Glittering distractions

Google and Facebook have joined the online deals battle. Will they dominate this market?

Into an already crowded group buying market, Google Offers and Facebook Deals have launched. It’s tempting to think the power of both will swamp existing players like Groupon and Living Social, but will the search engine and social media giants eventually dominate the group buying market.

There’s a number of barriers to success in the group buying industry; securing a steady supply of compelling offers, generating a community of followers, building a sales team and dealing with customer service issues are just a few. For both Facebook and Google these obstacles are not just a matter of money or scale.

The power of Google

Google’s clear strength lies with its local search functions. Google Places is an excellent fit for group buying services, a point not lost on many of the existing players who use Google Maps and the local business service to support their offers. Merchants can already use the free vouchers feature in Google Places and proactive businesses are already doing this.

Leveraging their existing voucher features into paid group buying services should be one of the easier tasks for Google Offers’ management. Search itself is a powerful tool for merchants offering group buying services, I might not be interested in dog washing or personal training services in my neighborhood, but if I’m online searching for a holiday a group buying offer for discount meals or car hire in Miami may well attract me.

Facebook’s power

Adding social media to group buying is a pretty powerful combination and one that many of the early services leveraged extremely well, so Facebook’s entry into group buying should worry the existing platforms. Being able to segregate deals by geography, demographics, friends and likes is another example of how powerfully Facebook’s advertising can be targeted.

Merchants who use the Facebook service can be pretty confident their ads will hit the right audience rather than being blasted across a mailing list of indifferent subscribers. Coupled with this is the use of Facebook credits. While Facebook aren’t going to make them directly redeemable for gift vouchers or cash at this stage, they still add to a compelling package Facebook can offer both advertisers and customers.

The customer service dilemma

One thing that makes a group buying service successful is the delivery of well timed, compelling deals. This means a hands-on sales and support team. Like most web2.0 businesses, both Facebook and Google aren’t particularly good at face-to-face, or phone-to-phone interactions with customers.

A challenge for both companies will be to attract management talent that can run the sales teams necessary to provide attractive daily deals while dealing with the inevitable consumer service tasks that come with selling direct to the public.

Channel conflict

Facebook and Adwords advertising have been big lead generators for the existing social media platforms and it’s going to be a challenge for both companies in managing the conflicts which will appear between their advertising and group buying platforms.

Those advertising channels are both organisations’ primary source of revenue, so these are going to take priority over other initiatives. Both services’ group buying operations may interfere with their advertising revenue by discouraging or competing with paying advertisers and this will be a major challenge for both Facebook and Google to manage.

Are we over group buying?

That effort to find compelling deals is a problem for all group buying services and we’re seeing the saturation problem with many of the providers as they struggle to find compelling daily deals in all of their markets.

Being late to the markets means both Google and Facebook are going to face exhausted buyers and merchants who been saturated by the dozens of services that have appeared in the last twelve months.How many consumers and businesses are prepared to sign up to YAGS (Yet Another Group buying Service)?

There’s also the issue that group buying might be a passing fad; many of the merchants advertising on these services are service businesses grimly hanging onto failing business models built on the late 20th Century idea of unlimited credit driven consumer demand.

Many of their customers too are cash strapped consumers shopping around for cheaper deals – a discount haircut here, a cut-price meal there – as a way to maintain the lifestyles that are becoming unaffordable in an economy where jobs aren’t as secure, credit isn’t as easy and retirement savings looking uncertain.

As it becomes apparent to both consumers and merchants that most of the group buying services aren’t meeting their needs then the demand for these service is going to drop away.

That’s not to say group buying is a dead model, but it appears the market is overheated with way too many suppliers.

Having deep pockets may well turn out to be why Google and Facebook end up being the sole survivors from the inevitable group buying shakeout, but it doesn’t mean they’ll actually be the best players, or they’ll make any money from it.

Given how late both Facebook and Google are to this market it’s hard not to think they are repeating the mistakes of previous market incumbents in other sectors of ignoring a market until becomes a shiny trinket which every dynamic corporation should have a presence in.

In that respect it’s a bit sad that relatively young corporations like Facebook and Google are overlooking genuine innovation and using their skilled teams to build me-too products rather than finding and building new markets. Hopefully the time taken to build their group buying services won’t distract these companies from their core businesses.

