Decoding the new economy

Amazon and the Soviet customer service model

We all value our collections of CDs, books and photos, but what happens when we completely lose the digital equivalents?

The story of Linn, a Norwegian lady who had her account terminated by Amazon, demonstrates the dangers of being locked into one Internet company’s empire. Get cut off and you lose everything related to them.

A little understood part of the cloud computing and app world is that you, the customer or user – which isn’t necessarily the same thing – don’t really own anything. The money you spend on ebooks, mobile apps or web storage are for licenses to use the services, not the products themselves.

Should the supplier decide they no longer want to provide you with their service, then you lose your account and everything with it.

This is what happened to Linn when Amazon’s algorithm decided her account was in some way breaching their terms and conditions.

We have found your account is directly related to another which has been previously closed for abuse of our policies. As such, your Amazon.co.uk account has been closed and any open orders have been cancelled.

Per our Conditions of Use which state in part: Amazon.co.uk and its affiliates reserve the right to refuse service, terminate accounts, remove or edit content, or cancel orders at their sole discretion.

“At their sole discretion” is the key point here. This is a standard term in most online contracts and reflects the legal realities of the physical world where a shopping mall manager or bar owner can ask you to leave their property without having to tell you why.

When you use a virtual service, which includes e-books and cloud computing software, you are on someone’s virtual property and they can ask you to leave any time they feel.

Of course those rights are subject to any contract you might have with that e-book seller, cloud computing service or shopping centre but you have to be in a position to enforce them – not an easy task when you’re in Norway and their lawyers are in Connecticut.

Even if you want to enforce the agreement you believe these services have entered into, the grossly biased contracts attempt to put all obligations on users or customers while freeing the vendor of the distraction of being responsible for anything.

The real problem though is the lack of notice and fairness – this blog’s previously looked at how PayPal, Facebook and Google will shut down business sites without any warning or due process.

It’s one thing to get thrown out of a shopping mall but it’s another matter when your car and week’s groceries are still in there.

Even more worrying in Linn’s case is how ebooks and music purchased with Digital Rights Management (DRM) controls can be erased by companies like Amazon. Which is like walking home from the shopping mall you’ve been banned from to find the manager has called by to confiscate the toaster and TV you bought last week.

What’s particularly notable in all of these stories though is the Soviet customer service model, the Amazon”Executive Customer Relations” representative Linn dealt with refused to tell her what she’d done wrong or what rules she broke.

The only thing “Michael Murphy” would tell her was she was effectively banned for being linked to a blocked account and stated;

“Please know that any attempt to open a new account will meet with the same action.”

No notice, no appeal, no rights. The computer says no and the bureaucrat cannot help you further.

Trust lies at the core of all business and this is even more true when buying services like e-books and cloud computing products. If you can’t trust a vendor to provide a service, or to act openly and honest with you when a problem occurs, then it’s unlikely you’ll use that service.

A lack of trust is what web 2.0 companies like Amazon and eBay risk with hostile, Soviet style customer service. This is the weak point of the entire online business model.

For individuals and businesses it’s important to understand that those e-book, cloud storage or social media services may appear to be a bargain, but there are risks lurking in the fine print.

The new Soviets might be doing well at the moment, but their days are numbered just as the USSR’s were.

Ominious days for the omni-channel

The omni-channel retail buzzword bites the dust, and a good thing too.

At the beginning of the year we heard much about Omni Channel strategies as it dawned on retailers like Harvey Norman, David Jones and Myer that this Internet thingummy they’d heard about wasn’t going away.

When asked at the time what a ‘omni channel’ strategy was, Gerry Harvey admitted he’d had no idea what it was a week before it was announced while Myer CEO Bernie Brooks said late last years it was something about having electronic kiosks and free delivery.

So it was interesting to hear the CEO of US cloud computing service Netsuite, Zack Nelson, talk about his company’s ‘omni channel strategy’ this week at a lunch in Sydney.

On being asked what exactly Netsuite’s omni channel strategy was Zack let the cat out of the bag about the holy grail of the omni channel.

“There are so many channels, there are no channels,” said Zack. “Omni-channel was the only word we could find.”

