Category: Investment

A website can’t save a dying business

Online tools can’t fix an organisation’s structural problems

The last week has seen some interesting changes in the local online business community.

Embattled department store David Jones’ announced they are following Harvey Norman into an “omni channel strategy”.

Harvey Norman chief executive in turn appeared on national television to state the “internet drives no sales.”

In the political field, it was reported the Australian Labor Party are looking at using Blue State Digital tools to counter voter and member apathy.

Each one in it’s own way illustrates how organisations can be distracted by shiny new technology while ignoring much deeper problems.

In the case of David Jones, the department store ignored their core competencies and tried to ape their down market competitors in milking the financial services cow.

This worked fine while they could offer 24 and 36 month interest free deals and as soon as their partners American Express started charging a monthly “Administration Fee” that business evaporated.

One of DJ’s down market competitors is Harvey Norman, co-founder Gerry Harvey has spent his life building a fortune based upon providing cheap credit to consumers.

It was always going to be a mistake for DJs to compete with Harvey’s as Gerry is far better at the business than the well connected, genteel board of David Jones and their snappily dressed friends in the store’s executive suite.

Worse for DJs, the whole strategy alienated their core markets and while management focused on financial services customers went elsewhere to find the quality goods and services that the upmarket department store should be providing.

For both though, the financial services business model is now fading as the 20th Century debt supercycle comes to an end; consumers no longer want to load up on “buy now, pay later” schemes.

So all the talk of “omni-channel strategies” really doesn’t address the underlying weaknesses in both business.

This disconnect with reality is true in politics as well where the ALP is reported to be considering using the Red State Digital tools that Barak Obama used so well in his 2008 US Presidential campaign.

While the tools are impressive, they don’t address the problem that the electorate – and the member bases of the major political parties – have become rightly disillusioned and disconnected from the political processes that exclude everyone except an increasingly smaller circle of cronies and insiders.

The only good thing that will come of using US political communications tools in the spectacular eruption the first time one of the ALP’s factional warlords encounters a grass roots online campaign like The Great Schlep.

Heck, the resulting furore might even see some of the apparatchiks distracted from partying and whoring on their union credit cards for a day or two.

All the frivolity aside, the reality for the Australian Labor Party, David Jones and Harvey Norman is their problems are far deeper than a well designed website and impeccably executed social media strategy can fix. These organisations need major rethinks about how and why they exist.

It doesn’t matter how much money you throw at the web or how effective your social media strategy is – if the foundations of a business are shaky then a nice “omni-channel strategy” aren’t going to fix things.

For some of organisations, a failure to embrace the online world may be one of the causes for their problems, for many though there are far more basic issues they need to address.

Should we be subsidising industries?

Can we pick winners in a globalised world?

The 2012 UK “austerity” budget has one bright side with big tax breaks of the games and television industries.

Meanwhile down under, the Australian government is about to announce more massive subsidies to the local motor industry.

While protecting jobs and trying to help struggling industries is admirable, we should ask if the cost to the taxpayer and economy is worthwhile.

Squeaky wheels

“The industry has lobbied for such changes for several years” says the BBC report on the UK budget and this is one of the problems with industry specific support; that it’s the ones who complain the loudest who get the assistance.

Often the companies and industries lobbying for subsidies spend too much management time and resources duchessing ministers, public servants and key media “opinion makers” than actually listening to their customers.

The fact they have staff dedicated to lobbying efforts in itself shows where their investment priorities lie. It isn’t in building better products or delivering what their customers want.

Missing voices

It’s often lamented that the high growth and small business communities don’t receive support, this is because they are running and building their businesses rather than shmoozing journalists, public servants and politicians.

Industry support programs often end up helping established insiders or those with a talent for filling in government grant applications rather than those who genuinely need help.

The Australian film industry is a good example of this where talented film makers struggle to attract funding from government agencies while a generation of well connected, experienced form fillers keep churning out subsidised movies that no-one wants to see.

Behind the times

One of the problems with government picking industry winners is they are often well behind the times with support going to mature or fading industries; both the Australian and UK announcements illustrate this.

The UK games announcement is at least ten years behind the times; strategic investment in the games and TV industry a decade or two ago may have been a wise move, today it’s just supporting another mature sector that is struggling to adjust.

At least though the UK’s policies are somewhere near the 21st Century, the massive Australian support for the failed motor industry shows Canberra’s politicians are mired in an era somewhere Henry and Edsel Ford.