Trust is the currency of the web

To succeed online, we have to be a trustworthy voice in the noise of the Internet

“On the Internet, nobody knows you’re a dog” says Peter Steiner’s famous cartoon. All of us who want to be taken seriously on the web have to prove we’re not dogs – or trolls, shills or just those who regurgitate cheap, nasty and unreliable content.

This is particularly true when you want to be a trusted news source; your audience has to be assured an article’s facts are true and the conclusions can be relied upon. That assurance is found in references to source material, the writer’s identity and the basic facts for the reader to decide how accurate the story is.

An article in the Sydney Morning Herald on Voice over IP security illustrates just how even mainstream, established media can get things wrong. This article tells us nothing; we don’t know who the writer is, it doesn’t link to source material and, unforgivably, the story leaves it to the reader to guess what the security problem was.

Because of Fairfax’s silly and inconsistent rules on external links I normally don’t link to Fairfax news articles. A good example of this silliness is illustrated in the above article where the reader has to copy and paste into a web browser the bit.ly reference to MyNetFone’s security advice which the writer has managed to sneak into the copy.

It would be nice to congratulate the writer on this little bit of subterfuge but the article doesn’t have a byline, the credit at the bottom simply says “Livewire” which probably refers to the long defunct IT section of The Age, the Sydney Morning Herald’s sister publication.

That the article also refers to Bleeding Edge, a long running Age technology column by Charles Wright which was discontinued some time in early 2006 and which Charles later tried to morph Bleeding Edge into an independent blog. It’s not good enough that we have to guess who the writer is.

Having a semi-anonymous writer, no byline and no links to supporting information might be all forgivable if the article actually told us what the problem had been with the phone account; did the evil Hong Based criminal mastermind hack the providers’ network, was it a security lapse on the writer’s network or had the user’s password been weak and compromised?

I suspect it’s the latter, but like most things about this article the reader is forced to guess. If the reader doesn’t have some level of computer expertise they’d be totally lost.

For organisations like Fairfax, the publishers of The Age and Sydney Morning Herald, the challenge in a society where the traditional newspaper model is rapidly dying is to build their online brand so they can bring advertisers across to it.

The only way they will succeed in this difficult task is to be trusted as a source of reliable information, and right now poor editing coupled with silly policies such as the one on linking out to other trusted sites are damaging readers’ trust in their brand.

Rather than sacking editors, publishers should be preserving them and making their online content more trustworthy than the bulk of the web with its dozens of content farms and millions of inconsistent blogs (like this one).

It’s only by having high standards that today’s media empires will survive the changes the Internet has bought, going cheap and losing the trust and respect of the audience is not an option.

How safe is your net connection?

It pays to be careful on the web when travelling.

Reports last week that foreign “hackers” had intercepted emails between Australian government officials and miners raised the issue of email security, just how private are our online messages?

When the media uses the word “hacking” it’s always worth taking a step back and finding out the facts. Often a security breach is the result of a simple setup mistake or the information and passwords have walked out the building with a disaffected, lovestruck or just plain dumb employee.

That’s not to say hackers aren’t a risk organisations should to be conscious of, it’s just that often the security risks are more mundane than we would expect. A good example is the simple matter of logging onto a wireless or hotel network.

We assume when we log into our networks that the data is secure though often the user names and passwords are exchanged in “clear text”, which anyone with access to the network can view your passwords with the use of a “packet sniffer” that reads each bundle of information sent across the internet.

Poor security isn’t just a feature of unprepared computer users, every year the world’s leading hackers and security experts gather at that Las Vegas DEFCON conference which since 2001 has featured the Wall of Sheep, an embarrassing display of user information captured off the convention’s network.

This is a surprisingly common security problem made more frequent with the rise of unencrypted wireless networks which can be sniffed by anyone who can be bothered logging on, this is a common problem when you’re connecting onto free wireless networks at the local coffee shop or fast food restaurant.

The answer to all of this is to use Secure Socket Layer encryption, which creates a secure link between your computer, mobile phone or iPad and the servers. For email use, your system administrator can set this up or if you use the popular web mail services it’s a matter of ticking the box.

