deal architect

Software Innovation - Optimize Magazine Square-off

Optimize Magazine asked me to provide commentary on whether innovation is lagging in the technology industry, especially software. Here is my column. The opposing viewpoint in the Square Off comes from David Thomas of the Software and Information Industry Association.

My points:

a) we are actually seeing a lot of innovation - Florence during the Renaissance
b) CIOs are, however, in a dark mood as most of their spend is on utility v/s innovation
c) the big software vendors,  however, are only spending 15% of revenues on R&D
d) most of their R&D is going in to "tinkering" - as even Steve Ballmer of Microsoft acknowledged recently. Most of the innovation has come from smaller software vendors.
e) CIOs should negotiate hard to get an "innovation dividend" from the vendors and assign that instead to their own innovation "tiger teams" as I have profiled in my category Innovative Business Uses of Technology

Enjoy the cheap seats!

Most powerful tech ladies

8 Technology/telecomm reps  in Fortune's list of most powerful 50 female execs in business with Med Whitman of eBay and Anne Mulcahy of Xerox leading the way.

WSJ has an article "In line to lead" about the next generation of female leaders.

Safra Catz of Oracle and Anne Livermore of HP are in both Fortune and WSJ lists...

...when I showed the lists to my daughter her question was did any of them play chess growing up? No, probably Monopoly?

India labor market

Feels like Silicon Valley in late 90s - BusinessWeek and Silicon India write about it this week. I have written about it in past here, here and here.

Having said that, some firms (Western and Indian) will use the labor issue to seek significant offshore rate increases. Let's bear in mind their salaries and other benefits are still less than 20% of their billing rates, so even if compensation goes up 20%, the net effect is still only 4%. 

VoIP wars - the sobering reality

With all the excitement around Sykpe, GoogleNet, Apple's move to integrate the cell phone and the iPod that Om and John write about, it is easy to forget SBC and Verizon. BusinessWeek has a nice article on the two US communication giants. Post-ATT acquisition, SBC is expected to be $ 99 billion. Post-MCI, Verizon is expected to be $ 93 billion. Post respective acquisition, SBC and Verizon will control 80% of the corporate market.

Yes, domestic US long distance rates have been beaten down, but international rates are still wildly inconsistent. Try calling from one European country to another on a US cell phone plan. It is cheaper to fly thereWhen you see what corporations pay for wireless (cells, PDAs, WI-FI roaming etc), data services, videoconferencing and whole bunch more it explains why connectivity is still the single biggest line item in many CIO budgets.  For most families, the landline, cell, broadband cable and related equipment plans are a sizable "utility" spend - since the majority still buy connectivity on a fragmented basis.

So, yes new competition is good, and good old fashioned negotiation is still needed just as CIOs and regulators may be starting to feel sorry for the "BabyBells" and other national carriers.

Technology Innovations and Prince Charles

Prince Charles in an interview with ABC News  said this about technology, "If you make everything overefficient, you suck out, it seems to me, every last drop of what, up to now, has been known as culture,"

"We are not the technology. It should be our ... slave, the technology. But it's rapidly becoming our master in many areas, I think," he said.

May be he does not realize how many classical composers are now downloaded in MP3 format. How many period pieces are available in DVD format. How museums and libraries are benefiting from technology. How WI-FI and WI-MAX will allow rural living to continue and get richer.  How even his beloved polo is being helped along.

The tech world needs to win him over. As part of the first generation of royalty to have grown with television and computers we need him as a fan...

 

CIOs and pumpkins

Last year during a presentation discussing utility and innovation spend, I compared CIOs to the comedian Gallagher. They have to go around smashing utility spend watermelons, and spend the rest of the time delighting their audiences with innovations.

In keeping with Halloween spirit I have a better analogy this year - pumpkin gutting. Check out Scott Cummins' site filled with spectacular pumpkin carvings.

A little less messy than Gallagher, and you end up with puree for my favorite pie (well, ok next to the pecan kinds).

No tricks, just treats...

Innovation by Re-organization?

3M has long been known as an innovator. 

