This is consistent with the hands on previews of Windows 8 which Microsoft have been giving journalists over the last few months. Something that leaps out is the integration with online services; something that both Google and Apple have also been pushing.

What should worry investors is that moving into services isn’t easy. Service businesses are far more labour intensive and, as a consequence, far less profitable.

Despite having relatively low labour costs, cloud computing services are problematic as many sectors have been commoditised, which is the genius of Salesforce in establishing a profitable niche.

The fat margins Microsoft are used to in their core software business can’t be replicated in the cloud based markets, which is one of the reasons why customers are switching to the cloud.

Microsoft’s problem is shared by telecommunications companies who are finding their cloud offering don’t generate the same ARPUs — Annual Revenue Per User — that they’ve become accustomed to in the mobile phone market. Which means pain for executives whose KPIs are tied to historical performance.

For Microsoft, the problem is compounded by their simultaneous move into hardware with the Surface tablets. Meaning the company’s has to deal with two significantly different business models to the ones they are used to.

Again Microsoft aren’t alone in this, Google is having similar problems adjusting to the hardware market though its acquisition of Motorola Mobility.

Integrating hardware with services and manufacturing isn’t impossible, we only have to look at Apple for how a company can succeed in that space although most managements struggle with the very different demands of each sector.

During the 1980s we saw the rise of the “all business is soap” philosophy where MBAs and management consultants preached that the challenges of running a business were the same regardless of whether you sold cleaning products, soft drinks, computers or automobiles.

Those folk were wrong. Most famously the Australian media company Fairfax hired as CEO a business school professor who preached this philosophy and managed to ignore the rise of the Internet, the echoes of the failed McKinsey ideas haunt Fairfax over a decade later.

While its possible for a software company to succeed at services or hardware, the magnitude and complexity of the management challenge shouldn’t be understated. Both Google and Microsoft will be defined by how well their leaders succeed.

Accounting for business change

Cloud computing is changing the accounting industry, how are the incumbents dealing with this?

Small businesses owe a lot to Craig Winkler – in 1991 he bought a obscure Mac based accounting package called Mind Your Own Business (MYOB) and built it into Australia’s leading small business accounting software.

Today Craig is a director and investor of Xero, a cloud computing service which is MYOB’s fastest growing competitor

At Xero’s Australian partner conference, Craig described how the development of business accounting software has evolved around technology opportunities.

MYOB’s massive growth happened as desktop computers became accessible to small businesses. Prior to 1990, it was rare to find a computer sitting on a business desk and they were largely confined to large financial, engineering and government organisations.

In the early 1990s computer prices dropped and as small businesses started using them, the need for desktop based office software exploded. This drove the growth of software like MYOB, Quickbooks and – most profitably of all – Microsoft Office.

Today a similar revolution is happening as computing moves onto the cloud, further reducing business costs and giving small organisations access to the same resources that only big corporations could access a decade ago.

Cloud based companies like Xero and Saasu are now threatening the incumbents like Quickbooks and MYOB who are responding with their own online products.

Tim Reed, the CEO of MYOB yesterday discussed how his business is moving to the cloud. With MYOB’s legacy of desktop based applications which they claim is used by 40% of Australia’s small to medium businesses it isn’t a straight forward process of dropping the old software and embracing the cloud.

Not that their customers are rushing to the cloud, Tim claims that a survey of their clients found that most want a ‘hybrid’ system where data is saved both on the cloud and on the desktop.

MYOB are catering for the hybrid cloud demand with a pilot program of their AccountRight Live product that adds online capabilities to their desktop software.

This is clear difference between MYOB and its cloud competitors. Xero’s founder Rod Drury maintains that those hybrid solutions are cumbersome and adds far more complexity into software. In Rod’s view, “cloud technologies are the right technologies.”

The difference between the philosophies of MYOB and Xero is reflected across the software industry – most notably this is the difference between Google and Microsoft or Apple.

Both Microsoft and Apple see cloud computing as an adjunct to their desktop, tablet and smartphone products. Data is synchronised between the cloud and the device while work is carried out on both.

Google on the other hand tries to do everything on the cloud.

Both approaches have their benefits, particularly in a world where Internet access cannot always be taken for granted which is the cloud’s biggest weakness. Although as mobile broadband becomes ubiquitous in the developed world, that disadvantage is quickly eroding.