A similar service works when you’re browsing the web, on visiting a secure site the address should start with https instead of the usual http, the “s” on the former stands for “secure”. A padlock symbol will also appear – in the bottom left hand corner of Firefox or beside the site address at the top of both Chrome and later versions of Internet Explorer.

Before logging onto any secure service, including social media platforms, both the https address and the padlock symbol should appear before you enter passwords or sensitive information like credit card or banking details.

Sadly, the secure websites are not always foolproof as sometimes the site will use a secure connection for your password details then once you’ve logged in, return to an unsecured version. This is how the Filesheep program that was released last year works by sniffing cookies and other stored information from unsecured websites.

It’s surprising how many tourists and backpackers get caught out while doing online banking, checking their email or using social media while on the road.

Without logging into a network securely, then logging out when finished and making sure their details haven’t been saved, it’s quite common to see travellers getting their details stolen.

Assuming you’re safe because the network belongs to a high priced hotel or resort doesn’t always work either; a few years ago passengers on a major cruise liner had their bank accounts compromised when one of the crew was stealing data passing through the ship’s Internet cafe.

You don’t need to be a mining executive in China or Julian Assange to fall prey to the Internet snoops, whole industries and criminal organisations are built around using your data so it’s a good idea to be making sure your information is secure while taking a little bit of caution and using some judgement before logging onto a network.

Happy birthday, iPad

Last week’s anniversary of the iPad has some useful lessons all disruptive businesses

Last week the iPad’s first birthday quietly passed, lost among the hoopla of the release of the tablet computing leader’s second version. It’s a difficult to think of another product that’s changed an industry so radically and so quickly.

All of Apple’s successes in the last decade have been in areas with many already established players; the iMac entered a crowded PC market, the iPod was just another MP3 player and the iPhone plunged into a sector sated with hundreds of mobile devices.

With each product Apple redefined their segment of the market place and established a secure, and profitable, niche.

The iPad was somewhat different to the other products; with it Apple redefined the entire market and now leads the tablet computing sector. Yesterday industry analysts Gartner put out figures claiming Apple has over two-thirds of today’s market and will still hold half in 2015 despite the rise of the cheaper Google Android devices.

Notable in Gartner’s predictions is the absence of Microsoft Windows based systems and that’s the clue for the iPad’s success as industries like healthcare, retail and logistics had been begging for affordable and usable tablet computers for a decade which the clunky Windows based systems had consistently failed to deliver.

Another factor in Apple’s favour has been the rise of cloud computing, which has freed devices from relying on heavy and power hungry internal hard drives and made them more flexible. One of the most popular business iPad applications has been Evernote, a note taking program which has proved indispensable for business executives.

Most of those executives work for corporations where the IT departments had blocked the introduction of cloud services and Apple products on compatibility and security grounds.

Senior management’s adoption of Apple products and cloud services has broken down that enterprise barrier, which is one of the reasons why competing companies that made their fortunes selling desktop and server products are now desperately trying to find other selling points.

In many ways, the adoption of Apple and the cloud is similar to how personal computers entered business. In the 1980’s computing departments resisted the introduction of PCs for almost the same reasons as IT managers today object to social media, cloud computing and Mac desktops in the office.

The difference is the PC revolution was initially driven by the office accountants, sales teams and secretaries who found desktop applications like Lotus 1-2-3 and WordPerfect made their jobs more effective. This time, being different, it’s their managers driving the change.

For smaller businesses and entrepreneurs Apple’s successes open a whole range of opportunities in the applications and services markets to support these devices.

Those applications also help upstarts disrupt existing industries; the lower cost of entry is reducing barriers and speeding up lead times making slower incumbents more vulnerable to change.

Disruption is probably the greatest lesson that Apple and Steve Jobs have taught us with the iPad, you can enter an already crowded market with a product different from the existing players and own a substantial part of it.

All businesses, regardless of the sectors we work in, can learn from the iPad whether it’s how we can use tablets and the cloud in our operations or how we can apply Apple’s disruptive business model to secure a profitable industry niche. It’s a good time to be being open to new ideas.

Email turmoil

What the Epsilon email breach means to you.

The massive email breach at Epsilon, the World’s biggest email marketing services company, has rightly caused headlines as it appears customer addresses from many of the world’s largest brands has been leaked to spammers and crooks.

