Category: business advice

Context and the digital divide

Paul Mabray, founder of US online monitoring service Vintek, sees a digital divide developing as businesses struggle with social media big data and Facebook.

“This is the most difficult time in history to be a wine maker, declares Paul Mabray, Chief Strategy Office and founder of Vintank.

“Never has the wine industry been as competitive as it is today.”

Update: The Wine Communicators of Australia, who sponsored Mabray’s visit, have posted Paul’s presentation that covers this post’s theme in more detail.

Mabray’s business monitors social media for wineries and collects information on wine enthusiasts. Since Vintank’s founding in 2008 the service has collected information on over thirteen million people and their tastes in wine.

Rewriting the rule book

Social media, or social Customer Relationship Management (sCRM), is what Mabray sees as being part of the future of the wine industry that’s evolving from a model developed in the 1970s which started to break down with the financial crisis of 2009.

“In the old days there was a playbook originating with Robert Mondavi in the 1970s which is create amazing wine, you get amazing reviews and you go find wholesalers who bring this wine to the market.”

“As a result of the global proliferation of brands the increase of awareness and consumption patterns where people like wine more, those playbooks didn’t work in 2009 when the crisis started.”

With the old marketing playbook not working, wineries had to find other methods to connect to their markets and social media has become one of the key channels.

Now the challenge in the wine industry, like all sectors, is dealing with the massive amount of data coming in though social media and other channels.

The cacophony of data

“If you rewind to when social media came out, everyone had these stream based things and the noise factor was so heavy,” says Mabray.

“For small businesses this creates an ‘analysis to paralysis’ where they’d rather not do anything.”

Mabray sees paralysis as a problem for all organisations, particularly for big brands who are being overwhelmed by data.

“The cacophony of data at a brand level is just too much,” he says.

“It’s as noisy as all get go and I think the transition is to break Big Data down into small bite size pieces for businesses to digest is the future, it shouldn’t be the businesses problem, it should be the software companies’.”

A growing digital divide

Mabray sees a divide developing between the producers who are embracing technology and those who aren’t, “the efficiencies attributed to technology are obvious whether they’re using CRM, business intelligence or other components.”

“The people who are doing this are recognising the growth and saying ‘hey, this stuff actually works! If I feed the horse it runs.”

While Mabray is focused on digital media and the wine industry, similar factors are work in other industries and technology sectors; whether it’s data collected by farm sensors to posts on Instagram or Facebook.

Facebook blues

Mabray is less than impressed with Facebook and sees businesses concentrating on the social media service as making a mistake.

“I think that every social media platform that’s been developed had such a strong emphasis on consumer to consumer interaction that they’ve left the business behind, despite thinking that business will pay the bills.”

“As a result almost every single business application that’s come from these social media companies has met with hiccups. That’s because it wasn’t part of the original plan.”

Facebook in particular is problematic in his view, “it’s like setting up a kiosk in the supermall of the world.”

The business anger towards Facebook’s recent changes is due to the effort companies have put into the platform, Mabray believes; “everyone’s angry about Facebook because we put so much into getting the data there.”

“We said ‘go meet us on Facebook’, we spent money collecting the items and manufacturing the content to attract people and now we have to spend money to get the attention of the people we attracted to the service in the first place.”

Despite the downsides of social media Mabray sees customer support as one of the key areas the services. “It’s easy to do in 140 characters.”

Context is king

“Everything come back to context. There’s this phrase that ‘content is king’,” Mabray says. “Context is king.”

“Anyone can produce content. It’s a bull market for free content. We have content pollution – there’s so much junk to wade through.

Mabray’s advice to business is to listen to the market: “Customers are in control more than they have ever been in human history: Google flattens the world and social media amplifies it.”

For wineries, like most other industries, the opportunity is to deal with that flat, amplified world.

