Nonlinear Thinking

Apple Stock Anyone?

Not yet sure where this move will fit in the pantheon of really bad strategic blunders, but Microsoft's decision to proceed with the announced retirement of Windows XP has a real "new Coke" feel to it.

Implementing a move that's been planned for months, Microsoft will no longer make Windows XP available to large computer makers, such as Dell, Lenovo, or Hewlett-Packard, or to software retailers, after June 30. It will continue to offer the OS to "system builders," that is, small, independent PC makers, through July of next year.

This move will force many current users of XP to migrate to Vista or wait until 2010 for the arrival of Windows 7. As the much maligned Vista has engendered a legion of XP loyalists, this would seem to bode well for Apple. 

Concurrently, we have this new survey from Yankee Group on Apple's increasing penetration into the corporate world.

Nearly 80% of businesses have Macs in-house, nearly double the percentage that said they had users running Mac OS X two years ago, a research firm said today.

Twenty-one percent of the firms surveyed reported that they had deployed more than 50 Macs. "This isn't Mickey Mouse; it's not just onesies and twosies anymore," said Laura DiDio, a research fellow at Yankee Group Research, who conducted a survey of more than 700 senior IT administrators and C-level executives.. "Apple's graduated into the big league."

DiDio was impressed with the growth of Macs in business, considering that Apple Inc. has put little to no official effort into that part of the market. "This isn't a tidal wave, but it's certainly a sustained trend," she said. "Apple has a beachhead in business. Where it once had just 1-to-2% market share in corporate, now they're up to 8-to-10%," DiDio added.

While you can understand Microsoft's rationale for following through on the original decision, the problems with Vista have been more than adequately documented and the criticisms continue to this day.  Microsoft used to be able, prior to Apple's resurrection and the mainstreaming of open source, to force these kinds of decisions down the throats of their users with impunity. Not anymore.  I think the next few years could be real interesting for the PC/Mac platform war.

Cloud Computing Behemoths

InformationWeek provides a brief overview of eight of the major players in the cloud computing universe in this article.  While there are any number of important participants helping structure and define what the "cloud" will look like, InformationWeek selected the following companies as representative of the differing points of view on where the "cloud" is going.

• Amazon
• Google 
• Salesforce 
• Microsoft 
• Sun Microsystems 
• IBM 
• Oracle 
• EMC 

The only surprise here is that there isn't any surprise that they selected the eight large, well-known technology providers that happen to be involved in advancing the cloud computing model.  Hard to argue with including Amazon, Google, Salesforce and IBM but I think some of the smaller, niche companies focused on the space might have been elevated to the list.  Emerging players such as Bungee Labs, Enki, Joyent and Rackspace might have created a more balanced list as they represent some of the very best, most advance thinking about the "cloud".

But check out InformationWeek's overview, particularly if you aren't aware of what the "big 8" are doing.

Marketing's Wheel of Misfortune

David Armano, on his Marketing and Strategy Innovation Blog, has a creative, fun and insightful look at the challenges marketers face with the cascade of emerging channels and technologies available to us.  Part and parcel of the movement towards building and maintaining stronger relationships with customers by delivering more long term value is improving the methods we use to build and execute marketing strategies and programs and the mix of tools and campaigns.  Armano calls it spinning the wheel of marketing misfortune and created this terrific graphic to drive the point home.

To read a description and assessment of each of the components of the "wheel" visit his blog here.

Contextual Commerce/Ubiquitous Marketing

I began toying with the concept of contextual commerce in a white paper that was published back at the turn of the millennium.  My initial construct balanced on the notion that we were moving inexorably towards a contextual economy in which enterprises would necessarily have to manage context to maintain competitive advantage. In short, contextual commerce was predicated on the evolution towards every person, every enterprise and, ultimately, every machine, becoming massively connected to each other.  From moment to moment, an individual’s or an organization’s needs might change based on a unique and rapidly evolving set of circumstances - in other words, their context.  The notion of context dependency has tremendous ramifications for developing and maintaining competitive advantage for enterprises.  Monitoring context, developing an offer and delivering it in a timely manner are fundamental to success in contextual commerce.