Epsilon looks after the email services of major brands, including Tivo, Marks & Spencer, McKinsey and Dell Australia so the breach has exposed many people’s email addresses.

What does this mean?

The breach has not exposed passwords or credit card details, so there’s no direct threat from the breach.

However, having your name, email address and a company you’ve dealt with means a phishing attack, where a crook poses as a business you’ve dealt with and tries to get your passwords, will be more effective.

Normally these messages are a give away as they aren’t addressed personally to you and are often from organisations, usually foreign banks, you’ve never dealt with.

However a scammer who knows the organisation along with your name and email address can now launch a pretty convincing fake email campaign directing you to a site pretending to be say a competition or a security warning that asks you for your password.

Given many people use the same passwords for all the secure sites they visit, there’s a reasonable chance the bad guys will get a large number of live accounts and be able to access victims’ bank accounts, email services and social media sites.

What should you do?

The first thing is to be careful, don’t respond to any suspicious emails and if you are uncertain call the organisation’s support line from a number although do not use any numbers or other contact details shown on the suspicious email.

If you are concerned you have fallen for a trick, then change all your passwords immediately, we’d also suggest following the instructions on the IT Queries website and having a layered approach to security where sites which don’t matter have simple passwords.

We can also expect a wave of fake email and social media messages as peoples’ personal pages and accounts are hijacked and the scammers try posing as other people.

The Networked Business

The first of the City Of Sydney’s Let’s Talk Business looked at how business can use the cloud

The first of the City Of Sydney’s Let’s Talk Business workshops looked at how business can use cloud computing services to help improve the marketing, operations and profitability.

My presentation, Business In The Cloud covered the definition of cloud computing, the benefits for business, the risks and the case for getting on the cloud.

The text of the presentation, shown here has been broken into four segments each addressing the individual points.

What is the cloud?

The opening section looked at what cloud computing is, the underlying definitions and how it works. We discussed how the underlying concepts of cloud computing are nothing new and how the concepts of shared resources across a reliable and robust network are part of the very reason for the Internet itself.

The benefits of cloud computing

Having defined cloud computing we look at the benefits of these services, focusing on the flexibility online software delivers and how businesses can use these tools to quickly seize opportunities in our fast changing society.

Risky business

Every new technology has its risks and cloud computing is no different. In our third presentation we look at some of the online traps and how to manage them.

The business case for cloud computing

Concluding the presentation is a summary of the business case, balancing the benefits and the risks and concluding with how businesses might use cloud services.

Further information

Illustrating how businesses can use online tools, we have a list of some of popular business cloud services that can help your organisation use the web to be more flexible and innovative.

The presentation was part of the Let’s Talk Business series of workshops run by the City of Sydney and held at the Customs House. There’s three more events in the 2011 series covering the new consumer, mobile internet and business leadership.

If you’ve been along to the Lets Talk Business events, or have some ideas on how business can use cloud services, we’d love to hear your comments.

The networked business Part 4: The business case for cloud computing

Part 4 of the Let’s Talk Business Cloud Presentation

This is the fourth and final part of the presentation given as part of the City of Sydney’s Let’s Talk Business series of events on new business technologies.

The case for business cloud computing

Cloud computing is part of the future of of business. Increasingly it’s going to become of fundamental part of our society as we become more connected.

Business is open 24 hours. Even if your office or staff aren’t working at 4am on a Sunday, customers are checking your website to look at your products. If you are selling online, everything has to be running.

The cloud is not a tool for every business. For some, the risks or limitations mean they are better served running application or storing data on their own computer.

For most businesses though the cloud changes the game, it makes them more flexible and productive.

In an era where we’re seeing massive change in our economy and society, it’s the business who can respond quickly to the new normal who will survive and prosper.

Cloud computing helps businesses adapt and are part of the key to running a successful enterprise in the 21st Century.

This is the third of a series of four posts taken from The Networked Business presentation. Parts One, Two and Three are also online. A list of the useful business cloud computing tools to accompany this article.

The networked business Part 3: Managing risk in the cloud

Part 3 of the Let’s Talk Business Cloud Presentation

This is the third part of the presentation given as part of the City of Sydney’s Let’s Talk Business series of workshops on new business technologies.

Not always free

There are some misconceptions about cloud services though.

