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This week’s special report on Corporate IT in the Economist examines economical implications of changes coming with advent of “Cloud” computing. While people are still debating definitions of the term, and the concept is not as new as journalists and marketers (wait, it there a difference? Hmmm..that a subject for another post) making it to be, this report is attempting to cover much wider implications, as I have read before. Quite interesting read in general, but there are two areas that resonated with me the most:
1. As and if the concept of “cloud” becomes more acceptable from corporate, legal, social, etc. points of view, more corporations will start to outsource their business processes, that are not their “core” competence, to BPU’s (Business Process Utilities). How many corporations still run payroll in house? Today most companies collect their payables in house, but as as they age beyond certain point, they do outsource collection to the specialists. There is nothing new to this except the reach, flexibility and the scale which could escalate substantially;
2. As the investment barriers for entry into the software business coming down, the “cloud” offers enormous leverage for fast scaling to meet requirements of any large customer. As SaaS successfully demonstrated, the current software licensing model is no longer license to print money. But even SaaS vendors finding they subscription fees under pressure.
software vendors will have to find new ways to charge for their wares: in the cloud, tying licensing fees to the number of users, for instance, will be difficult, since services will mostly be consumed by other machines. More importantly, the corporate world has become less and less willing to buy software for large sums of money, so software firms listed on America’s stockmarkets now make most of their profits from maintenance and other services
The scary part is that software business model transition may find itself on slippery slope similar to the music recording industry have discovered.
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I think it was Tom Siebel, who funded first serious efforts to document, develop and publicize CRM Best Practices, I am aware of. Over the years many companies and practitioners engaged into this very meaningful exercise. It is unfortunate that many people prefer to re-discover and re-invent them on their own, unaware of existing wealth of knowledge and experience, and repeating the same mistakes over and over.
One of the best and most lighthearted CRM Best Practices materials are created by John Cleese of Monty Python Flying Circus fame. It is very funny, and extremely meaningful, but I don’t need to belabor on value of other people experience -
“there are three kinds of people:
1. people who learn on other peoples mistakes - there are very few of these;
2. people who have learned on their own mistakes - it is a larger group, and
3. people who never learn.”
What can one possibly do to completely undermine the company investment in CRM technology? So one of the CRM primary goals is to create consistent customer experience and communications with the company that foster loyal and subsequently profitable relationship. Well, that is a theory, but consider the experience of this Comcast customer - 10 days after installation of their promotional Internet service I still cannot make my wireless router work. I have wasted hours of Comcast support personnel, my own and my, less technologically challenged, friends’ time trying to troubleshoot the problem; I have driven to purchase, and then to return, a new router on suggestion of clueless support technician, I have wasted my wireless minutes listening to Comcast sales agents opinion about the problem. At the end I just found out that Comcast has decided to promote their Home Network product, which offers integrated modem/router, at home installation and different rates. So they blocked dynamic IP renewal for new customers to force them into higher priced new offering, but did not tell anybody.
I do not pass a judgement on the value of their products here. I just want to point out that none of the Comcast employees knew anything about it, and still don’t because nobody bothered to communicate it in concise and meaningful fashion.
It must be even harder punishment to work for company like that, then to be it’s customer. Here is your lesson in CRM worst practice - disrespect your employees, hide information from them and throw them in front of angry customers. How much loyalty does it create? Not much - I just moved my TV service to the Direct TV. Internet goes next.
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I would like to pose a theory that the “Internet” bubble was burst by sudden stop of tremendous flow of cash into myriad of projects 2000, not by sudden realization by “the Market” that there is no such thing as “Internet Economy”. Such realizations do not come suddenly.
Technology is often marketed by visionaries who have or display very strong “religious” believes necessary to gather momentum, critical mass of “converts” to make a dream the reality. Hence a term “evangelist” often used to describe job function of these people.
Peter Drucker wrote in his classic book “Innovation and Entrepreneurship” that it often takes 15 years for a new technology to mature into commercially viable product, and provides a number of history examples. The IT industry is particularly susceptible to early claims of technology adoptions - perhaps you are old enough to remember promises of Artificial Intelligence and Paperless Office. Well, it seems that some of these promises are finally being delivered and not in a form of self serving advertising, but in a form of actually observed change in underlying business trends. The Economist reports that
demand for office paper began declining. David Pineault, a paper expert at InfoTrends, a consultancy, estimates that office workers in rich countries will reduce their consumption of “uncoated freesheet” paper (called “woodfree” in Europe)-the sort used in offices-every year for the foreseeable future. Some market segments, such as high-quality paper for photo printing, may buck the trend. But overall, Mr Pineault is “bearish” on paper.
“It’s a generational thing,” says Greg Gibson, in charge of North American office paper at International Paper (IP), the world’s largest paper-maker. Older people still prefer a hard copy of most things, but younger workers are increasingly comfortable reading on screens and storing and retrieving information on computers or online. As a result, IP has closed five uncoated-freesheet mills in America in the past decade, and the industry is consolidating. IP is investing instead in poor countries, where demand is still growing.
This week’s special report on Corporate IT in the Economist examines economical implications of changes coming with advent of “Cloud” computing. While people are still debating definitions of the term, and the concept is not as new as journalists and marketers (wait, it there a difference? Hmmm..that a subject for another post) making it to be, this report is attempting to cover much wider implications, as I have read before. Quite interesting read in general, but there are two areas that resonated with me the most:
There are many excellent blogs and other resources on the Internet which explore methodologies and Best Practices for business process re-engineering, project management, systems implementation, software engineering, and change management. However I could not find much help with unlocking value of integrated utilization of these disciplines to facilitate Organizational Transformation. In this blog I would like to focus on this subject. I would like to stress that this is not an academic inquiry, but a practitioner's desire to discuss and share practical business knowledge and Best Practices. Let's see how it evolves - "Every brilliant idea quickly degenerates into a lot of hard work" - Peter Drucker.