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More New Florence

on the innovation blog

Technology at the Oscars

Innovation in Glass

Florida’s surprising diversity in technologies and technologists

Technology at the Daytona 500

Good Housekeeping’s Most Innovative Home Products

Obama’s Polymath Valley Dinner

The more than thousand points of influence

I have been invited to a session where a multinational rethinks the mission and next moves for its technology innovation team. They are conducting such sessions around the world and inviting small teams of outsiders to help them in their rethinking process. What struck me was in the list of  invitees there are boutique strategy consultants, authors, academics and several peers from other respected user companies. Very few (if any) from the industry analysts or lists of prominent bloggers or those with a zillion Twitter followers. It reminded me of a post I wrote in 2007 about the thousand points of influence.

In analyzing the KPMG acquisition of Equaterra, Phil Fersht talks about PwC, Deloitte, Kearney as also influential in the outsourcing advisory world.  More influencers.

Phil’s own firm, Ray Wang’s new firm, and Altimeter  are other examples of the changing world of influencers.

In the post in 2007 I wrote

We all have our roles to play - but put yourself on the grid of 1000 and see what steps, decision makers, and influence impact you have on a technology buying decision. I do it all the time on transactions I help with. It is a humbling experience to see how little I individually - and for that matter all other influencers and advisors - have in the decision.

Even more true today.

Meet the new guard, same as the old guard

It is fitting that a new age CEO, Zach Nelson of NetSuite will kick off this evening’s event at the Churchill Club where Scott McNealy and Ed Zander are featured. Scott and Ed will undoubtedly talk about how Sun and Motorola are being redefined – Sun as part of Oracle and Motorola in the new world of Android devices.

I hope they also talk about HP and IBM. HP under new management seems invigorated. While much recent attention has gone to the reborn Palm division, I was impressed at the breadth of research reported in the recently issued HP Labs annual report. Its not just about milking the traditional printer cash cow – plenty of cloud computing, analytics, social media influence, sustainability and other focus. IBM has been making its own waves with Watson and its Social Business focus.

Will IBM be successful at “applications beyond trivia” as Michael Cote terms it? Will both HP and IBM be able to drive much needed productivity through their bloated services groups? These are clear challenges but compared to the trajectory both were at just a year ago, you can sense significant change in the air.

Talking about services, KPMG’s acquisition of EquaTerra brings even older players back in the fray. Deloitte and PwC are similarly helping companies evaluate IBM, HP, Accenture, TCS, Infosys and other service providers.  Seems like just a few years ago, these accounting heritage firms were competing with them for outsourcing business.

All over the Middle East the old guard seems to be moving out. But in California, we have a new-old Governor. In Haiti, the old leader has come back home. In my city of Tampa, the former Mayor is running for the office again at a tender age of 77.

Old, new – keeps life interesting. Like Scott McNealy’s trademarked wisecracks, which I hope we hear plenty of this evening :)

Wall Street and “industrialization of technology”

Evan Schuman is besides himself as Wall Street expresses dislike with amazon’s continued high capex investment in its AWS unit. Frankly, he would be better off patting amazon management on the back like I did Microsoft when the Street similarly beat it up in 2006.

I also profiled Microsoft’s Azure data center infrastructure in my book. It took a huge cultural change as Mike Manos described

“The capex [capital expenditure] commitment of $300 to $500 million for each of these data centers was culturally a tough sell. It was a significant mind - set change at Microsoft, where the biggest capital investment some of their software executives had ever made was in their office building.”

Microsoft, amazon and cloud vendors in general are accelerating a shift which has been happening for a while  - the onus for IT Capex has been shifting from buyer to vendor. These vendors are showing they can be far more efficient at scale – Manos called it “industrialization of technology”.

Wall Street may not understand it or like it, so we have to keep giving kudos to vendors who persist and deliver the massive efficiencies that come from such industrialization.

More innovation

in New Florence

HP Labs Annual Report

The Progressive Snapshot

Walgreens – making prescription refills a breeze

The VA Innovation Initiative

Hey, Benny!