It’s worth noting one of the first moves of the incoming Australian Labor government in 2007 was to axe the Commercial Ready program that was designed to help commercialise new technologies and innovations yet motor industry support dwarf any savings from abandoning this scheme.

The investment problem

In most countries the real problem to building jobs and industries is investment. Both the UK and Australia illustrate this with their domestic investment being largely directed at the housing industries.

The two countries have taxation and social security policies that favour over-investment in property. In Australia the problem is exacerbated by a retirement saving scheme that directs domestic savings to index hugging fund managers.

Australia’s sinking of money into an industry that have been struggling for nearly forty years and currently suffering massive worldwide oversupply is one of many damning indictments on the country’s political classes squandering of the current resources boom.

Making things worse, massive subsidies to uncompetitive industries already distorts a twisted economy.

Real economic reform that encourages investment in research, development, training, innovation and entrepreneurs is tough and means losses for many in those vocal, dying industries.

For the average politician a feel good announcement giving a bucket of money to a noisy group is a much better short term investment.

The challenge, and opportunity, in the democratic world is to make the politicians aware that the economy has moved on from the times of John Major in Britain or Bob Menzies in Australia.

It may well be that industries do need, and deserve, government support although we need far more scrutiny and justification from our political leader of why certain groups get help while others do without.

Insanely profitable

Apple change the game again with some major ramifications

Apple’s announcement that they will start paying dividends to shareholders changes a number of things in Apple’s business model and those of many other businesses.

The sheer size of Apple’s cash reserves also illustrate how profitable the outsourced manufacturing model is as well the contradictary nature of special pleading by affluent corporations.

Moving a cash mountain

Not only is Apple’s business insanely profitable, but sales are growing exponentially. In the company’s conference call, CEO Tim Cook reported that 37 million iPhones sold last quarter and 55 million iPads sold in the last two years.

Apple’s CFO Peter Oppenheimer pointed out the company’s cash reserves increased $31 billion in 2011 and 2012 is on track for a similar result in 2012, leaving them plenty of money for investment along with a “warchest for strategic opportunities”.

Paying a dividend

The reluctance to pay dividends has been a feature of the US corporate for the last few decades and Apple are certainly not alone in not distributing their profits to shareholders.

Companies like Microsoft, Google and Oracle -even Yahoo! once upon a time – have been just as profitable as Apple and their efforts to shrink their cash mountains has had some perverse effect.

Many of these companies have squandered suprpluses on poorly thoughtout and badly executed buyouts of smaller businesses, this urge to avoid returning money to owner has been one of the drivers of the Silicon Valley VC Greater Fool model.

Another result of fat profits is the rise of flabby, overstaffed management ranks at some of these companies. Although this certainly isn’t the case at Apple where Steve Jobs ran a very lean machine.

The retail model

Unlike their major tech competitors Apple is a manufacturing and retail business as well. In 2012, 40 new stores are planned around the world.

This vertical control of their markets, from the beginings of the supply chain  to “owning” the end customer is anathema to modern MBA thinking and probably the area that gives them the greatest competitive advantage over their hardware competitors.

Justifying Mike Daisy

In some ways this announcement justfies Mike Dasy’s discredited criticisms about Apple’s Chinese suppliers.

The reason for manufacturing these goods in places like China, India or Vietnam is the vastly cheaper cost of doing business, not just in labour rates but in reduced environmental and safety standards.

Plenty of brand name clothing, footware and fashion accessory companies make similar massive profits to Apple with their ten, twenty and sometimes hundred fold markups on their products.

Repatriating profits

One of the big changes of Apple repatriating money is that is undercuts the special pleading by these extremely profitable companies that they should have a US tax holiday so they can repatriate their riches.

It’s now clear these companies can easily afford to pay the taxes of their home countries and it’s time they started to, along with returning dividends to their shareholders.

Once again Apple have changed the way others do business, how these changes affect the way we invest and governments treat companies is going to be one of the most interesting developments over the next decade.

Milking the dead cow

How Sensis killed itself and the lessons for Australian business

Many big Australian businesses seem untouchable as they dominate their markets to degree almost unknown in most other developed countries. As the story of Sensis shows, Australia’s big duopolies may not be as strong as they appear.