Eight short years later, we have achieved a semblance of a context-based economy.  Incredibly connected and massively wireless, we find ourselves reinventing business models and delivery models and discovering that the old ways of doing things just don’t work.  One function really feeling the effects is marketing.

The preponderance of new marketing channels that have emerged as a direct result of the growth of social media and mobile/wireless technologies is radically altering the traditional concept of integrated marketing.  The world of advertising is already struggling with how to operate in this new environment and every other traditional channel is dealing with an increasingly fragmented marketplace.  Navigating such a dynamic and challenging environment will require some tremendous reinvention, innovation and agility on the part of marketers if they hope to remain relevant and deliver a viable ROI.

One emerging concept to help marketers meet this challenge is the notion of ubiquitous marketing.  Ubiquitous marketing represents an integrated marketing mix that is highly contextual, relying on the omnipresent access to the customer that is available using a broad combination of both the wired and wireless technologies in use today. By understanding where a customer is both physically and in their decision-making process, marketers can deliver timely, relevant products/service offers that resonate strongly and create an increased potential for a sale.  

Critical to success in this new model is a recognition of the power of the consumer and a respect for their time and privacy.  The critical competency for enterprises will be to understand what the customer wants, when they want it and where.

For more on ubiquitous marketing, see the work that Mary Beth Kemp, of Forrester Research, is doing here.

Confirmation Bias

Change is hard.  Too much experience with enterprises both large and small has confirmed this to me in spades.  But experience has also shown that maintaining enterprise stasis, when external market drivers suggest a different path, is incredibly dangerous, if not outright fatal.  Such is the place that we seem to find the majority of the global IT service providers with respect to the very large, and growing, externality known as Software-as-a-Service (SaaS).  There appears to be an almost collective confirmation bias among the service providers in viewing SaaS as, at best, a minimal threat to their business model.  They shouldn’t have to be reminded that five years ago, they didn’t view the India pure play service providers as game changing competition either.

  

Confirmation bias refers to a type of selective thinking whereby one tends to notice and to look for what confirms one's beliefs, and to ignore or undervalue the relevance of what contradicts one's beliefs. For example, if you believe that during a full moon there is an increase in admissions to the emergency room where you work, you will take notice of admissions during a full moon, but be inattentive to the moon when admissions occur during other nights of the month. A tendency to do this over time unjustifiably strengthens your belief in the relationship between the full moon and accidents and other lunar effects.

IT service providers are struggling with understanding how their application management delivery models will be impacted when/if they integrate SaaS into the service mix.  How are margins impacted? How is systems integration revenue impacted? If they don’t have intellectual property, in the form of proprietary applications, to deliver in a SaaS model, do they become expensive middlemen in the delivery model?  And if they are just middlemen, do they have a future in a SaaS world?  Hence, the search for validation that SaaS will not become much more than a niche service, albeit an important one.

This tendency to give more attention and weight to data that support our beliefs than we do to contrary data is especially pernicious when our beliefs are little more than prejudices. If our beliefs are firmly established on solid evidence and valid confirmatory experiments, the tendency to give more attention and weight to data that fit with our beliefs should not lead us astray as a rule. Of course, if we become blinded to evidence truly refuting a favored hypothesis, we have crossed the line from reasonableness to closed-mindedness.

As Bob Dylan sang so many years ago, “You don’t need a weather man to know which way the wind blows”.  Service providers must begin to embrace SaaS as a key element of their service delivery models and their business models or prepare end up on the wrong side of a very strong, and sustained, gale.

Changing the Architecture of Our Revenues

John Seely Brown has, for almost four decades, been one of information technologies' true visionaries.  A recent, fresh review of his 1997 compilation of articles by thought leaders of the day, Seeing Things Differently: Insights on Innovation, uncovered this prescient thought on business model innovation:

"To do things differently, we must learn to see things differently. Seeing differently means learning to question the conceptual lenses through which we view and frame the world, our businesses, our core competencies, our competitive advantage, and our business models... If there is anything actually coming into focus today, it is the realization that we need to question much of what we think we know about how to conduct commerce, including marketing, distribution, service and the notion of competition itself. Hardest of all, we need to be able to think about changing the architecture of our revenue streams, that is, the way we make money." 

Though published prior to the mainstreaming of the Internet revolution and the reordering of the cosmos, much of the book retains currency in this era of globalization, dynamic commerce ecosystems, social networks and on-demand delivery of services.