My barber, er hair stylist, Blanca has for 20 years called me Benny. She proudly displays a copy of my book at the entrance to her store, and must see the word Vinnie on it countless times a day, but I will forever be Benny! Bless her heart and her skills, which my son is now getting used to - albeit he goes 3X less often, though should go 3X as often as I do.

Over the last few months, someone else has been calling me Benny. It is Vonage transcribing my office Voicemail messages.  Mostly, it is Benny, but it has also been Penny, Britney, Danny, Betty and others.

In all the excitement around IBM’s Watson and predictions of much more evolved natural interfaces I am just glad  I don't have to worry about what the results would be in Cyrillic which has two “ soundless ”characters or Devanagari where if a vowel follows a consonant, the two characters are merged into one!

The future’s so bright …that we need government intervention!

I wrote in this post 5 years ago

“Quick name some of the hottest technology and business opportunity areas around. Would you say:

- Globalization
- SaaS
- Mobility
- Collaboration
- Telemetry (GPS, RFID etc)

Telcos are bang in the middle of each of these. They are going to be selling billions of mobile phones in India and China and roaming minutes and hotspot coverage to all of us as we travel globally. They will be hosting and connecting massive SaaS grids. They will be delivering video and other content across growing broadband markets. They are linking rapidly growing eBay, amazon, Open Source and other communities. They will be carrying messages across billions of sensors.”

All that has transpired and each of those line items continue to offer huge opportunities.

So, it is sad to read in BusinessWeek

“Investors are valuing European telecommunications stocks at the same level as European utilities, according to Bloomberg data. The dividend yield of 5.81 percent is the same for both the Bloomberg European Telecommunications Services Index as well as the European Utilities Index.

"It's a pity, but it's true that telcos aren't seen as growth stocks," said Boris Boehm, who helps manage about 1.1 billion euros at Aramea Asset Management in Hamburg.

Revenue growth also shows why investors have shunned mobile operators. Apple's first-half sales rose 39 percent and Google's 23 percent. Vodafone Group Plc's first-half organic revenue increased 1.8 percent, France Telecom's slipped 1.2 percent.”

and the suggested solution to the anemic growth? :

“Finding a way to extract revenue from content that flows over networks may depend on government regulation. That effort got a boost in December when French industry minister Eric Besson said he would seek to ensure that "services that occupy the largest part of our networks contribute to the deployment and maintenance of those networks."

U.K. culture minister Ed Vaizey has also said he's open to operators charging content providers for access.”

Yeah, that’s the trick…

Reagan once said about Washington’s attitude to business: “If an (industry) moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it” and you can see what Washington has done to reconsolidate our telecom landscape over last few years to the detriment of consumers.

Think Brussels and London have a little more sense?

More New Renaissance

On the innovation blog

The Veterans Affairs Innovation Initiative

The NASA Stardust

“Growing” clothes

The Boeing 747-800

BPO and clouds

My friend Phil Fersht says:

“Cloud BPO” is, simply put, really a load of nonsense in today’s environment.  The core fulcrum processes of BPO are the toughest to move into the Cloud, and only the small-to-medium business sector is going to enjoy any modicum of success of moving genuine “BPO” processes, such as finance and HR, into the Cloud in the near-term.  And this is mainly with very standardized and straightforward Internet-hosted apps (i.e. simple interface, no integration requirements), as opposed to genuine Cloud-enabled ERP apps that leverage IaaS/PaaS/SaaS architecture.”

It’s not Phil’s intention, but basically he just wrote a brochure for incumbent on-premise apps software vendors, hosting firms, systems integrators who focus on release upgrade projects and offshore apps management. Those four categories of spend cost most companies upwards of $ 1,000 a user a month. If that cannot be lowered to the sub-$ 100 benchmark using cloud solutions, any labor arbitrage from BPO tasks is trivial.