The last few months have been tough for Sensis; revenues last year fell nearly 25%, the once strong business was folded into the latest incarnation of Telstra Digital Media and now the CEO Bruce Akhurst has departed after seven years.

What could have been a dynamic business is now shriveling away, what went wrong?

Milking the revenue cow

Bruce did a good job of keeping revenue coming in during a period that the then owners, the Federal government, wanted to maximise the book value of Telstra before its sale.

Year upon year Sensis could be relied upon to squeeze more money out of the businesses advertising in it.

Management were focused on extracting revenue from the existing client base rather than responding to the obvious threat from online search.

Expensive distractions

When senior management decided to respond to the online world, they were sucked into unnecessary and expensive distractions; the most notable being the 2005 launch of Sensis Search where the then Telstra CEO – the disastrous Sol Trujillo – famously sneered “Google Schmoogle”.

Three years and hundreds of millions of dollars later, Sensis admitted defeat. By then the small business advertisers who were the life blood of the directory market had woken up to the reality their customers weren’t using the Yellow Pages anymore. Sensis had missed the boat.

Clunky processes

Whenever I spoke to small businesses about Sensis through the 2000s there was the same complaint, “I don’t have time to deal with their sales people, just let me tick a box on a web page or send a fax!”

Purchasing space was difficult for customers, their 1950s Willy Loman sales model should have been automated in the 1990s and never was.

Instead Sensis was locked into a high cost sales model and added friction for advertisers which they shouldn’t need, not only were they expensive but they actually made it difficult for their customers to place orders.

Should Sensis have been sold?

At its peak in 2005, Sensis was valued at between 8 and 10 billion dollars as a stand alone company.

Many, including myself, believe that breaking Sensis away would have been the best result given Telstra were at the time focused on protecting their fixed line copper wire monopoly and the directories business was not getting the management attention or capital investment it needed.

History shows though that we might be wrong.

Commander Communications was spun off from Telstra in 2000 and like Sensis had inherited an almost monopoly position in the small business communications market.

By 2007 Commander was out of business thanks to a combination of incompetence, management greed and an inability to recognise the changing communications marketplace.

The Australian disease

Commander’s biggest problem was it saw its customers as cash cows, just as Sensis did. This exposes a much deeper problem in Australian industry and management culture.

Over the last thirty years Australian government policies have seen duopolies develop in almost every key sector of the economy.

All of these duopolies share the same “customer as a milk cow” philosophy which, along with the rampaging Australian dollar, has dragged Australia into being a high cost economy.

The banking industry, while not a duopoly for the moment, is an even more debilitating example of the cash cow syndrome where small business has been crippled by excessive interest rates and fees – particularly since the 2008 crisis.

Sensis’ demise is systemic of a culture that fixates on extracting maximum revenue from customers; concepts like innovation, R&D or adapting to market trends don’t have a role in this mentality.

Milking cows is a fine business, but sometimes you have to think about the health of the herd.

Investing in the future

Investment is not a cost

UK supermarket chain Tesco announced it intends to create 20,ooo new job over the next two years through “significant investment in customer service, refreshing existing stores and opening new ones”.

That word – investment – is the key to business growth. Not whining about the internet stealing jobs or begging the government to bail out failed industries and their managements.

Investment is more than just buying a shiny new machine, it’s also research, development, training and educating a business’ management, staff, suppliers and customers.

Too many businesses and governments are locked into the the 1980s mindset that investments, along with things like customer service, are a cost that that has to be driven down.

Driving down costs was profitable for many managers through the 1990s and early 2000s, in fact we could argue this was one of the big drivers of corporate profits and productivity through that period.

While some of those costs were undoubtedly unnecessary and deserved, it’s now clear that many governments and businesses ran down investment as well.

Today we’re seeing the results of that; crumbling infrastructure, skills shortages and businesses that can’t compete in a changing global economy.

What we invest in our businesses – be it time or money is essential to its long term success. Only the biggest companies in the most protected industries can survive for a while without investment.

Is the problem in the cockpit?

Who is in control anyway?

In the Daily Reckoning newsletter editor Callum Newman uses Malcolm Gladwell’s description of power relationships to draw a parallel between Korean pilots crashing planes into mountains and the economy, pointing out our politicians are like distracted, doomed aviators ignoring the obvious features they about to collide with.

Is that fair though? In a plane the passengers are strapped in their seats and have to take their the pilots in trust, in real life we have control — all of our actions affect the vehicle that is our economy.