So we can safely put the omni-channel myth to rest – the idea businesses can focus on one, two or three channels such as bricks and mortar, the web, iPhone apps or tablet computers was always flawed and risked locking companies into one or two technology platforms at a time when things are changing quickly and in unexpected ways.

Netsuite’s response is to adopt ‘responsive design’ principles where sites adapt to the device being used rather than spend lots of money building apps for devices that might be redundant in the near future.

This is true of business in general – we often forget the core role of our businesses, like the retailer’s mission is to get goods into the hands of eager consumers and TV stations or newspapers are ways of delivering advertising. Instead we fixate on the type of delivery vans we use, the background colour of our websites or which apps we are going to develop.

For retailers there’s a far more fundamental problem which Micheal Hills of CoCo Republic described at the same lunch, “people boast about buying designer labels online at discount prices but still want to go to bricks and mortar stores.”

That paradox is the sort of problem many businesses have to deal with which aren’t going to fixed by trendy buzzwords.

In Netsuite’s defense their use of the word ‘omni-channel’ is about offering multiple currencies and languages in the one package rather than selling to customers on different platforms. They aren’t using it as a cover for failing to notice their markets have changed in the last decade.

The main change in the market place is the good old fashion imperative of getting back to the basics of service and delivering value for money. The days of making money from finance packages or vendor rebates instead of looking after the customer are over.
Some managers are yet to understand this and their companies won’t have the luxury of indulging in buzzwords over the next decade.

ABC Nightlife: Apps down the farm

For the October ABC Nightlife spot we’ll be looking at how the agriculture sector is using smartphone and tablet computer apps

If you missed this program where we covered a wide range of subjects, you can listen to the ABC Nightlife podcast of the show.

Paul Wallbank joins Tony Delroy to discuss how technology affects your business and life.

This week we’re talking about how the agricultural industry are using smartphone apps and the web. A list of apps for farmers is available from the NSW Department of Primary Industry website.

We’ll also be looking at how machines are talking – in agriculture, the next generation of farm equipment will be sending data straight to the farmers’ tablet or laptop computer using the technologies we’re seeing in jet engines and other high tech equipment.

Connecting everything does come with risks. A US report found that networked medical equipment is rife with malware and the Defense Signals Directorate points out that out-of-date computer systems are one of the main causes of data breaches.

One of the things driving the apps world is cloud computing and Google have given a rare glimpse into the data centres that run their services.

Social media is one of the things that are driving cloud computing, but there’s traps for businesses in posting information about customers and staff. We’ll be looking at those as well.

We’d love to hear your views and comments so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Playing in the big boys’ sandpits

Businesses using social media, cloud computing and web 2.0 services need to be careful of being shutdown without notice.

The Cool Hunter is a site whose mission is to “select and celebrate what is beautiful and enduring from all that is sought-after in architecture, design, gadgets, lifestyle, urban living, fashion, travel and pop culture.”

In posting cool stuff they find on the web, Cool Hunter always runs the risk of copyright infringement complaints as people have the unfortunate habit of slapping images up onto the Internet without permission from the rights holders.

Last August Cool Hunter’s founder Bill Tikos found the site’s Facebook account had been wiped for ‘repeat copyright infringements’ without warning or recourse.

Anybody following this site won’t be surprised to read this – an exposed nipple can get you thrown off Facebook faster than you can say “New Yorker cartoon” or “it’s only a porcelain doll, for chrissake!” – so one can only imagine the paroxysms of rage that alleged copyright infringement sends Facebook’s puritan bureaucrats into.

It’s not just nipples at Facebook though, thousands of small traders have seen their accounts arbitrarily suspended on sites like eBay and PayPal.

Google too are quick to suspend businesses from their local and search services without warning or recourse. Usually business owners only notice they’ve been locked out when they log into their control panels only to find a terse message that their account has been suspended.

What usually follows is a Kafkaesque tale of trying to understand exactly what they’ve done wrong and how to get their accounts reinstated. In some cases the businesses get cryptic messages saying their accounts are still in breach while others get no response at all. In a few examples, the offending page goes back online only to be shut down again a few days later.

Rarely does someone in this situation find a calm, helpful voice to explain exactly what they have done wrong and how to fix it.