Advances in technology in general, and information-related technologies in particular, continue apace.  It can be difficult sometimes separating the real from the imagined, but for those enterprises that do not understand or, worse still, fail to embrace the changes/opportunities that are manifest in this environment, life can become brutal pretty quickly.  The quote above speaks to the importance of constantly assessing, testing, reframing and reinventing your business model.

The 2008 Black Book of Outsourcing

Doug Brown and Scott Wilson are back with their 2008 edition of The Black Book of Outsourcing, a document that has traditionally been a flashpoint for discourse, debate and diatribes from those service providers that aren’t “comfortable” with their ranking.

The 2008 list of the Top 50 best managed global outsourcing providers witnessed another significant reordering.  The providers in this year’s top 10 are:

1. HP
2. Perot Systems
3. CSC
4. Unisys
5. EDS
6. Wipro
7. Satyam
8. Genpact
9. ADP
10. Ciber

HP gained the top spot prior to the merger with EDS, but with both in the top 5 this year, the announced combination of the two powerhouses looks even stronger.  Also interesting is the showing of the India pure plays, with three in the top 8, all of whom are focused on building their presence in North America.  

Notable declines in the rankings from 2007 include:

• Capgemini (from 2 to 12)
• WNS Global (3 to 26)
• ACS (4 to 31)
• SAP (7 to 46)
• IBM Global Services (14 to 48)

Surveying to support this kind of analysis and reporting is always difficult and fraught with peril, but Doug and Scott do a nice job pulling it all together.  For those so inclined, you can view the complete report here.

I imagine I will have additional thoughts on this once I have time to digest the report.

Social Media and the Revolution in Marketing

Every single company I have spoken to in the past six months has simply not understood social media and the implications for their business.  More distressing is the failure of the marketing organizations I have spoken with to realize how fundamentally social media is changing the rules of their game.

Francois Gossieaux has thought about the problem as well and posts on his blog, emergence marketing, that social media is more than just another channel. 

Unlike email, which was a new channel of communication with customers, social media is not a new channel. Social media is what transformed the rules of marketing. By providing a platform of participation to your employees, customers and prospects, social media has changed the fundamental pillars of the marketing game. Not only have the rules of game changed, so have the players, the scope, the tactics and the added values - to use the game theory elements of the game.

So the end goal of marketing has not changed - it still is to create a customer. It is everything in between to get to that goal that has changed! And you will not get there by monitoring the new social media channel. The only way you will get there is if you understand the new rules, the new players and all the other elements of the marketing game.

The understanding and, more importantly, the application of social media in the "new" marketing mix possesses all the characteristics of a game change.  If you are a marketing professional, you need to make yourself one with this new media and here is a primer, courtesy of smashLAB, to get you started

Has the Fat Lady Sung?

One has to wonder, after spending most of this decade trying to sort itself out, why BearingPoint can’t seem to find a way out of the fog.  After too many restructurings, redirections and restarts to count, now we get this.

Morningstar is placing its fair value estimate for BearingPoint under review and may rule out a successful turnaround for the company.

The investment research firm cites the McLean-based company's weak financials, its low stock price and the recent resignation of BearingPoint's chief financial officer in placing the company under review. Finance chief Eileen Kamerick resigned earlier this month after less than a month on the job. 

BearingPoint stock (NYSE: BE) was halted this week by the New York Stock Exchange after falling below $1.05 per share. It currently trades electronic exchanges, but will not resume trading on the New York Stock Exchange unless its share price rises above $1.10. 

For all its problems, the company still generated $3.4 billion in revenue over the past 12 months.  As of the close of business on Friday, the market valuation for BE was a lofty $185 million with a share price of $0.85.

Operating a consulting organization in the current environment is challenging but there are dozens of BearingPoint’s competitors that are not only surviving but, in many cases, thriving. I won't pretend to know all the problems that have plagued BearingPoint, but the things I have heard about suggest a complete inability to adapt to the exigencies of the evolving services marketplace.  

While the company’s exposure to the Federal market might complicate things, BE could end up becoming a nice front-end for one of the India pure-play providers looking for a larger footprint in the Americas.