Unlike a plane we can jump out and do our own thing, we can refuse to buy one good or service and we can set up a business for ourselves when we see a market that isn’t being serviced.

Where the analogy does work though is our politicians – and many business leaders – aren’t paying attention to major demographic and economic shifts.

The question is “why?” Most of these people aren’t stupid and they have access to better information than most of us, which is one of the reasons they are in power.

Perhaps it’s because we don’t want to hear the truth; that our assumptions about what the state will provide and how our economy is developing are flawed.

In many ways, particularly in a modern Western democracy, our politician are mirrors of ourselves. They tell is what they think we’d like to hear.

The problem isn’t in the cockpit, it’s back at the boarding gate where we’re more worried whether we’ll get a packet of nuts than whether we should agree to embark on a rough journey to a destination we don’t expect.

Book review: Endgame by John Mauldin

Life after the debt supercycle.

“There are no good choices – only bad ones” could sum up John Mauldin and Jonathan Tepper’s Endgame which looks at how our economies will evolve the end of the late 20th Century debt “supercycle” that has driven the world economy for the last fifty years.

Endgame examines the choices that confront governments, societies, businesses and investors as the world economy adapts to the realities of the West’s aging populations and excessive debt levels.

Much of Endgame relies on This Time Is Different by Carmen Reinhart and Kenneth Rogoff which the examined eight centuries of financial crises. While Reinhart’s and Rogoff’s conclusions are that speculative bubbles driven by debt almost always result in a banking crisis and painful economic restructure, each episode does have unique characteristics.

In each case governments have three basic choices; reforming spending which is rare and maybe impossible given the debt levels in many nations, inflating debts away as Western governments have done since WWII or through outright defaults which have been associated with less developed nations.

As we see with the convulsions the European Union is currently going through and the massive support given to banks around the world since the 2008 banking crisis, the default option is the one which governments will avoid at all costs.

While the bulk of the book concentrates on the US, John does dedicate several chapters to the how the debt endgame will play out in other nations including Japan –“a bug in search of a windshield” – the UK, Eastern Europe and Australia, where he finds a massive property bubble that he believes could be the most spectacular endgame scenario of all.

The clear lesson from Endgame is the post World War II social compact of working taxpayers supporting the aged, the sick and unemployed is over and was only propped up the illusion of wealth generated by loose credit and financial engineering throughout the 1980s, 90s and early 2000s.

Some are hoping the Chinese economy can provide the global demand that was provided by US consumers. While Endgame doesn’t specifically look at this aspect, it’s unlikely China’s economy can do this.

With consumers and governments now exhausted by debt and at the limits of what they can spend, the assumptions that have driven the economy along with our investment and consumption patterns of the last fifty years no hold true.

Endgame is primarily a book for investors and John Mauldin’s emphasis is on where the safest investments will be in at the end of the debt supercycle. His view is it depends on whether governments choose to eliminate their national debts through deflation or inflation.

For business owners, wage earners and retirees this is an important question too and Endgame describes what the consequences for everyone are under either scenario.

The message of Endgame isn’t overwhelming negative; John Mauldin also looks at where the opportunities will lie after the credit endgame plays out. “We don’t know where the jobs will come from, but they will come” is another theme of the book.

Whether you’re an investor or a business affected by the changing economy or building those businesses of the future, this is an important book for understanding the changing economic world in which we live.

The year of the cloud

2011 was the year cloud computing took off.

This post originally appeared in Smart Company on December 23, 2011.

I was asked last week to join Stilgherrian and Jeff Waugh on ZDNet’s Patch Monday reviewing the year that was in technology. One of the things that came out of the session was much of what happened in the tech world over the last year was really a continuation of 2010’s trends.

That’s certainly true and the biggest buzzword in business tech for the last two years has been “the cloud”.

Over the last year we’ve seen a lot more providers getting on the cloud bandwagon with Microsoft responding to the Google Docs threat with their Office 365 product, MYOB launching Live Accounts, to respond to threats like Xero Accounting Software and Saasu and a whole range of vendors proclaiming they are ditching the desktop and moving onto the web.

Despite the hype businesses are slow to respond as they evaluate the various risks with moving to web-based services. Partly this is due to suspicion of the more outrageous claims such as “saving 80% of your costs by going onto the cloud” that have been peddled by some vendors.

