Enterprise Collaboration: Five Inconvenient Truths

Large enterprises are looking into enterprise collaboration with an intensity I haven’t seen in years.  Several companies are working with myself and other OnCorps members to plan these projects.  Here is what we are learning.

1. Individuals choose collaboration tools, not companies. This is not a radical elective architectural concept; it is a reality.  If companies want to reach their employees, customers and partners, they need to reach them on their devices and tools.  The percent of time people are sitting at their office, logged into office computers, using office phones is shrinking fast.  Unfortunately, most of our IT and communications capital is fortified around this fading assumption.
2. Mobile is Cinderella: belle of the ball but in the corporate basement. Mobile is quickly becoming the dominant tool for collaboration.  There are five times the number of mobile devices than PC’s and laptops in the world; there are as many broadband wireless contracts as PC’s and laptops.  Yet mobile is neglected in most corporate IT groups.  Mobile should be a part of a collaboration process, not an afterthought where unreadable content is pushed.  Like the US military, enterprise IT is funded to fight yesterday’s war, not today’s war.
3. Privacy and security changes could change radically. The US is among the least regulated countries when it comes to protecting data privacy rights of individuals.  In many countries, laws protect vendors and even employers from moving data, revealing it to others, and breaching the trust of the individual.  The primary way consumer technology and social networking companies make money is selling information about you.  Companies must prepare for an inevitable consumer backlash and understand they will be required to meet new regulations about personal data.  In some countries, you are breaking the law if you retrieve personal data, store it on your mobile, and leave the country.
4. People can remember how to log-in and navigate to only 3-4 sites (your corporate site may not be one of them). Enterprise computing is not under the intense profit pressure facing consumer technology companies.  If users don’t understand how to navigate an application in the enterprise, there is often little incentive to change.  The truth is enterprise applications do compete.  They compete for attention.  Standards in IT always focus on technical matters like API’s, but need to encompass consumer tech workflows.  There is a reason red lights mean stop all over the world.  Similarly, enterprises need to model their workflow after commonly used terms introduced by consumer companies to increase impact.
5. Telling everything to everybody anytime is an unacceptable setting. Most social networking sites and enterprise collaboration projects fail to match message with person.  The result to the receiver is information overload.  The sender may not communicate at all if they cannot direct the message to the right people.

My intent in communicating these points isn’t to dissuade enterprises from pursuing collaboration.  Quite the contrary.  I have never been more excited about technology’s potential.  My intent is to dissuade enterprises from executing new technologies the old way.  When people first made moving pictures, they often filmed plays.  Trotting horses were also popular.  It took a while for people to realize that technology could alter the way you use it.  Hopefully, enterprise collaboration will not be a filmed play.  Pushing a PowerPoint presentation with 12 point font to a smart phone is a filmed play.

Filed under: Uncategorized

Why Tech Industry Consolidation Increases Risks

Ben Worthen wrote a great article in the WSJ a while back, essentially describing how the big get bigger and richer in the tech industry: http://voices.allthingsd.com/tag/ben-worthen/ There is no doubt that past recessions have driven consolidation.  Customers seek to simplify their portfolios and decrease their risk.  Big tech firms acquire smaller firms to substitute inorganic revenue for organic revenue.

Here’s the problem: consolidation decreases diversification and diversification is the one true way to lower risk.   This is an immutable law of nature.  Pure bred dogs are attractive to owners because breeders, in effect, certify the consolidation and branding of certain traits.  But this “homozygous” gene matching also magnifies Spot’s vulnerability to certain diseases.

Consolidating an IT Department’s architecture and rationalizing the “Two V’s” – vendors and versions – helps make life simpler for those managing technology but it also increases the firm’s vulnerability.  The obvious threat in the cloud is hacker’s tend to target big brands.  If you don’t want to get robbed, don’t buy an alarm, buy an unassuming smaller house in the middle of the block.  Buying the largest house on the hill or a corner is the best way to attract thieves.  If you want to lower your chances of being a terrorist victim, avoid flagship US carriers and hotels.  Anonymity is a better.

http://www.sustainabletable.org/issues/biodiversity/

Unfortunately, industrial agriculture has caused a dramatic reduction of genetic diversity within the animal and plant species typically used for food. About 7,000 different species of plants have been raised as food crops in the history of human agriculture. Yet in part because of modern tendencies towards mass production, only fifteen plant and eight animal species are now relied upon for about 90% of all human food. ⁱⁱⁱ As a result of this homogenization of the food industry, thousands of non-commercial animal breeds and crop varieties have disappeared, along with the valuable genetic diversity they possessed.

I was struck by this quote and wonder if the same consolidation of technologies increases vulnerability.