Stay tuned.

SMART 2020: Enabling the Low Carbon Economy in the Information Age

In the vein of previous discussions regarding technology’s ability to positively impact energy usage and man-made emissions comes a new report published this week by The Climate Group and the Global e-Sustainability Initiative (GeSI). The report concludes that transformation in the way people and businesses use technology could reduce annual man‐made global emissions by 15 per cent by 2020 and deliver energy efficiency savings to global businesses of over EUR 500 billion [USD 800 billion].

SMART 2020: enabling the low carbon economy in the information age – is the world’s first comprehensive global study of the Information and Communication Technology (ICT) sector’s growing significance for the world’s climate.

The report’s supporting analysis, conducted independently by international management consultants McKinsey & Company, shows that while ICT’s own sector footprint currently two per cent of global emissions will almost double by 2020, this is countered by the sector’s unique ability to monitor and maximise energy efficiency both within and outside of its own sector could cut CO2 emissions by up to five times this amount. This represents a saving of 7.8 Giga‐tonnes of carbon dioxide equivalent (GtCO2e) by 2020 – greater than the current annual emissions of either the US or China.

Although tele‐working, video‐conferencing, e‐paper, and e‐commerce are increasingly commonplace, the report notes that replacing physical products and services with their virtual equivalents (dematerialisation and substitution) is only one part (six per cent) of the estimated low carbon benefits the ICT sector can deliver.

Far greater opportunities for emissions savings exist in applying ICT to global infrastructure and industry and the report examines four major opportunities where ICT can make further transformational cuts in global emissions. These exist globally within smart building design and use, smart logistics, smart electricity grids, and smart industrial motor systems.

Luis Neves, Chair, GeSI, said:

“The ICT industry is a key driver of low carbon growth and can lead transformation towards a low carbon economy and society. The ICT sector must act quickly to demonstrate what is possible, require clear messages from policy makers about targets and continue to radically innovate to reduce emissions.”

One key finding is that a new ‘socially networked’ generation around the world continues to drive unprecedented global demand for ICT hardware, software and services providing mobile and instant access to information. 

The global study predicts PC ownership will quadruple between 2007 and 2020 to 4 billion devices and emissions will double over the same period, with laptops overtaking desktops as the main source of global ICT emissions (22 per cent); mobile phone ownership will almost double to nearly 5 billion accounts to 2020 but emissions will only grow by four per cent; and broadband uptake will treble to almost 900 million accounts over the same period, with emissions doubling over the entire telecoms infrastructure. Despite the major anticipated advances in the energy efficiency of products, the ICT sector’s own footprint – currently two per cent of global emissions – is expected to grow at six per cent per year (CAGR) and double by 2020 driven by increased technology uptake in India, China and rest of the world.

Trends like virtualisation of data centres, long‐life devices, smart chargers, Next Generation Networks, and growth of renewable energy consumption (eg solar powered base stations) could help deliver future sustainable sector growth. To help, rather than hinder, the fight against climate change, the ICT sector must manage its own growing impact and continue to reduce emissions from data centres, telecommunications networks, and the manufacture and use of its products.

Crucially, the new report reveals significant opportunities for emissions reductions and how cost savings can be leveraged by applying ICT to global infrastructure and industry. Through enabling other sectors to reduce their emissions, the ICT industry could reduce global emissions by as much as 15 per cent by 2020 – a volume of CO2e five times its own footprint in 2020. If global businesses systematically used ICT to realise all of the solutions indicated in the report they would unlock global energy efficiency savings of over EUR 500 billion (*calculated as at December 2007 prices and not including a carbon price which may emerge if a global carbon market is established). This enabling effect is due to ICT’s unique ability to allow us to measure, optimise and therefore manage energy consumption. 

Four major global opportunities are highlighted in the study:

1. Application, globally, of smart industry motors and industrial automation 
2. The global emissions savings from smart logistics
3. Institution of smart buildings technologies 
4. Implementation of smart grid technologies 

While there has been some significant criticism of the information technology industry in the past for it’s perceived contribution to increased energy usage and the attendant impacts of that usage, the report shows that the global ICT sector has a, relatively, small footprint but an extraordinary potential for improving energy efficiency and reducing carbon emissions.

You can access the full report here.