A lot of that suspicion is fair enough, too. Many business owners – along with CEOs and government ministers – have been burned over the years by IT salespeople claiming big savings available if the gadget or software of the day is purchased.

Unlike corporate leaders and government minsters, the managers and owners of smaller businesses tend to learn from their mistakes and so they are waiting to see if the cloud services really deliver.

Eventually businesses will move a lot of their computing applications to the cloud as the cost-benefit equation is better for most services than running it in your own office as it eliminates the overheads of buying computer hardware and hiring some geeks to look after the things.

Given the real advantages of cloud services – not just in terms of cost savings but also in business flexibility, productivity, security and reliability – it’s worthwhile using the quiet January period to have a look at where your organisation can benefit from moving online.

Some of the other buzzwords like social media, collaboration and site optimisation are worth having a look at too. The holidays are an opportunity to see where these can be used better in your business.

One thing is for sure – next year you’ll be hearing more about cloud computing as vendors are gearing up for some big marketing campaigns next year. So knowing what you want for your business may well pay dividends.

Distrusting the cloud

Why are customers distrusting cloud computing services?

The recent KPMG Convergence Report looking at online trends in the mobile web found that nine out of ten Australian consumers are concerned about the security of their online data.

In light of recent corporate security breaches such as Sony’s and Telstra’s this is understandable which creates a real barrier for the adoption of cloud computing services.

For cloud computing to be taken seriously, customers have to be certain their data and applications will be respected and protected.

The corporate sector’s failure to hold senior management responsible these problems shows how big businesses largely aren’t taking user privacy or security seriously.

This is a great opportunity for new businesses, we’ve already seen Amazon become the biggest host for cloud services over storage and Internet incumbents who five years ago would have dismissed Jeff Bezo’s company as a glorified book stand.

For newer companies offering cloud services it’s a chance to build a culture where customer service, privacy and respect comes before management bonuses and perks. Where delivering what you promise is more than waving a vague Service Level Agreement (SLA) document under customer’s noses.

As customers, big and small businesses have much to gain from cloud computing‘s productivity, collaboration and cost saving aspects but trust that data will be protected and the service will be available is essential.

Before choosing a cloud service have a search of the web and popular forums to check what people are saying about the product.

Don’t rely on fancy marketing, or assume that a big company will be better at protecting your data. The evidence is clear that smaller, newer companies are doing a better job at protecting data and ensuring business continuity than many of their bigger competitors.

Over time, customers are going to get used to trusting cloud service providers and the businesses who’ll succeed in the online applications world are those who’ve been shown to be trustworthy.

This is one way the web is changing the way we do business.

The case for faster internet

Is the argument for a national broadband network being lost?

The National Broadband Network (NBN) is a project designed to deliver faster and more reliable broadband to Australia’s regions. While a good idea, it’s not without its critics and a fair degree of controversy.

One of the problems the project has is the inability of NBNCo, the company established to build and run the network, to articulate the benefits and scope of the project.

Last Friday night “John from Condobolin” grilled the Gadget Guy, Peter Blasina, about the project. John’s questions, and Pete’s answers, which can be found at 35 minutes into his program, illustrates the confusion the surrounds NBN and the failure of the project’s supporters to explain the benefits.

So how should proponents of the National Broadband Network – people like me who believe that high speed broadband are the freeways and railways of the 21st Century – respond to questions. Let’s answer John’s questions from last Friday.

Lightning might affect fibre networks

John’s first question was about lightning affecting the NBN, commenting when Pete confirmed electrical storms would affect the network that “it’s no better than the existing service.”

Sadly all infrastructure is affected by weather – a freeway is just as affected by fog as a dirt road, perhaps even more so, but it doesn’t mean you don’t build a highway because of that. The same applies for the NBN.

Interestingly the wireless and satellite alternatives proposed to fibre optic cable are even more susceptible to electrical storms, which perversely makes a better argument for running a fibre optic network.

I don’t need any NBN

“I have got quite good reception in Condobolin and I don’t need any NBN, I can assure you” was John’s next big statement.

That’s nice for John that he’s happy with what he has – the rest of us should be so lucky.

For many of his neighbours and those in the surrounding district, particularly those dealing with remote suppliers and overseas markets, reliable and fast communications are essential.

Now is good enough

A farmer doesn’t need broadband for selling into America, he’s able to do that today, was the crux of John’s next comment after he and Pete had an exchange about rolling broadband out to remote locations.