As I wrote last year:

“My view is BPO, particularly horizontal process BPO (finance, HR, procurement etc) is due for a major upheaval. The vision for BPO has always been to optimize the transactional metric end point – price per check, price per invoice etc. Somewhere along the way the industry accepted the albatross called “and do it with my existing system”.  When I go to a restaurant, I don’t take my Weber grill along and insist the restaurant use that. I go there expecting industrial scale food equipment, economies of scale in their food and other procurement and for the finished product to be as advertised - wholesome, well priced, well served etc. But we have burdened BPO with existing Oracle or SAP’s annual maintenance, and all the associated hosting, application management, upgrade cost.”

So, if not clouds, BPO providers need to propose other cheaper on-premise solutions – even their own. For too long they have told customers “we can work with what you have” and hurt their own value proposition.

Consultant travel revisited

Rawn Shah just started reading my book and came across a section I title “empty calories in infotech”. One of my roughly 20 examples of low-payback spend is IT consultant travel. Rawn works for IBM’s software group, but has plenty of colleagues on the services side (IBM, after all is the largest outsourcer in the world) and wrote a thoughtful post about it on the Forbes blog. Thoughtful, yes but somewhat narrow POV - he primarily concentrated on the travel expense portion of the issue and on the potential telepresence solution.

First the relevant section from my book:

“Another problem in the SI world is consultant travel. That often adds another 15 to 25 percent to base fees, which are already high to begin with. The common reasoning is “ We are bringing the best talent to the project. ” Often, the reality is those consultants are available, and on the bench. The traveling consultants usually have a Monday – Thursday
on - site policy, which forces the entire project to adjust to a four – day workweek. There is a reason why it is nearly impossible to get an upgrade on most U.S. airlines on a Thursday night. Consultants who fly weekly qualify for elite levels, which get upgrade priority. Over the longer term, some clients also report health and other productivity issues with
consultants who travel that frequently. SIs implement constraint – based solutions for their clients all the time, so implementing a staffing model that constrains their own travel would not be difficult. Many SIs are implementing telepresence for internal communications but have not shown much initiative in using it on client projects and cutting back on project travel.”

Now my comments

a) The issue is much bigger than the travel cost.

While an additional 15, 20, 30% of fees in travel costs is not to be sneezed at, there is the issue of consultant fatigue and health.  Travel is not fun – not just talking about the pat downs. Now visualize its impact on consultants who do it week-after-week, year-after-year. If you saw Up in the Air, you saw the George Clooney glamorized view of frequent flying and even he is beat down towards the end.

So most services firms have moved to 4 day a week at client-site policies, but its impact is significant on client projects.  As I wrote a while ago “To be able to bill at least 40 hours per week, consultants will frequently work 11 to 12 hours on Tuesday and Wednesdays. But are they really productive for such long hours (especially after travel fatigue)? Also, what happens during project "crunch" periods where weekend support may be required? Few consultants work on the client project on Fridays - they do their chores, work on sales proposals, undergo training. This often causes morale problems with client employees - they expect slacker Fridays too. I have advised some clients to negotiate based on daily rather than hourly rates, and only pay for four days a week. Also to stagger - some consultants off Mondays, others Friday so there is coverage throughout the week.”

b) How about local staffing and solution centers?

There really is little justification to fly in each week a bunch of mid level or junior consultants. There should be enough talent which is local so can drive in. For clients in major metro cities in particular, local (or those who could drive or take train on Mondays and Fridays) staffing should provide the bulk of the team.

Also, what about centers of excellence in the many solution centers outsourcers tout? I mean many clients are used to working with internal shared service centers and with offshore vendors who staff 60 to 80% of their projects at remote sites thousands of miles away. Many development, testing and other activities can be concentrated in such centers.

c) And, yes, how about applying contemporary technology to an old problem?

The problem is not new. One of my most quoted lines as a Gartner analyst in the 90s was “Consultant travel costs on many ERP projects exceeds the license cost of the software” A decade and a half later we have much better communication, collaboration, constraint-based modeling capabilities available to use – if the services industry chose to put its focus on the problem. 

Think what a nice Social Business case study IBM could present about how its consultants collaborate and communicate with clients using modern tools. Think what a nice “Smarter Planet” commercial IBM could have if it showcased how it saved its clients tens of millions in consultant travel costs. Having George Clooney in it would be a really nice touch :)