Just last year, the Australian Financial Review ran a front page article headlined “massive savings to be made in the cloud” stating that cloud services can save a business up to 80% on its IT spend.

Many industries have made the mistake of relying on cheap prices to get customers through the door. Think of Myer’s problems with their perpetual sales, a mistake being repeated today by dozens of smaller businesses offering 80% off meals or haircuts through the group buying services.

In the Internet based industries we’ve made the mistake of training our customers to believe we can do everything online for free.

Free is an illusion, there is almost always a cost and on the net you’ll either pay by spending time or giving away your own, or your clients’, privacy.

The better services cost. The most successful cloud service, Salesforce.com, is quite expensive although still substantially cheaper than the server based alternatives.

Many services though are based on the freemium model, when you need additional features or grow beyond a certain size charges kick in or increase with your needs.

Mail Chimp, an online email management system is an example. Late last year I resurrected a mailing list which hadn’t been used for 18 months. I chose to pay the fee for MailChimp as their management service would deal with the hundreds of invalid addresses and unsubscribes a neglected mailing list always attracts when you restart it.

Not only did MailChimp deal adequately with these problems but it also took the size of the mailing list below the 2,000 name threash hold for their free service.  So spending a bit of money actually saved a lot more money and a massive amount of time. It also illustrated the flexibility of cloud systems and their pricing models.

The risks

Nothing though is risk free. Any technological change comes with risks; electricity changed humanity but thousand of people die every year from misusing it. We can say the same for the motor car, steam engines and penicillian.

For all the benefits of Internet technologies they too have their own risks. In cloud computing we can divide them into three major groups; Reliability, Terms of service and Security.

Security

Probably the most misunderstood, and so riskiest, aspect of IT is security. Most business people over estimate the security of their own systems and are shocked when their data is compromised by viruses, hackers or, most commonly, their own staff walking out the door with vital information.

Cloud services generally have better security than most business networks as they have the resources to deal with the massive task of keeping computing systems secure, but there are still risks in using online providers.

Strong passwords begin to matter and guarding them is important as well.

Granular access, not giving everyone access to everything also becomes very important. This is also a common problem on small business networks.

Accessing cloud services from shared computers or through unsecured wireless networks is probably the biggest danger, particularly with mobile workers. It’s important any provider you use offers encrypted services, which you can tell from the login page showing https:// at the beginning, and making sure you log off when you finish using computers in Internet cafes or in other people’s offices.

Terms of service

When using cloud services you have to understand these are someone else’s computers you are occupying so you have to play by their rules regardless how arbitrary they seem.

Wikileaks is a good example of how large cloud and Internet providers use ToS to shut down customers they don’t like.

You don’t have to upset the CIA or Julia Gillard to get into trouble. Victoria Buckley Jewellers in Sydney’s Strand Arcade uses beautiful porcelain dolls to model their products. One of the female dolls has nipples and Facebook shut down Victoria’s account after a series of photos showed the doll topless, nudity being a breach of Facebook’s conditions.

A more common problem is eBay shutting down traders’ accounts on spurious piracy claims. This is very common and genuine risk to anyone running an online store relying on PayPal or eBay.

Probably the best example of silly piracy claims is when the University of Florida hit the Flickr photo sharing service with claims that every photo with a description containing the words “Florida” and “football” was a breach of their college grid iron team’s copyright.

The howls of outrage from angry Flickr users when their pictures of kids playing football while on holiday in Florida or local team photos were taken down soon convinced both organisations that their actions were hasty and ill-advised.

The problem remains though that online services are still too quick to shut down other people’s services so you need to plan for these type of disruptions.

Reliability

Tied closely into the terms of service is reliability.

Reliability is at the heart of all technologies. If something breaks down most of the time you use it, then it’s of little use to your business.

If you are using a cloud service you need to have both reliable internet connections and a provider you can trust. This is why free services often don’t cut it for business use.

One aspect cloud services and technology companies often sell is the Service Level Agreement or SLA, these offer a refund if the service doesn’t perform to set standards. While SLAs are useful, they don’t make up for the disruption a service interruption causes your business. As Virgin Blue found during their service problems late last year.

