March, 2016

  • March 25, 2016
  • Rodin_TheThinkerFor over 50 years, the IT industry has followed a well-known script associated with emerging and evolving paradigms. First a product or category is introduced, then it gains wide market acceptance (or dies on the vine) followed by a long period when vendors and customers seek out ever more efficient ways to produce the thing. Ultimately, the category becomes so important that all must have it and the only way to make money is to sell to very large, mass markets. That’s commoditization for you.

    In IT there have been several cycles of birth and eventual commoditization and the trend is for more. If you’ve ever been to a Salesforce event you know that there will be at least one slide in the deck addressing the transition from mainframes to networks to the Internet to social media, and cloud computing. These days the last stop on the tour seems to be not just the cloud but clouds such as financial services, healthcare, and education. Siebel once had over 20 vertical CRM products so I expect more clouds to come and not just from Salesforce. This cloud or industry specific approach is another facet of commoditization involving product line extension—where once there was one SKU now there are many that give a vendor the ability to further penetrate the market.

    Prior to industry specific CRM, cloud computing or SaaS, had been the ultimate commoditization of IT. Pay by the drink, don’t buy anything other than your personal device, let some other party pay for the back office administration and acquisition costs, it’s hard to see how you commoditize further but who knows?

    Despite all of this, one area of IT has been resistant to the commoditization cycle: application coding. Through all kinds of disruptions in hardware, networks, storage, and even computing language introductions the core reality of the technology industry has been that no matter what, someone had to write tedious, bug ridden code to keep all the balls in the air. But we’re finally at the point in technology commoditization where that’s changing and there are two good reasons.

    First, the demand for software is so great that we’ve passed the point where we can expect to provide for our software needs with traditional approaches. Second, the belief is growing that software, like music before it, should be free or virtually free, so it’s becoming hard to see how conventional coding will pay the mortgage in the future.

    The solution that’s becoming ubiquitous is application generation but alone, that’s not enough to make software commoditization a reality. Generating an app or even a whole suite of them will only get you to the point where you can provide for your own needs. That’s a problem because it means you need to be more or less self-sufficient. Ideally, if software is free or nearly so, there should be no issues with sharing template applications that almost anyone could tune for one organization’s specific needs, using appropriate tools for the job.

    All this would significantly alter and even disrupt the process by which we get software today. There would be virtually zero coding and the developer would more likely be a business analyst or other line of business person attempting to support a critical process. We already see this taking place but the implementation tool is a spreadsheet and we all know that spreadsheet apps work well only until they need to capture successive versions of data as business processes move forward. Spreadsheets don’t have databases behind them.

    But spreadsheet apps provide a good first approximation of the functionality needed in a business process. So the new paradigm of commodity software administered by a generation tool plus a suite of readily available and nearly free template apps almost forms the nexus of the new software paradigm.

    The last piece of the puzzle is a method of exchanging templates so that no single entity must be self-sufficient. Sharing zero cost software drives the formation of a software commons united by a common software platform. Unlike other platforms all participants would be equals, able to trade their self-made apps for others. Then the cycle could renew itself. Users might tune template apps to suit their needs and re-contribute their solutions to the commons—or not, the choice is individualized.

    In a future post I’ll examine how some emerging vendors approach this very different and possibly disrupting approach to the software lifecycle. Companies like Anaplan, Metavine, and Servicenow have all deployed their versions of this vision. Each has a different take on it based on the markets they serve. For instance Anaplan focused on enterprise planning, Metavine is an application development and deployment platform (as are the others) with emphasis on front office solutions, and Servicenow on service modes.

    All of this is straightforward but the ultimate demand might surprise you. As large as the software market is today, it will be much larger by 2020 when various prognosticators speculate that there will be in excess of 50 billion devices connected to the Internet. All of these devices will need software and the demands on software providers will be intense. Those demands will include, near zero cost, near flawless performance, and the ability to run anywhere. That’s commoditization at a very high level.

     

     

    Published: 8 years ago


    An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. A Frankfurt high court will hold a hearing on a recent lawsuit brought against Uberpop by Taxi Deutschland on Tuesday.  San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, offers two main services, Uber, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which connects private drivers to passengers - an established practice in Germany that nonetheless operates in a legal grey area of rules governing commercial transportation. The company has faced regulatory scrutiny and court injunctions from its early days, even as it has expanded rapidly into roughly 150 cities around the world.   REUTERS/Kai Pfaffenbach (GERMANY - Tags: BUSINESS EMPLOYMENT CRIME LAW TRANSPORT)

    There’s an interesting piece in the New York Times today by Farhadd Manjoo that dissects the Über business model and concludes that it might be good for Über but it doesn’t translate well to other services like home delivery for restaurants, supermarkets, and more. It turns out just slapping the “as a service” or similar tag on a business doesn’t always turn out well, if your idea of business and profits are tightly aligned.