Filed under: Uncategorized

Employees are our greatest asset, unless…

I have been in hundreds of companies in my 25 year career and have seen dozens of mission statements.  Many companies have their statements in posters prominently displayed in hallways and conference rooms.  Here is a mission statement I’d prefer to see, in the spirit of candor:

“Our employees are our greatest asset, unless…..

• We miss earnings
• We want to beat earnings during a period when revenues are flat
• Someone has a more vocal boss than yours
• You get so buried in helping customers, you forget to lobby for your promotion
• You are so busy helping customers, you forget to complete your HR review forms
• We make leadership changes and you are not well known by the new leaders
• You join the company when the stock has already gained 200% and your options are underwater
• We buy a company and tell our investors the “synergies” will make the deal accretive (synergy is CFO speak for cost redundancy)
• You want to make more, but you refuse to stop serving customers to climb our ladder
• You want to make more, but you refuse to stop being technical to climb our ladder

This economy unfortunately will not be kind to employees.  Labor is by far the largest cost in most companies and adding employees has, for the last several years, been an earnings drag.  CEO’s of public companies make millions to meet earnings expectations.  Fund managers make millions holding stocks who consistently meet earnings. Employees are the pawns in this trade.  Ironically, employees often stick with the company longer than CEO’s and investors.  In our system, the most loyal constituent is the most vulnerable.  CEO’s certainly deserve to be rewarded when they create jobs, but I wonder how hard it is to force layoffs to meet your CFO’s spreadsheet.  That seems fairly automatic to me.

Filed under: Talent, Labor, Talent, Work

Cloudy Prospects for Tech: Lessons From the Music Industry

I recently read an upbeat article in Barron’s about mature tech companies benefiting from the move to cloud computing:  http://online.barrons.com/article/SB126238697750612907.html

As someone who frequently spoke to investors and analysts, I know the game very well.  A large institutional investor is concerned about performance and has decided to increase its allocation to tech. The investor must allocate hundreds of millions to the sector and has ruled out small caps.  An analyst is charged with identifying high quality large cap tech (a.k.a. mature tech) and modeling earnings.  It looks pretty grim.  Most earnings are taken from layoffs. The stocks have already traded up in 2009.  What could possibly justify more growth in the stock?  Pent-up demand?  How about a new trend?  How about cloud?

Since I don’t need to allocate hundreds of millions of dollars, I am unfettered from making forced justifications.  As an unfettered observer, I think the logic is flawed.   If you want an analogue, look at the carnage in the music industry. Thanks, in part, to Steve Jobs, the music industry has now been in the cloud for quite some time.  See Stephen Dubner’s post on the music industry:

http://freakonomics.blogs.nytimes.com/2007/09/20/whats-the-future-of-the-music-industry-a-freakonomics-quorum/

Steve Knopper also wrote an excellent book: Appetite for Self Destruction: The Spectacular Crash of the Record Industry in the Digital Age, in 2009.

Here are a few analogues to consider:

1. Record industry executives over estimated their ability to control distribution.  The software industry has historically controlled distribution through agreements with hardware firms who distribute their software.  Like music, software is now distributed on the internet.
2. The record industry continued to believe consumers would buy entire albums, underestimating the market for individual songs.  The software industry stresses integrated solutions to customers; as most consumers rarely listen to all songs on an album, most companies rarely use all the modules they buy from software packages.
3. The record industry alienated young customers by targeting and suing college students.  While there has always been a level of frustration with mature tech pricing practices, the most alienated are younger customers who are accustomed to downloading software for free.
4. The record industry regulated our choices and had inordinate control on picking the next stars.  Now, consumers have the power to discover artists in what Chris Anderson calls the “Long Tail.”  The trend for individuals to consume software in the cloud will unleash a similar dynamic.  This may be further propelled by the lock-down on corporate IT budgets, which will force more users to take out their corporate Amex’s and download contraband software.

My bet is that the factors contributing to profit decline in the record industry will hit the mature tech group.  It will probably unfold much more slowly due to higher switching and migration costs.  There may also be an earnings “head fake” as pent-up demand and refresh kick in.  But it will happen.  Mature tech will survive, but that is not the question.  The question is whether mature tech will thrive in cloud computing.

Characteristics of Potential Winners and Losers in the Cloud

Losers

1. Companies whose pricing practices are rooted in software distribution through hardware vendors.
2. Companies that require you to buy more than you need or use.
3. Companies who make most of their money from software now available for free.
4. Solutions that require substantial software downloads and patches.
5. Solutions easy to migrate from.

Winners

1. Companies focused on consumers who love their product and now use it for business.
2. Solutions that require no downloads or training.
3. Solutions with fair and transparent pricing practices.
4. Companies free from unusually high earnings legacy.
5. Niche companies that provide a great solution and win over customers one at a time.
6. Solutions easy to migrate to.

Filed under: Cloudonomics, Uncategorized, cloud computing, open source, software