This hostile attitude is a result of the “hands off customer service” model of web 2.0 companies and it’s their biggest achilles heel as, paradoxically, customers and users take to social media to complain about bizarre and arbitrary account suspensions.

For some, like Cool Hunter, it’s a monumental pain and loss of a valuable platform while many of those small eBay and PayPal traders may have thousands of dollars tied up in suspended accounts they can’t access.

Unfortunately this uncertainty is the cost of doing business on social media sites and it’s one of the reasons why owning your own business website is essential.

When you choose to use one of these service, understand you’re playing in the big fat kid’s sandpit and you risk him throwing a tantrum and chucking your toys out of the playpen.

Simply put, don’t base your business on Facebook, don’t keep all your money in PayPal and always have a plan B.

Every business is a cloud business

Cloud computing can present an unexpected set of problems for a business.

Every business is a cloud business claims Zach Nelson, the CEO of cloud Enterprise Resource Planning service Netsuite.

In Zach’s view every business should be using cloud computing services and at a lunch in Sydney he illustrated this with companies ranging from agribusiness Elders through to furniture and design store CoCo Republic.

A buzzword used by Zach and Netsuite is ‘omni-channel’ and this is something we’ve heard from local retailers in the past.

Interestingly Netsuite’s definition of omni-channel is more as a catch-all phrase than a definition. “There are so many channels, there are really no channels,” says Zach. “Omni-channel was the only word we could find.”

This doesn’t bode well for older retailers struggling with the idea of a website as part of their “omni-channel’ strategy, let alone tablets, smartphones or 85” smart TVs.

The problem also faces businesses adopting cloud computing platforms with the related trend of Bring Your Own Device being in itself is an “omni-channel” medium where an employee could be using anything from a smartphone with a 7″ touchscreen through to a fully equipped PC workstation with a 27″ cinema display.

How Netsuite deals with the plethora of channels is through responsive design strategy where their sites adapt to the various screen sizes their customers use. This is the opposite to the philosophy of building specific apps for each platform.

We’re seeing other cloud companies struggle with this problem as well, Mark Zuckerberg recently described focusing on the open HTML 5 standard over dedicated iOS and Android apps as one of Facebook’s biggest mistakes while Salesforce founder Marc Benioff used the recent Dreamforce conference to confirm his company’s commitment to the web despite releasing an iOS application.

Zach Nelson’s notion that every business is a cloud business is interesting and true, whenever business owners or managers say “no” asked it they use cloud computing they are genuinely shocked when its pointed out to them that almost every external internet service they use runs on the cloud.

Slowly we’re seeing this being accepted by the business community as show by diverse companies adopting services like Netsuite, Salesforce and Xero.

The big challenge for managers is in taking advantage of the processing power businesses find that cloud computing gives them.

Are you a worthy customer?

Some businesses aren’t worth worrying about as customers.

“Those companies are not going to be winners in the long term. We’re very happy to work with the fastest growing companies in the world; the companies who understand that people are core to who they are,” says Daniel Debow, Vice President of Salesforce’s Work.com at the recent Dreamforce conference.

Debow was talking about companies that aren’t interested in social software, or those who don’t have the infrastructure or management culture to implement changes which reflect the modern workplace.

When writing about social and cloud services one thing that jumps out is just how unprepared many businesses, big and small, are for changes that are happening in both the workplace and the market.

The story of Work.com reflects those changes – the idea behind Rypple and Work.com, which was born out of Salesforce’s 2011 acquisiton of Rypple, is that workplaces are inherently social.

“We spend as much more time with the people we work than with our families. It matters to us what our workmates think” says Daniel so Work.com gathers the social intelligence within the business to give people real time feedback on their performance.

The Rypple idea lies in the inadequacy of existing HR software and management practices. Daniel says, “today this model we have it’s totally not reflective of the reality of how people work; people are more connected, they’re collaborative, more realtime.”

This collaborative and realtime way of doing business challenges the structures in many businesses and the methods of a lot of managers. Many are ill-equipped to deal with a more open and transparent way of managing their teams.

In fact, software like work.com and its competitor Workday make some of those older style managers redundant, particularly those whose roles involve little more than box ticking and following the strictures of the company’s procedure manual as this can be done better by a computer program.