Similar posts:

  • No Related Posts

Furthering the startup conceit

Lachlan Murdoch declares News Limited to have the energy of a startup

I’ve ranted before about the romantic views corporate executives have about the lives of startup founders.

“News Corp today has the energy and sensibility of a start-up,” Lachlan is quoted in the company’s media announcement.

Let’s see how that goes.

Similar posts:

  • No Related Posts

Kickstarter and ownership

Has Kickstarter funded startup Oculus discredited crowdfunding with its sale to Facebook?

The purchase of virtual reality headset designer Oculus by Facebook has raised some interesting questions about crowdfunding sites.

As the Wall Street Journal reports, many of those who contributed to the Kickstarter campaign that Oculus ran now feel betrayed by the company selling out to the social media giant.

Founder Palmer Luckey explained the companies sale to the WSJ as a quest for more funds; “a lot of people don’t understand how much money it takes to build things — especially to build hardware.”

Crowdfunding is tough

That ties into what founders have told Decoding the New Economy about crowdfunding startups; it’s tough and it easy to underestimate the capital required to launch a project.

Ninja Blocks’ Daniel Friedman told Decoding the New Economy last February that the main thing the company had learned from its successful Kickstarter campaign is that crowdfunding is a good way to raise funds for specific projects but a lousy way to fund a business.

Moore’s Cloud wasn’t as successful as Ninja Blocks and in his Decoding the New Economy interview, founder Mark Pesce described how he’d “rather eat bullets” than crowdfund a hardware startup again.

Startups are always hard, but it’s difficult not see how the high moral purpose often citing from Kickstarter project founders clashes with the ruthless moneymaking of Silicon Valley.

Discrediting crowdfunding

The criticism of Oculus also illustrates how crowdfunding lies between traditional investment and sales; those contributing to crowdfunding projects are true believers, not just customers and certainly not investors in a legal sense.

In recent times Kickstarter has been discouraging hardware startups from using their service; mainly because of the high risk of failure and disaffected contributors. The unhappiness with Oculus vindicates that move.

Oculus’ sale to Facebook may make many Kickstarter contributors doubly wary of Silicon Valley style startups trying to raise funds through crowdsourcing campaigns.

Lords of the Digital Manor

Looking at Oculus’ move, it’s hard not to conclude we’re seeing another cynical version of the Lords of the Digital Manor business model where enthusiasts are exploited by entrepreneurs looking for the big Silicon Valley pay off.

For Kickstarter and the other crowdfunding platforms, this is a problem as cynicism about the motives of those posting projects is probably a greater risk than the fear of being ripped off.

It may well be that Oculus marks a big change in the types of projects that get successfully funded, certainly the next hot hardware startup that tries crowdfunding is going to find things much harder.

Similar posts:

  • No Related Posts

Tomorrow Starts Here

Managing big data is one of the future skills of business.

Today was the main day of the Melbourne Cisco Live Conference; the company’s annual Australian event.

Much of the talk was around the Internet of Everything — which will be the basis of subsequent  posts — with a constant theme around the explosion of data.

A favourite statistic was that of Cisco’s Executive Vice President who pointed out that US Department store Walmart collects 2.5 Petabytes of customers data every hour.

The reason for this was pointed out by GE’s Australia and New Zealand CIO, Mark Sheppard, who pointed out that twenty years ago jet engines had few sensors while today they have hundreds, a point also made by Team Lotus’ Engineering Director Nick Chester to Networked Globe.

Chester observes that when he started in Formula One racing two decades ago, there were four or five sensors on a racing car; today Lotus’ vehicles have over two hundred.

All of these sensors are creating massive amounts of data and the big challenge for businesses is to manage all of this information, something we’ll be exploring over the next few weeks.

Similar posts:

  • No Related Posts

Technology One and cloud computing’s gold rush

Technology One’s Adrian DiMarco has strong views about the outsourcing industry as he steers his company onto the cloud.

“Consulting companies are a blight on our industry” declares Adrian DiMarco, CEO of Technology One.