    While the players are new, this is really an old story of technological disruption and insufficient homework that has led to impressive valuations, big series B awards, and another bubble that seems set to pop. Let’s look at disruption first.

    As you know, Über, the ride hailing service, enables anyone to be a driver for pay by subscribing to Über’s dispatch service. Customers seek rides through the dispatch and dispatch sends a car. It seems simple and for anyone who’s ever climbed into the back seat of a conventional cab, long overdue. Über cars are cleaner, prices are lower, and you might begin to think, “Why doesn’t everything I consume come this way?”

    As it turns out, there are good reasons everything is not yet a service and a lot comes down to economies of scale, the idea that if it costs X to make something called Y then making Y times a big number should only cost X times a much smaller number. In other words the marginal cost of making 100 extra widgets might drop to the cost of raw materials and not the cost of all the R&D that went into widget number 1. There is a great deal of logic to this and we live in a society that proves it.

    The article makes it clear that Über’s disruption depended on several factors in the taxi industry it disrupts like erratic pricing models, sub-optimal service, a fixed market so that during peak demand periods like rain storms it’s just about impossible to find a cab.

    But when you try to translate this model to services you get into trouble. Services don’t gain the same amount from economies of scale in part because if you are providing a service to one customer, chances are good that you can’t provide the same service at the same time to someone else. That’s what’s happening in many other fields trying out the service model a la Über.

    As with the manufacturing model though, there’s a great deal below the water line that makes the service possible, in fact it’s the same stuff, with a bit more automation perhaps, that conventional taxi companies need to provide including a dispatch service and tangibles like mechanics, all of whom must be paid. The taxi model collects enough money to support all this infrastructure. The service model doesn’t. So for instance the customer pays less in many instances for an Über ride than for a taxi. But from the smaller revenues that a driver collects, those same externalities still must be paid.

    I am not out to trash Über because I have used them before, usually on someone else’s nickel and will continue to. But if you’re wondering where some of the anger and populist sentiment of this election season is coming from, it’s things like this new services or gig economy. Cabs might be a long way from perfect but the industry has found a way though medallions and regulation to prevent a service oversupply that would put pressure on fares and make driving a cab financially unrewarding. You don’t have the same protection as an Über driver.

    The point of the Times article is that there are many areas in the economy that at first look like great opportunities to apply the Über business model. But increasingly entrepreneurs that enter these new markets are coming to the conclusion that the Über moment was special and the disruption of the taxi industry doesn’t spread easily to other sectors.

    Published: 8 years ago


    Pieter_bruegel_il_giovane,_estate_02Periodically, a blatantly silly idea gains currency spreading through the society and it has either of two effects. Either it scares the heck out of people, or they become enraptured with its seeming plausibility. Last week, the New York Times published a piece set as a dialog between two economics writers, Eduardo Porter and Farhad Manjoo titled, “A Future Without Jobs?”I thought it fell into the silly category.

    There has been a great deal of speculation lately about dwindling job prospects as automation has replaced many blue collar jobs and is now threatening white collar jobs. A few years ago, the French went to a 35-hour workweek to the horror of most non-French economics experts and pundits. Last week more than 100,000 Frenchmen (and women) protested in Paris against suggested changes in government work rules that would increase work per week.

    Closer to home, CRM seems to be moving in the direction of fewer and fewer bodies doing front office jobs as automation expands its footprint. The natural conclusion many people leap to is that soon there won’t be any jobs left for people, then what? The solution, as some put it is rage against the machine. Or is it?

    This is all part of what I will call end-of-paradigm behavior. A paradigm begins when a new category opens up, usually because technology makes it possible. The new paradigm makes new jobs possible and for a time, the ranks of companies in this new segment swell. But soon, when technology continues its relentless improvement, jobs become less plentiful as companies seeking greater profits learn to do more with less. It’s called productivity improvement and it can be nerve wracking if your job is considered in the way of a productivity boost. That’s when people start worrying about the end of work and creeping socialism.

    This has always gone on. The Industrial Revolution, which was all about manufacturing and especially textile production, started when nimble inventors made machines that could spin thread from raw cotton. Initially one machine could run as many as a dozen spindles that captured this output and a single operator could manage it. But over the course of a single lifetime the number of spindles doubled and doubled until one person could look after more than a thousand spindles.