The problem for many organisations, both private and public, is they have become more focused on cossetting and protecting the box ticking bureaucrats of middle and upper management rather than delivering service to their customers and supporting their staff responsible for keeping clients happy.

Something that jumps out when you talk to entrepreneurs like Daniel Debow and others building new social and cloud companies is their lack of interest in selling to those organisations, their view is the old school companies are dinosaurs on the path to extinction.

Dinosaurs though lasted a lot longer than we often think and the same is true of the current generation of zombie companies being kept alive by government or investors too scared to book the losses which the failure of these enterprises would entail.

While those dinosaurs are going to be a drag on our economies for the next decade or two, the real opportunities – and rewarding work – is with those businesses who want to change and aren’t run for the administrative convenience of their managers.

The question for many business owners and managers is whether companies like Rypple or Workday could be bothered selling to you. If you’re not, it’s time to consider your exit strategy – or lobby your local politician for some subsidies.

Paul travelled to Dreamforce courtesy of Salesforce.com

Today’s business Neanderthals

Many businesses are hopelessly ill-equipped to deal with today’s realities and are doomed to extinction

“Bringing a knife to a gunfight” describes showing up hopelessly ill-equipped for the task at hand.

Two recent conferences, the massive Dreamforce in San Francisco and the smaller, but still fascinating, Australian Xerocon in Melbourne illustrate just how radically the commercial world is changing and how many business leaders are poorly equipped for today’s times.

In July, the Melbourne Xero Convention bought together 400 Australian partners of the cloud accounting service which showed how how one New Zealand based company is building it’s business through engaging other suppliers who add features to the basic service.

Vend, a Point Of Sale cloud service provider, was one of the companies exhibiting at XeroCon. In the past POS systems have been a pain for retail businesses with most suppliers’ business models being about locking customers into expensive contracts.

With cloud services, the old vendor lock in model dies as stores can use any device they like such as a PC, tablet computer or a smartphone so a business is no longer locked into using an overpriced and often antiquated piece of equipment.

Making the cloud offering even more attractive is that Vend, and many of their competitors, also take advantage of APIs – Application Program Interfaces – built into other services so they can seamlessly change records.

So a shop can make a sale in their physical store and inventory levels will automatically change in the online stores and on services like eBay. If an item is now of stock, the websites are automatically updated to reflect this.

This business automation makes it easier and cheaper to run a business. It’s everything that computer have promised for the last thirty years and is now being delivered through cloud computing services.

At Dreamforce in San Francisco last week, Salesforce.com CEO Marc Benioff showed the 90,000 attendees how these services work on a corporate level with demonstrations from companies as diverse as General Electric, ski company Rossignol, and Australia’s own Commonwealth Bank.

What really stood out with all of these presentations was how each business had made major technology investments that in turn allowed them to deploy modern tools.

The Virgin America Dreamforce presentation was particularly telling. Having just endured a 13 hour United Airlines flight in a plane that had been barely refurbished since 1988 it was clear that the older airline simply didn’t have the hardware to compete with the upstart even if management and staff wanted to.

From both Dreamforce and XeroCon the message has been clear, those legacy managers who won’t invest in new technologies or re-organise their businesses to meet the realities of the 21st Century are simply doomed.

In Australia this sense of doom in the business community is confirmed when MYOB and Google missed their target of giving away 50,000 free business websites as part of their Getting Aussie Business Online program.

Depending on whose figures you use, between 50 and 65 percent of Australia’s 1.7 million small businesses don’t have a website – and websites are last decade’s technology.

Business has moved onto mobile and social platforms, those 800,000 businesses who are yet to move into the new century are roadkill – the competition are just going to run over them.

If you are still struggling with the idea of a website – let alone a mobile site, mobile phone app or social media strategy – then you haven’t bought a knife to a gunfight, you’ve bought a sharpened stick. It’s time to figure out whether you still want to be in business.

Disclaimer: Paul travelled to XeroCon in Melbourne courtesy of Xero and to Dreamforce in San Francisco as a guest of Salesforce.com

Category: cloud computing

Ominious days for the omni-channel

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