A quick way to rile DiMarco is by asking him about IT outsourcing as I learned during an interview at Technology One’s annual Evolve conference on the Gold Coast last month.

The 1600 enterprise clients attending this year’s Evolve conference illustrate Technology One’s growth since it was founded in 1987 out of DiMarco’s frustration with the multinational outsourcing companies.

“I used to work for multinational technology companies and as a young person I really used to want to work for them, I found it very attractive and I expected they’d be very attractive and cutting edge.”

The reality DiMarco found was very different; “I worked for them for years and found the opposite, just how bad and inefficient they were.”

“I really didn’t like what I was working with, the software we were using and stuff and I thought we can do it much better here in Australia. The idea was to build enterprise software.”

Moving to the cloud

Having built that enterprise software company DiMarco now sees his Technology One’s future lying in cloud services and empahises the importance of learning from the industry’s leaders.

“We looked at companies like Google, Salesforce, Facebook and Dropbox. These companies are the undisputed leaders in the cloud.

“One thing that we noticed was that you can’t get Google, Salesforce, Facebook from a hosted provider; you can’t get it from IBM or Accenture.

“The leaders in the cloud build it themselves so they are deeply committed to it, they run the software for their customers and they invest millions of dollars each year in making the experience better.”

“It is clearly what the cloud has always meant to be.”

DiMarco though sees problems ahead as vendors look to rebrand their products and warns businesses need to be careful about cloud services.

“It is the next big goldrush in the IT industry. IT companies, particularly service companies have over the last few years seen revenues decline so in order to find new sources of growth they are all targeting the cloud.”

Accountability and the cloud

The lesson DiMarco learned in the early days of cloud computing was that accountability is necessary when you’re trusting services to other providers.

“We had early customers that went to the cloud; we said ‘look, it’s a great idea and we think it’s the future’. They wanted to go with hosting providers and we thought it was a sensible decision and we saw a train smash, it was a train smash of epic proportions”

“They were running data centres overseas in Europe that had latency issues, performance issues and the customers were paying money after money after money.”

“The customer was getting a terrible performance and there was no accountability.”

“We couldn’t fix it because we had lost control over the customers.”

This lack of accountability is one of the reason why so many IT projects fail DiMarco believes, citing the notorious Queensland Health payroll project.

“Queensland Health again used this fragmented model; the party that built the software, which is SAP, used a third party which was IBM to implement it which meant no accountablity.

:That would never have happened If SAP had signed the contract, if SAP had implemented the software, which they won’t do, they would have known the risks that were being taken and they would have stopped that project and fixed it up.??“That’s the difference between our model and the competitors model.”

“They take no responsibility, they implement these systems, they charge a fee-for-service and they have open ended contracts – that’s how they get to be a billion dollars – and do you know who suffers? It’s the customers.”

Shifting away from consultants

DiMarco sees governments moving away from the consultant driven model that’s proved so disappointing for agencies like Queensland Health which creates opportunities for Technology One and other Australian companies.

“For the last fifteen years we’ve not been able to sell software to the state government. It’s just changing, we’re getting in there now, but it was a terrible problem for us.”

The shift from big consultants is a view endorsed by Sugar CRM co-founder Clint Oram who described how the software business is changing when he spoke to Decoding the New Economy last week.

Oram sees the software market challenging established giants like SAP, Oracle and Microsoft; “in the past it was ‘here’s my software, goodbye and good luck. Maybe we’ll see you next year.”

“If you look at those names, the competitors we see on a day-to-day basis, several of them are very much challenged in making the shift from perpetual software licensing.” Oram says, “it’s been a challenge that I don’t think all of them will work their way through, their business models are too entrenched.”

“Software companies really have to stay focused on continuous innovation to their customers.”

DiMarco agrees with this view, citing the constant investment cloud computing companies make in their products as being one of the advantages in the business model.