    These and other innovations in thread making and fabric production put people out of work and the talk was that machines would take over the world. But that didn’t happen. In fact, it never happens. True, jobs go away and people who do not or cannot retrain are left high and dry as the tide recedes. Somehow though there are still jobs, especially new jobs in new fields.

    For decades the front office has been a bloated job fair and many of its positions were tedious and manually performed. Just take sales as an example. For many companies lead generation meant broadcast advertising in trade journals and trade shows which scared up meager leads resulting in the need for cold calling as the number one sales activity.

    As CRM automation has improved, our machines and systems have also improved the jobs of front office workers. True enough, fewer people are employed in the front office today than 25 years ago. Quotas are higher but thanks to really good sales and marketing automation and analytics, those quotas are far more attainable. I don’t know if there are fewer jobs in customer service but I can say that there are many, many more ways to get a problem solved than simply waiting in a phone queue to speak with a customer service representative. You can look at these examples as cutting jobs if you want but they’re also great examples of productivity growth.

    At the same time though, there are more varied and higher quality job categories today than there were 25 years ago. For instance, who could have imagined the role of a social marketer back then? It’s all here thanks to the relentless improvement of technology referred to as Moore’s Law. As raw processing power increases, there’s more to take advantage of and that drives innovation.

    Now, back to the textile example. Improvements in steam engines made them more reliable and powerful and able to drive bigger machines, which was responsible for the growth in the number of spindles one worker could look after. In our world, greater raw processing speed and other tech improvements in networking and storage have produced a world where it’s now possible for machines to connect to each other without any human input. This will continue but it hardly signals the end of work.

    What it does signal is the end of a paradigm. In the economic world paradigms often run their courses in the span of a human lifetime or now the span of a working life. Either way, when the consolidation from automation really hits, the only people left standing are those who have grown up and spent their careers working within the paradigm. So naturally, a paradigm shift looks scary, even bleak, and prognosticators forma chorus chanting that the sky is falling.

    But the sky isn’t falling, our jobs are being pushed closer to the customer, to provide services they need. We are supported by automation that removes friction and tedium from our work lives. Our ultimate job is to stay abreast of change, not to avoid it.

     

     

    Published: 8 years ago


    What would Oliver Wendell Holmes, Jr. do?

    What would Oliver Wendell Holmes, Jr. do?

    Apple and the Justice Department will be back in court this week arguing about whether Apple has to obey a court order to unlock an iPhone that belonged to one of the San Bernardino terrorists who opened up automatic weapon fire on colleagues in a work place last December, killing many. Although I am not an attorney and have no formal training in constitutional law, I’ll weight in because I have a hunch that resolving the case will result in new law.

    The government is relying on several strategies in the case, notably, the All Writs Act, to compel Apple to unlock the phone. All Writs basically says that a judge can compel a defendant to obey a court order. People who refuse to do so are held in contempt of court and the penalties vary but the point of all this is that once a court of competent jurisdiction rules, the ruling has the force of law behind it and must be obeyed.

    In my reading of the situation, it strikes me that the wrong litigants are in front of the judge. Certainly, the Justice Department should be there trying to gather data about a crime. But it’s not Apple’s phone. The phone belongs to a dead person who obviously can’t be there so the point should be moot. Again I am not a lawyer so take this with a pound of salt. But, let’s ask the next question that everyone seems to be shying away from but which really ought to be asked. What if the owner of the phone was sitting in court, simply refusing to comply with the court’s order to reveal the contents of the phone by entering a password?

    Things get complicated but also clarify quickly in this scenario. An individual has a first amendment right to speak freely and that includes the ability to refuse to speak if such action would cause the person to say something he or she found antithetical to personal beliefs. Apple is relying on this idea to defend its right to not write code that would lead to unlocking the phone. Also, there’s a fifth amendment right against self-incrimination meaning not only that you can’t be forced to reveal something about yourself that could implicate you in a crime but also, that by invoking your fifth amendment privilege no court can take that action as an admission of guilt.

    So where does new law come into the picture? It’s simply this. We are evolving at a rapid clip to a point that in the intermediate future computers will not only be part of our lives, they will be part of ourselves. We are already using handheld technology as extensions of our minds. The Internet is functioning in part as an extension of our memories, digital assistants get information for us and help us resolve ambiguities, our use patterns provide a trail of places visited both virtual and physical. Could all this be used against us? In labs around the world, researchers are tinkering with ways to make technology substitute for diseased or malfunctioning organs such as eyes and ears. Face it, we are becoming part human and part technology and that reality will only become more apparent over time.