As we’ve seen with the recent natural disasters in Japan, New Zealand and Queensland, the Internet routes itself around problems. So if you are in a problem area the challenges of keeping your business operating may be increased while communications are still being repaired

Redundancy is the key, just as the Internet and cloud computers have redundant features, so too should your systems. You have to choose providers that let you easily download usuable data from their services in case you find yourself offline or unhappy with their product.

This is the third of a series of four posts taken from The Networked Business presentation. Parts One, Two and Four are also online

The networked business Part 2: The benefits of cloud computing

Part 2 of the Let’s Talk Business Cloud Presentation

This is the second part of the presentation given as part of the City of Sydney’s Let’s Talk Business series of presentations on new business technologies.

Scalability

This scalability, or flexibility, of cloud computing changes the way we buy and use technology. No longer are we locked into major technology investments as leasing services off larger companies means we don’t have the capital costs of investing in computers, servers and all the associated software purchases and support charges.

An architect or designer a few years ago might spend $10,000 per employee every three years kitting them out with the latest workstation capable of running AutoCAD or another high end design program.

While some businesses still need that sort of investment, most can now get away with just a computer running a web browser and the boss can pay the monthly bills on her credit card rather than having to take out a loan against the family home.

The 19th Century Prussian general, Helmuth von Moltke said “no battle plan survives first contact with the enemy” and similarly no business plan survives its first contact with the marketplace. The flexibility of cloud computing means we aren’t locked into expensive technology choices as our business evolves to meet the changing demands of our customers and industries.

Teamwork

Collaboration is another of the big buzz words of today’s economy. The truth is all successful businesses are a collaborative effort and have been since the days of cavemen hunting mammoths.

One of the biggest irritants with PC based systems is how they are designed for one user at a time and how many force you to pay for an unreliable multi user versions.

Think about Microsoft Word, if you’re accessing it on the network you’ll find only one user at a time can read or edit it. This was true of the older desktop accounting packages.

The older, desktop based accounting packages only allow one user. Their multiple user, network packages are expensive and clunky. The cloud based systems like Xero or Saasu, an online service based out of Elizabeth Street here in Sydney come with the teamwork functions built in.

Recently at a workshop in Melbourne, a director of a large services company told me how his board of directors are using Google Docs to work together on agendas and committee documents. Using cloud services are saving him and his colleagues many hours of work and avoiding having big piles of documents dumped on them the weekend before their board meetings.

The team aren’t just your employees, it can also be your customers, suppliers and other business partners. Cloud services allow you to share selected information without compromising your own systems.

Mobile working

By definition your customers and suppliers aren’t in your office. Increasingly your staff and even the boss aren’t there either.

Working on the move has been one of the great weakness of both PC computing and the mainframe era. Cloud computing, made possible by accessible and affordable Internet, means we can now easily access data and applications while we’re on the road.

Remote working has been possible in the past, but it was awkward and difficult. To set up secure connections usually involved setting up a complex and flaky Virtual Private Network that tended to choke at the times you needed it.

In my own IT support business we saw this a number of times where we struggled to set up reliable remote networking connections. For instance the owner of a business in Pyrmont decided to move his home to Orange and telecommute into the office. At the same time his assistant had a baby and wanted to work from home.

The juggling of hardware and server requirements so the client had a secure and reliable service was difficult and expensive. Today the use of online accounting and office packages along with cloud based document sharing services like Dropbox, that business could be paying $100 a month without any upfront capital costs.

Dismantling edifices

Those capital costs are real, a five person Sydney law firm I know ended up spending thirty thousand dollars when their software provider told them they had to upgrade their systems.

Much of a big or small businesses IT budget goes into building impressive technological edifices that add little to the profitability of the business.

Worse, IT is a time consuming beast – in a big business hundreds of people are employed to keep their computers running. In a small business, the proprietor or manager spends a disproportionate amount of time messing with technology.

Cloud services take a lot of that load off businesses.

We should keep in mind though that this is as big a benefit for big businesses as well as small. Last year the Commonwealth Bank of Australia announced they were moving services to the cloud.

The big end of town has woken up to the benefits of cloud computing, while they have a problem in dismantling their massive structures once they do they will be stronger more nimbler competitors as their cloud platforms make it easier for them to respond to market changes.

Barriers are falling

As large businesses are learning, removing big capital costs reduces barriers to testing new ideas. It means getting a new business up and running is cheaper and quicker than ever before.