But as this Business 2.0 article mentions "A little over five years ago, several top executives at 3M called together their senior managers in R&D to show them the not-so-rosy writing on the wall. The company’s annual revenues were stalled, and the new-product pipeline was inefficient and unpredictable. Groups of researchers had become too fragmented to develop ideas that led to breakthroughs or blockbusters. In short, innovation at the century-old American icon needed a reorg. Soon thereafter, newly hired CEO James McNerney -- a Jack Welch protégé who had been a finalist for the top job at GE -- tapped Larry Wendling, the vice president in charge of 3M’s central R&D lab, to rev up the company’s invention machine."

Reorg as the solution? Too many corporations reorg every few months. What is interesting about this story is how the re-org  re-energized innovation - the relevant kind that yields new revenues and profits.  Read on...

Tom "Passion" Peters

If you have ever seen "Mr. Excellence", Tom Peters present on stage you understand the meaning of the word passion. The man who made "Management by Walking Around" mandatory corporate behavior walks so much around the stage, you worry about his exhaustion.  So it was great to see this inspirational post from him. Even when you are dog tired (and God who would not be after a 76,000 mile trip)  what you are working on may be the most important thing for your client or customer...find that extra ounce of energy.

I posted this blog under the Innovative Uses of Business Technology category because Tom continues to exhort excellence, creativity, breakout performance. As I have written before CIOs should be pushing to get an Innovation Dividend and then doing their own applied innovation as Hertz, Starbucks. Jetblue and others have done. As they do so, Tom's zany, think out of the box concepts are just as important as building blocks of emerging technology.

Tom  is also a very generous blogger. Many of his prolific presentations and publications are free for download on his blog under resources.

I find it ironic that the Forbes tirade against blogs recommended publishers sue bloggers for copyright violations. Pretty soon - it may be the other way round. Tom (and many other bloggers) offer the world so much for free.

Keeping on walking, Tom!

Economics in New Florence

Wow can you have great taste and less filling? Innovation at utility pricing? Can you get to the New Florence and not spend your life savings?

See this story on Joe Kraus, co-founder of Excite in Business 2.0. Look the economics today compared to just 7-8 years ago.  Intel based hardware, open source, global labor, search based marketing, (and likely some software as a service). He says from idea to launch cost him $ 3 m at Excite, and only $ 100K on his new venture Jotspot.  Wow, even if the ratio was 3 to 1 rather than 30 to 1, it would be impressive.

I am even more convinced the bigger software and services vendors are Killing the Golden Goose.

Delta, Song and the tech industry

Delta announced yesterday it would shut down its Song unit - the Jetblue look alike with live TV, cheerful colors, low fare costs. In corporate speak, it is "merging" the concept back in to mainline service and adding first class and other frills - but it is giving up on competing with the low fare airlines.

It's a shame (it was one of the few reasons I still flew Delta), but it was predictable.  In the late 90s, it tried a concept called Delta Express modeled after Southwest Airlines. Flew 737s, no first class, no meal service. It shut that down too.

I once protested to Delta when on an Express flight to Boston I was charged $ 600 one way. I told them if they wanted that they needed to provide me full line service. Otherwise they should match Southwest's full fare of $ 275. To my surprise, Delta agreed and sent me a $ 300 credit voucher. A year later they started to de-emphasize Delta Express.

What the Song move tells me is Delta's DNA has not changed. They want the pricing to stay where it was 10 years ago, and clearly a segment of their customer base will still pay that. I imagine it is a shrinking segment.

I write about this as Oracle rolls out its own answer to the open source threat from the likes of MySQL. Or as EDS and other western firms build their own offshore capabilities. Their DNA has not changed.  I am not convinced even EDS with its association with GM has learned enough about market segmentation and that Cadillac buyers are very different from Saturn buyers.

They still want premium pricing and they will likely thrash through their own versions of Delta Express and Song. Their mainline business will look down on the low price option and fight like hell to kill the "channel conflict".  Customers will see repeated attempts to charge more for the so called low cost option - like my seat to Boston.

Even with our advances in gene mutation, leopards cannot change their spots. Corporate DNAs are even more difficult to change.