Building the Australian software industry

For Australia to succeed in the software industry, DiMarco believes the nation has to encourage and celebrate the industry’s successes.

“It’s about getting people to believe in Australian software. I think the Aussie tech industry needs a lot more successes we can point to,” DiMarco observes. “I think that will create enthusiasm, excitement and a hub for the rest of the community to get around.”

“We gotta get some big scale companies with some high visibility and get them successful.”

For the future of Technology One, DiMarco sees international expansion as offering the best prospects with the company having recently announced a UK management team as part of its push into the British local government market.

Hopefully DiMarco’s UK management team won’t have to deal with the local management and IT consultants as they try to sell into British councils.

Similar posts:

  • No Related Posts

Contemplating a jobless future

Few industries are going to be untouched by the disruptions of the next decade and that’s going to present challenges for all of us.

Last October, ahead of the company’s Orlando Symposium, Gartner Research Director Kenneth Brant released a paper looking at the effects of technology on the workplace.

“Most business and thought leaders underestimate the potential of smart machines to take over millions of middle-class jobs in the coming decades,” Brant wrote. “Job destruction will happen at a faster pace, with machine-driven job elimination overwhelming the market’s ability to create valuable new ones.”

Brant’s view about middle class jobs is a sobering thought, many of the corporate ‘knowledge worker’ positions can be easily replaced by computers to make the decisions now being made by armies of mid level managers, bean counters and clerks.

Indeed the whole concept of ‘knowledge worker’ that was fashionable in the 1980s and early 90s in describing the post-industrial workforce of nations like the US, Britain and Australia is undermined by the rise of powerful computers and well crafted algorithms to do the jobs unemployed steel workers and seamstresses were going to do.

Twenty years later and the ‘knowledge workers’ had morphed into the ‘creative class’ and it appears the computers are coming for them, too.

Personally, I subscribe to the view in the medium to long term new jobs in new industries will evolve – a view shared by economists like GE’s chief economist, Marco Annunziata.

Over the next decade however there’s no doubt we’ll be seeing great disruption to established industries and the hostility to Google buses in San Francisco may be just an early taste of a greater antagonism to the technology community in general.

For managers, the problems are more complex; while their own departments, corporate power bases and even their own jobs are at risk, they are going to have to find ways to incorporate these changes into their own business. Gartner warns CIOs in its briefing paper;

The impact will be such that firms that have not begun to develop programs and policies for a “digital workforce” by 2015 will not perform in the top quartile for productivity and operating profit margin improvement in their industry by 2020. As a direct result, the careers of CIOs who do not begin to champion digital workforce initiatives with their peers in the C-suite by 2015 will be cut short by 2023.

Few industries are going to be untouched by the disruptions of the next decade and the resultant job losses are going to present challenges for all of us.

Similar posts:

A breach of trust

In business, trust is essential as security company RSA is discovering

“Today I’m happy not to have an RSA Conference badge on me;” Mikko Hypponen, head researcher of Finnish security company F-Secure told the inaugural TrustyCon conference in San Francisco yesterday.

Hypponen was referring to what was one of the world’s most prestigious information security conferences hosted by industry vendor RSA.

RSA are known to many corporate computer users for their SecurID authentication tags; the little key fobs that give a passcode for secure networks that illustrate this post.

Sadly for RSA’s users those tags were compromised in 2010 and the company did its best to obscure, if not downright hide, the problem both from the industry and its customers.

However the killer blow for RSA’s reputation was an article in Reuters at the end of last year claiming the US National Security Agency had paid the company $10 million to weaken its security protocols.

The company denies this but the damage was done, as Hypponen says “When a security company can’t be trusted, what do they have left?”

How the RSA lost the trust of security professionals is a good lesson for all of us; our businesses rely upon the goodwill of our customers and our peers. If we betray their trust, we’re hurting ourselves.

 

Similar posts:

  • No Related Posts