IEA

  • June 29, 2011
  • There’s a huge difference between the enterprise world and the social media community.  While there are many signs of life on the social side, the rank and file global one thousand seem for the most part to be clueless.  That’s not an indictment, just a statement of fact and maybe opportunity.

    At the Enterprise 2.0 conference in Boston last week I got an eyeful of the reality.  It’s still very early in this market’s evolution.  The vendors are all lined up including the small innovators and the big companies looking to cash in by being fast followers.  But what’s missing is the numbers of interested companies ready to be saved by the new solutions, a.k.a. customers.  I haven’t witnessed the beginnings of a land rush for social technologies in the big companies that will ensure its success.

    Perhaps everyone is tired and cautious after witnessing in rapid succession the rollouts of enterprise ERP and CRM.  They were both large-scale infrastructure plays that were as necessary to modern business as they were painful to implement.  A few weeks back I posted an article comparing the growth in U.S. GDP and the rise of the information age.  From a baseline of $1.6 trillion in 1975 the GDP has steadily risen to over $14 trillion today.  Other regions of the world have seen similar expansions.

    If it’s not institutional memory holding the market back — and holding back may be too strong a phrase — it could be that people in the enterprise just don’t understand in sufficient numbers yet the only thing that counts.  Maybe too few people see a way for social technologies to help them make money.  The halls of the Enterprise 2.0 conference were not exactly jammed with pioneers and pilgrims trying to get wise.  But don’t get the wrong idea, the show was in a big place and it was well enough attended to call it a success.  All I am saying is that the stampede has not yet started.

    So what will it take for the avalanche to begin?

    For a long time I’ve been harping on the challenges all companies face in demographic changes and most importantly transportation costs.  As we discover that fuel price fluctuations will adversely affect business we might see greater adoption of social strategies in the biggest companies.

    But that’s asking a lot, here’s why.  Back in May, I was in Chicago for a speech and I noted the high cost of gasoline.  It was approaching five dollars and at the time people were mad about high prices all over the country.  Since then, prices have eased and in many places gas is a relative bargain at less than four dollars.  A few years ago three dollars and change didn’t seem like a bargain but it shows what you can accommodate.

    Now, this isn’t good news for a couple of reasons.  First, fuel prices mirror economic activity.  When prices are on the rise, it’s because demand is higher due to increased economic activity.  The reverse is also true but it can take many months for the effects to be fully realized as an economic downturn.  This latency is a big problem because it separates cause and effect in many people’s minds.  As fuel prices fall we reap a temporary gain and think that things are returning to normal but we may fail to notice the country simultaneously slip back into recession.  I am not forecasting this, but it’s on my mind.

     

    The second reason for concern is that fuels are transitioning from a cheap commodity to a scarce and expensive one.  Traditionally when this happens there’s a round of inflation and the market adjusts by bringing more supply to bear.  As I’ve written before, that’s not happening.  According to the IEA, global demand is about 90 million barrels per day (mbpd) and supply is 88 mbpd enough of a shortfall to cause the price tightness we see.  Instability in some regions is no help either.  Fuel is becoming more expensive in an absolute sense and that affects business from raw materials to travel.  In a situation where supply is limited a round of inflation will simply breed another round of inflation and in short order, stagnation.

    Alternatives include various transportation substitutes including smaller cars, less flying, bio-fuels, trains and electric cars.  All of these require at least some modest change to infrastructure, which is expensive and will take many years.  On the other hand, the Internet is an already built infrastructure and social media is well developed and understood and can fill in for at least some of the transportation demand by making us more attuned to customers and more responsive to them.

    As the transportation issue unfolds it might prove to be the driver that enterprises need to begin thinking outside of their boxes.  It’s going to take a lot because we’re not simply talking about adopting a new technology, we’re talking about changing out a hierarchical management structure that goes back to the industrial revolution for something that is distributed, inclusive and very twenty-first century.  For some companies that will make implementing ERP and CRM look like child’s play.

    Published: 7 years ago


    I hate to sound like Dr. Doom and Gloom but have you paid attention to the cost of gasoline lately?  Of course you have.  It’s sickening to watch as prices resume their inexorable climb.  The last time we saw prices spike was the last time the economy was in decent shape — right before the wheels fell off in 2008.

    The global economy is based on the assumption that transportation and raw materials are cheap and will remain so.  Petroleum is our dominant fuel source and it doubles as a raw material for plastics, rubber, fertilizer cement and many other materials that make the world run.

    The price rise is no surprise.  As the global economy began to feel better we all began to use more petroleum and electricity.  The authoritative IEA (International Energy Agency, based in Paris) pegs global demand at 90 million barrels per day (mbd) while supply has never gotten above 88 mbd.  The small difference for all of you supply and demand types drives the higher cost of driving.

    While you might see this as a catastrophe, I smell an opportunity.  This is a disruptive moment and whenever a situation like this arrives, it usually means there’s an imbalance opening a niche for a new solution.  Frequently, though not always that means a technological solution.

    Historically CRM fit that description.  On-demand computing, embedded analytics, social media and an array of sales, marketing and service applications followed CRM’s debut.  The universe is still resonating from that big bang and we are now at the start or the middle of another.  High transportation costs open the door to a variety of solutions that help organizations to reduce their traveling while maintaining their business agility.

    Consider unified communications systems (UCS), which bring together voice, mobile, calendars, chat and video conferencing.  UCS has two jobs in a high cost transportation environment.  First, leveraging UCS can mean less travel for anyone who currently commutes to an office to work on a computer.  Much of that work could be done remotely if we have good communication between the hub and spoke.  That works for people in call centers — which have leveraged Internet technologies for a long time to do this — as well as sales and other business people as well as for creative types.

    For customers, a video chat or conference might speed solutions and reduce the need for all parties to converge in a conference room saving everyone travel costs but also time, which is even more valuable.

    At a macro level the days of the ten- or twenty-thousand attendee (or more) conference might be ending.  Vendors and their customers spend huge sums annually to attend user groups and similar meetings.  Visionary vendors are already taking advantage of Internet conferencing technologies to get the job done with much less travel and cost.

    The savings might go back into the corporate pocket but some of those dollars could also be recirculated to support more frequent Web conferences.  Think about it — we have cloud computing with multiple releases per year yet the user conference is so expensive to put on that we only see one per year.  That could change with on-line conferences and that would speed up the cadence of change in many companies.

    Personally, I would miss visiting some of the cities I visit each year and many attendees might miss the travel perks.  But that might simply be the symptom of another opportunity to fulfill.

    The important point to keep in mind is that no change of this type is total and complete change is not even what’s required.  If we start a process that enables us to get energy supply and demand back in synch then we will see reductions in other costs.  This can also mean that the economy whipsaws for a while with prices and economic activity moving in opposite directions.  To avoid this we will need to pick new directions and stay with them.

    There are other good reasons to consider these and other additions to the CRM suite.  In a global economy customers are everywhere and many potential new customers are too far away to seriously contemplate face-to-face interactions.  The traditional answer has been to open offices in other countries but that’s expensive.  More importantly, many of the things we sell on line, are delivered at price points that will not support that kind of expansion.  All of this makes the case for expanding an increasingly sophisticated communications footprint.

    The high cost of transportation might be the proximate cause of this expansion, but as this short examination shows, the downstream benefits can be big.  If the future works out as I think it will, it makes sense for all of us to consider again how we can best build out the front office suite.

    Published: 7 years ago