Regardless of the differences in the philosophies, everybody agrees that cloud services are going to revolutionise small business. Both Tim Reed and Rod Drury see how the Big Data opportunities in the cloud are going to give business much more access to real time sales, banking and expense data while being able to benchmark their operations against industry performance.

As Craig Winkler described, we are on another big wave of change and there are great opportunities for the businesses that figure out how to use it.

Paul travelled to Melbourne attended the Xero Australian Partner conference courtesy of Xero. He received a private media briefing from MYOB.

Software’s mini revolutions

How the CIA are driving a business revolution

The CIA’s ‘revolutionary’ announcement of their changes to the way they buy software shows just how the relationship between software vendors and businesses is evolving as cloud computing methods become widely adopted.

For businesses it means more flexibility and efficiency while for software companies the new marketplace is requiring them to be more flexible and responsive. Those changes will challenge some vendors.

What’s driving these changes is ‘big data’ – the explosion of data being collected and stored – and the move to cloud based computer systems.

The CIA, like most businesses or home computer users, used to buy software by the license. For small businesses and homes this was by buying a box of disks from the local computer shop while for big organisations there were volume licenses where they bought the right to use tens of thousands of copies of the one program.

Box licensing was never satisfactory, it was difficult for users to know what exactly they bought and customers were always a year or more behind the trend.

Keeping up with Technology

One of the big pluses with cloud based systems is you don’t have to wait a year or two for a new release incorporating the latest technology. It’s rolled out as it becomes available without any work by the user.

With the old box software model you had to wait for the latest release and even then the features you were waiting for could still be missing.

As technology is moving fast online, organisations like the CIA can’t afford to wait.

Pay as you go

Another problem with the old software model was that big and small organisations found they were buying things they didn’t need.

This is particularly true with licensing agreements where a company might have 100,000 licenses when they only needed 15,000.

Pay as you go billing, which is the standard model for cloud computing services, means a lot more flexibility and a much more efficient way of managing software spend.

Closer relationships

In his speech describing the changes, the CIA’s top technology officer Ira Hunt said the agency is prepared to give vendors a “peek under the covers”.

This sort of closer relationship between suppliers and customers is one of the biggest attractions of the cloud computing model. It means both users and suppliers are more closely aligned.

For software vendors that close alignment is where the opportunities lie; the old days of flogging fat, expensive licenses are over and the successful sellers of computer programs will be quicker and nimbler.

The CIA has been accused of formenting many revolutions around the world, this is one most business owners should be happy about them leading.

The IT industry’s damaged business models

Can the Information Technology industry deal with a radically changed business environment?

JT Wang, Chairman of personal computer manufacturer Acer believes the release of Windows 8, Microsoft’s next operating system, will see a resurgence of sales for Windows based computers. Market trends suggest those hopes are in vain.

Right now the Personal Computer market can be roughly split into two camps; those happily running Windows XP who have no need to upgrade and those who are delighted with Windows 7 who have no need to upgrade.

Short of their computers breaking down, neither group have any good reasons to change to the new operating system as, unlike Windows 3.1, 95 or XP, there is no new technology breakthrough or advance to warrant making the jump.

To make things worse for the PC manufacturers the rise of cloud computing services extends the life of older Windows XP systems and eliminates the biggest driver of new computer purchases in businesses – the software upgrade.

During the PC era one of the banes of business owners were enforced software upgrades where vendors would release a new version of a program every year or two and withdraw support for the older editions.

Frequently the newer software would require the latest hardware, forcing the business into an expensive and disruptive upgrade of all their IT systems.

Today, software companies following the forced upgrade model are finding customers have viable cloud alternatives which destroys the revenue stream behind those frequent releases.

When a customer moves to a cloud service, they also delay buying new desktop or server hardware which is partly driving the steady increase in the age of business computers.

For computer manufacturers the release of Windows 8 could actually be bad news as customers will probably postpone system upgrades until the first service pack of the new operating system is released.

Even if Windows 8 does deliver increased sales as JT Wang hopes, the trend of steadily falling PC prices as smartphones and tablet computers take market share is inevitable.

The PC industry in both laptops and desktops has been a commodity industry for some years and any hope of establishing premium pricing from tablet computers has been dashed by the iPad’s competitive price points.

Regardless of the hopes of the IT industry’s leaders, both the hardware and software sectors are under a lot of stress. It will be interesting to see who adapts to today’s market.