On the back of Sydney Buses at the moment you’ll see ads for Freelancer.com, stating you can get an iPhone app or website developed from $30. While the reality is you’ll pay quite a bit more than that, the point is well made – with a web browser and a credit card you can outsource large parts of your business.

Most of these outsourcing businesses are run on cloud services. Many of the social media successes like Facebook and Twitter grew by hiring space off cloud computing services such as Amazon.

For established businesses, the cloud is changing the very fundamentals of their operations. One of the biggest growing areas in the outsourcing industry is the legal profession where law firms are giving lower level work to companies in India that can carry out the tasks of junior lawyers or paralegals. The cloud technologies these services use allow the law firms to supervise and bill for the workers as if they were in the same building.

Because you can be up and running in minutes using cloud computing services without the need of installing software on your computer, let alone the time involved in managing and downloading updates, it’s a quick and effective way to grow your business.

This is the second of a series of four posts taken from The Networked Business presentation. Parts One, Three and Four are also online.

The networked business Part 1: What is cloud computing?

Part 1 of the Let’s Talk Business Cloud Presentation

This is the first part of the presentation given as part of the City of Sydney’s Let’s Talk Business series of events on new business technologies.

The IT industry loves buzzwords and one of the biggest buzzwords at the moment is Cloud Computing.

Another thing the IT industry loves is overselling concepts, think of Y2K or the Dot Com Boom, so in this presentation we’ll look at what cloud computing is, whether it’s being overhyped and what it can realistically do for today’s businesses.

In 2003 Nicholas Carr wrote in the Harvard Business Review that Information Technology no longer matters. In Nick’s view, computers, the Internet and IT are all becoming a utility and we’ll take computers and the Internet for granted just as we in the Western world consider clean running water and electricity today.

That point of view is probably true and the always on nature of the Internet and cloud computing is bringing us closer to the day we’ll assume IT is always there.

In the always on, always connected society each of the nodes we see on this screen could be a customer, a supplier, an employee or even the tax man and this changes the way we do business.

But every innovation has its risks and every revolution its victims. So we’ll look at the risks as well as the opportunities in an economy where cloud computing is changing the fundamentals of our businesses.

What is the cloud?

Before we go on, let’s explain what the cloud is. The analogy of a cloud is quite appropriate, just as a rain cloud is made up of many individual water particles, the Internet is made up of millions of computers talking to each other.

In fact there are so many computers on the Internet that the Internet Protocol version 4 developed in 1980 allowed around 4 billion address and we’ve just run out of those.

The Internet Protocol 6 now being introduced allows 34 undecillion addresses. An undecillion is a trillion, trillion, trillion so 34 undecillion addresses is a big number, although in 1980 4 billion seemed to be a lot and it was unthinkable we’d use them all up in 30 years.

The Internet though was designed to survive the unthinkable. Surviving a nuclear war was the reason for the Internet’s design. The fundamental idea behind the net is redundancy, should one group of computers fail the network adapts and sends the information around the damaged area.

The same principle applies to cloud computing, the tens of thousands of computers in each data centre – the buildings that house the cloud computing companies – are duplicated many times so if one or a hundred fail then others will pick up the work and the person using the service should never notice there has been a problem.

Naturally the data centres themselves are duplicated so the failure of one centre won’t interrupt the service. When you open a document in Google Docs, the data and the program are being run on computers in Oregon, Belgium possibly even here in Sydney.

Interestingly, the computers in these data centres are cheap and basic with most of them having less power than our home or office desktop computers.

The real power lies in combining the capabilities of these modest systems, as a group they are far more powerful than most supercomputers.

For our purposes we can define cloud computing as using someone else’s computers to do the work rather than our own systems.

Cloud computing is nothing new

The idea of cloud computing isn’t new, it goes back to the earliest days of computers.

Until the arrival of the personal computer, academics and businesses had to use mainframe computers where time was allocated to them by the computing department. These were only really feasible for well resourced organisations.

The Personal computer took the data off the servers and onto the desktop. It’s notable that IT departments back then resisted introducing personal computers for almost identical reasons that they are resisting cloud and web based services along with social media tools today.

PCs and later laptops and smartphones had advantages that the old mainframes could never offer and while the old ways of centralised computing didn’t go away, most people and businesses preferred the advantages of the smaller, more flexibile systems.