It’s true that farmers can do a lot with today’s satellite and ADSL connections, then again they were able to ship exports in the days of bullock carts and sailing ships. We could extend that argument against railway lines, roads, containers and bulk carriers.

Once upon a time some guy argued against the wheel. Today’s technology has been good enough has always been the argument of those who don’t see the benefits of new tools; we’re talking about tomorrow’s markets and society, not today’s.

Broadband is all about fibre

“You’re talking about satellite dishes and things like that, not NBN.”

The National Broadband Network isn’t just about fibre; fibre optic cables makes up the network’s core and bulk of connections, but wireless and satellite are essential in order to make sure the entire nation has access to the network.

Unfortunately the nonsense argument that technology improvements in wireless will render fibre optics redundant has been allowed to take hold by self-interested politicians and sections of the media pushing a narrow agenda.

Wireless, satellite, fibre optic and other cable technologies are all part of the mix, the real argument is on the proportions of that combination and the consequences to the government’s budget.

Spotting the clueless

As an aside, the cable versus wireless argument is a good yardstick for measuring the knowledge of anyone joining the NBN debate.

Someone clueless arguing against the project says investment in fibre optic cable is unnecessary as it’s speed and data capacities will be one day superseded by those of Wireless networks.

This betrays a failure to grasp the inherent advantage of having a dedicated cable connection to your property as opposed to sharing a wireless base station with hundreds, if not thousands, of others.

Equally anyone pro-NBN who says that fibre is faster because it travels at the speed of light is equally clueless as wireless, copper wire and even smoke signals also travel at – or close to – the speed of light.

Games and videos

“Is this only to watch videos and DVDs?” was John’s last question.

Well, does Condobolin have a video store? A quick Google search shows it does, along with local and satellite TV stations. So the residents of Condobolin are just keen as the rest of us to watch the tube.

Increasingly our viewing habits are moving online and fast broadband is necessary to deliver that. John may be happy to exclude his town from being able to do that, but my guess is plenty of his neighbours would like to have that option.

What’s more, many of those farmers, processors, trucking companies and other service providers in the Condobolin region will need those video facilities for tele-conferencing with suppliers, customers and training companies.

Building for the future

Video conferencing isn’t the only application for what we consider today to be high speed networks, these are going to change society and business in the same way the motor car changed us in the 20th Century and railways and telegraph in the 19th.

Australia made a mess of the railways and the roads, in both areas we’re still playing catch up. The National Broadband Network is an opportunity to avoid the mistakes of the last hundred years and get the 21st Century right.

Unfortunately, the objectives of building a better nation are being lost in a fog of disinformation, political opportunism and corporate incompetence. We can do better than this.

So you want a business grant?

The promise of free government money is seductive, but is it real?

“Funding Available from $1000 to $500,000! Get an advantage over your competitors or give your business the Government Funding boost it needs to be more successful!” Is the promise of a website offering to find grants for your business.

Free money from the government sounds good and, as we’ve seen in the various Quantative Erasings and bank bail outs around the world, it sometimes is free.

Rarely though is cash really “free”, usually there’s strings attached and government money is no different.

Why do governments give business grants?

First we should understand why governments make grants, subsidies and loans available to businesses.

Governments have various objectives with their programs; they could be to get unemployed workers back in the workforce, to improve skill levels or to encourage exports. Whatever the motives are, they have clear criteria for giving money away.

One area they don’t give funds for is to “Get an advantage over your competitors” as that website. That’s clearly not the role for governments and they’d be rightly criticised for doing so.

The paperwork storm

Contrary to what some media outlets portray, most public servants take their responsibilities seriously and don’t give out taxpayers’ money unless the application clearly meets their programs’ objectives.

Meeting the objectives is important, because the public servants – and their political masters – are held accountable so they will make sure the business receiving the grant or subsidy has actually done what they have promised to do.

This is where things get tricky for business owners and managers who have received government money. Completing the paperwork to prove you’ve met the objectives will be time consuming.

Drive a cab

Often it would have been more cost effective to drive a cab rather than spend hours filling in government paperwork.

There really is no such thing as free money, there’s always a cost. While sometimes there are good reasons for applying for a government program, free money should never be your objective.

It’s also worth keeping in mind that services offering to find government money for you will usually take a cut of the grant as commission. Also, they won’t help you do the follow up paperwork, that’s your expensive problem.

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.