    So how does this apply to the Apple case? Simply that if you or I buy a bit of technology that is widely known to have encryption and that encryption is presented as a way to keep your innermost thoughts and mental property secret, then in a real sense that device becomes an extension of your mind and has all of the constitutional protections enumerated in the Bill of Rights.

    In the future, I think it will be accepted that your device can’t testify against your will or against you and I think that is one possible outcome of this litigation. However, it needs to be said, that such an interpretation would require that the Supreme Court, which is currently down one player, review the case and the possibility of a 4-4 deadlock on this and many other cases looms for the indefinite future.

    Nonetheless, I don’t see how a court that famously granted personhood to corporations could fail to do so for personal devices. But I am not a lawyer. Or a politician.

     

     

     

    Published: 8 years ago


    Screen Shot 2016-02-29 at 8_08_30 AMThis is delicate and I will be scrupulously neutral in these paragraphs so as to offend no one, but I thought it would be fun to attempt an interpretation of the current political climate from the perspective and sensibilities of CRM. Can this really work? You be the judge. This will be different from any other analysis you might have come across because I do not wish to discuss candidates. I am all about the customer.

    There are two CRM issues that inform politics this year and I have written about both—empowering the customer in Solve for the Customer—and engaging the customer to produce loyalty which I write about in my new book, You Can’t Buy Customer Loyalty, But You Can Earn It (available in May). First empowerment.

    It has been said so often that it is a cliché of our times that the power in most vendor-customer relationships has transitioned from vendors to customers thanks to the ubiquity of the Internet and social communities that readily share information, often cutting out the vendor in the process. This is not precisely what’s been going on in politics because, as a free society we’ve always had an abundance of information, at least in theory, through a free press.

    But in reality, until cable news appeared and the innumerable web outlets for every viewpoint, much was left unexplored because of space limitations in newspapers or time limits for newscasts thus information was held closely with some cooperation from the fourth estate. You need look back no further than the nature of scandals of the last several decades and compare them to the kiss and tell histories of earlier times to know that many opportunities to show political leaders had feet of clay were in olden times avoided.

    So political customers, like people in every other aspect of life, have become empowered with information they never expected to have even a generation ago. This abundance of information has not served the political process very well based on this cycle but not because transparency is bad. Information has now shown that the political practitioners have for some time turned a blind eye to their customers. They have ceased to be engaged at precisely the same time that technology has made engagement more commonplace in almost every other aspect of life.

    The failure to engage can now be seen clearly in the vitriol that the electorate express for establishment politicians. In issue after issue, one side or another has campaigned with promises to do better or to fix something and then failed to deliver. In the most non-controversial example I can find, the rising American living standard driven by increasing productivity in the workplace, has been replaced by a stagnation or outright decline that is well documented and keenly felt throughout the working and middle classes. This is analogous to a vendor repeatedly missing an opportunity to meet a customer’s needs in a moment of truth. Such a repeated failure is lethal both to vendors and politicians.

    The customer response has been a form of populism that expresses itself differently depending on one’s position on opposite sides of the political divide. Worse, in many cases, the establishment’s response is a tone-deaf attempt to bring voters back with still further promises of future benefits.

    It’s as if a customer has returned to a store with a defective product and all the vendor can think of doing is to offer a big discount on a future purchase. In the CRM world, when these tactics have been tried, customers have often gone bananas. You need only survey sentiment sites or search for your favorite company while appending the word “sucks” to see the lingering effect.

    Solutions for the political process are analogous to repairing the vendor-customer relationship. First, acknowledge the problem and validate the customer. This means listening more than talking or marketing which is very hard to do once a live election is underway. But until you’ve listened you might not understand what needs to be fixed and you won’t have the credibility to make the attempt in any event. It’s easier to do this in business.

    The next step is to quickly transition from diagnosis to prescription. This is also difficult, but not impossible, because it involves revising the traditional political scripts, which mostly deal with old pieties and not with specifics. It is complicated by the fact that at this point short attention span customers want actions and not plans, but such is the nature of elections.

    Business is fortunate in that elections happen every day—customers buy or they don’t, they engage or give up on you, but if you lose a relationship, you aren’t out of it totally. Each new day is a chance in business to get it right with no need to wait until after an election which can be months in the future. Politicians should be so lucky.

     

    Published: 8 years ago