With the arrival of the Internet, it was possible to link computers in the same way again and take advantage of the economies of scale of what we call client-server systems while retaining the benefits of personal and mobile computing.

This is the first of a series of four posts taken from The Networked Business presentation. Parts two, three and four are also online.

Ten business uses of cloud computing services

Some online services to help your organisation

As part of the City of Sydney Let’s Talk Business program, we’ve put together a list of some of the more popular uses of cloud computing for the small business.

Cloud services offer a lot to all business, particularly small and start up enterprises that need to move fast and are often cash strapped.

There’s a massive range of services available on the cloud and here are a few that are worth exploring to help your business.

email

Electronic mail is the cornerstone of every business, in the past it’s been a nuisance sharing the email account or keeping track of users and passwords. Today most cloud email services are free and offer as much, if not more than the computer based alternatives.

Google’s Gmail
Windows Live Hotmail
MailChimp (for newsletters)

Accounting services

One of the greatest challenges for small business is doing their books and accounting software is a must have for every commercial operation. Online services reduce costs and increase flexibility for businesses of all sizes.

Saasu
Xero
MYOB Your Business Cloud

Customer Relationship Management

CRM software helps you monitor and understand who your customers are and what you’re doing for them.

Salesforce
Sugar CRM

Backups

Backing up is critical for your business. Having an online automated backup helps you ensure essential data is safe.

Carbonite

Shared storage

Sharing files with others helps your business be more efficient as teams can get work done without using the same computer.

Dropbox
Box.net

Communications

Voice over IP, or VoIP, is a massive cost saver and most of them are cloud services.

Skype
MyNetFone

Office applications

One of the biggest costs for business is the software for writing letters and working on spreadsheet. There’s free and paid for services that you can use on the cloud that cut your costs and increase your office productivity.

Evernote
Google Docs
Zoho Docs

Project management

Running and managing projects is a complex task made much easier with a good project management program to keep track of tasks and time.

Basecamp
Zoho Projects

Blogging platforms

Web Logs, or blogs, are becoming the platform of choice for getting small business websites up and running due to their flexibility and ease of use.

WordPress
Hotmail

Outsourcing

Cloud computing and online services are making outsourcing possible for small businesses. With a browser and a credit card, you too can be in the outsourcing business.

O-Desk
Freelancer

These are just a small range of outsourcing services available for small business, we’d love to hear your experiences and suggestions for other online products.

Planning for today

Business aren’t recognising the connected future has arrived. It’s not too late to recognise this

Last week the Communications Day Summit was told of the bizarre situation where owners corporations and building managers were actively preventing their properties from being connected to high speed Internet.

This short sightedness shouldn’t be surprising to anyone who’s had to argue with architects about allowing sufficient data raisers in commercial buildings or has despaired at stingy developers condemning their projects’ future occupants to years of living in powerboard infested firetraps by only installing one or two power outlets per room – something that’s common in even high priced complexes.

As well as being firetraps, these properties are limiting their potential future value as owners and tenants find it hard to connect the devices most businesses and family find are essential to modern living. This situation is going to get worse as we start to rely even more on the web and we find we our incomes and livelihoods are tied to the reliability and speed of our connections.

This failure to plan for the connected economy by Australian businesses is a familiar story, last year one of the state governments asked the tech industry what they were planning around the high speed Internet access the National Broadband Network planned to deliver. The overwhelming response was “dunno, I guess we’ll wait and see.”

Last week Geof Heydon of telecommunications company Alcatel Lucent told an almost identical story of cluelessness where one of the big four banks asked its suppliers how the NBN would affect the provision of their products.

The frightening thing is the availability of reliable and fast Internet is already here for most of the population and yet the majority of the business community, not just the retailer sector, seems to be ignoring these fundamental changes to our marketplaces.

Even if you don’t like the NBN, or last week’s news of cancelled tenders only confirms suspicions Canberra has their sums on the project hopelessly wrong, cancelling it is going to strand large chunks of regional and outer suburban Australia without access to the newer services.

We all have to ensure our business plans have provision for the changes that are happening as our customers, staff and suppliers adopt high speed and mobile Internet. Failing to do so is going to leave your business or investment stranded, just a community without roads or high speed broadband would be.