I attended a Siemens analyst event last week in which they announced a new product called Project Ansible. In a quirky embargo between us I am able to say that much and a bit more but I must point out that their full details will be available after July 16. Generally speaking Ansible concentrates on unified communications but I will defer till July any further descriptions or discussion of roll out and roadmap.
That notwithstanding, Siemens has caused me to do some deep thinking about product category rollouts and their lifecycles and that has made me go back to Arnulf Grübler’s classic, “The Rise and Fall of Infrastructures: Dynamics of Evolution and Technological Change in Transport”. Grübler was associated with the International Institute for Applied Systems Analysis in 1990 when he published this and while the book might be getting old, it still offers some great insights.
Grübler traces transportation from the days of canals through the beginning of air transport after World War Two and yes, there is an important CRM component to this. If you look at the figure supplied here, you notice that each type of infrastructure has its rise and fall, as the title implies and as the S-curves amply demonstrate. If it looks like the curves were traced over by a fourth grader, it’s because the idealized shape is imposed on actual data. See how well they overlap?
The 55 year span between peaks of each curve is also significant as it represents a “long wave” interval first recognized by Kondratiev and others. It is the duration of an economic wave or paradigm and there is a great deal of writing available on this subject. Quick question: Where are we on the IT long wave? If we assume it started in about 1960, this paradigm where we all earn a living is getting old. But I digress.
Here’s what’s most interesting to me. Canals were developed to move heavy raw materials like coal and iron ore (and later some finished goods) from the mines to the factories. But they were replaced by railroads that, in addition to moving freight, began doing business transporting people. In each case, the transportation mode supported a kind of communication.
Canals moving raw materials had little need to be more explicit communicators. Directions, bills of lading and the like were hand delivered on paper with the order. Rails, on the other hand, began to move people associated with raw materials as well as finished goods. People came along to sell the goods and train others about them. People also came along to provide pure services. Ball teams, politicians (arguably), business people, and circuses all traveled by rail and their principle interest was either communicating ideas or delivering a personal service to patrons. Life became richer because of transportation.
Rails also moved people not associated with goods too, people on private business and those bringing information from place to place. It is also no coincidence that the telegraph spread at the same rate as rails, at least initially. When pure information was the only thing to be transported, telegraphy was better, faster, and cheaper than sending a body.
Roads accelerated the trend started with rails of enabling movement of goods, people, and it should be said, ideas. Newspapers, for instance, extended their reach with trucking and eventually the telephone working on the same or very similar infrastructure replaced the telegraph for most voice communication.
The revolution in air travel has gone differently. While airfreight has gained an important and lucrative part of the transport market — sending an over night package is no longer cheap — air travel has not replaced roads and rail to the extent you might have expected. We travel long distanced by air but the flying car never took off due to energy concerns and because humanity’s dreadful driving record is no endorsement for making everyone a pilot. But the communication theme remains in place. People fly to communicate ideas in business and to communicate on a more personal level when flying for pleasure. But lurking in the background is the new fangled Internet, which nicely takes on the functions of the earlier telephone and telegraph and which is competing with conventional transportation infrastructure.
We increasingly trade in information and not in goods and we have the ability to separate physical delivery of goods from virtual delivery of ideas. So, at least in some forms and for some needs, communication is in the process of replacing transportation.
The potential for disruption that this presents will be huge. For example, during 2009 (the latest year I have insight to, though there is more information on line) the U.S. Business Travel Association estimates that American business spent $234 billion in business travel costs. If business can find a way to communicate more through electronic means than by transporting people, that number will surely go down. It will hurt a part of the economy in the same way that the interstate highway system and trucking drove a few nails into railroads’ coffin. But it will also raise up a new industry and a new technology platform which might likely exceed the revenues of what is being lost. That’s the creative destruction that the economist Joseph Schumpeter wrote about in the 1930’s.
Unified communications — bringing together Internet, telephone, conferencing, software, video, and social media — has the capacity to be the disrupter of transport and the plain old next disruption. It might be the next thing on the horizon and the next platform we need to think about beyond ERP and CRM. Already Microsoft, Shoretel, ATT, Siemens, and many other vendors, have product sets that they are working to build out in this space. There is more work to do to bring so many disparate technologies together but that work is ongoing. There is also a great deal of work to be done explaining unified communication to a skeptical market. Naturally, there are early adopters to be found too. But I also think unified communication will inform how we think about CRM in the years ahead.
Sustainability and CRM
There was an interesting article in the New York Times last week, “When Flying 720 Miles Takes 12 Hours” about airlines but the subtext was all about CRM, or at least where CRM has to go. If you know me at all, you know I closely attend to macroeconomics and energy issues and they are all over this article.
The story documented how small regional airlines are having trouble in an economy where fuel prices are rising and there are fewer passengers willing to pay higher prices. The typical response you’d expect in such a situation is some combination of reducing the supply of seats and raising prices to enable the carriers to at least break even.
The article shows both but this is not a simple exercise from ECON 101. Higher prices and fewer flights signal stress on the economy because less business is getting done and that’s a downer economically speaking.
A few years ago a Forbes editor, Chris Steiner wrote, “Twenty Dollars a Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better” that postulated what might happen to the economy as fuel prices rise. We’re right on time with his predictions, but I think there will be much change and dislocation before we see the promised land.
With fuel heading for five bucks a gallon, we are seeing mergers and acquisitions of sick air carriers along with fewer feeder routes according to the Times article and Steiner. As prices continue to escalate we’ll see fewer short hops and fewer long distance routes as airlines try to hang on.
But also, Steiner thinks places that exist on the end of an umbilical cord filled with jet fuel — Las Vegas, vacation destinations (think ski areas and islands in the sun) — will see a decline in the traffic that brings tourists and their cash. The immediate fallback position is cars, but gassing up a car that gets 12 or even 20 miles per gallon has already gotten old.
The secondary default position will be to get serious about alternatives and since trains and new cars or especially more hybrids are an expensive proposition the next steep won’t be travel alternatives but conservation in the form of travel reduction.
Just a few weeks ago people were talking about the resurgence in U.S. oil production. We went from producing 4.95 million barrels of crude per day to pumping 5.75 mbpd and French champagne started flowing. But the sad reality is that we need 19.2 mbpd every day and while 5.75 mbpd is nice, even getting up to the 9 or 10 mbpd optimists predict would be nice but still leave us quite a bit short. And those are today’s numbers, they make no accommodation for growth.
Even worse, in 2007 just before the financial meltdown, U.S. crude demand was 20,680,000 mbpd meaning that the recession has done as much to reduce demand as drill baby drill has done for supply. I dare say reduced demand will be easier to come by than increasing domestic supply.
When we think we have spare capacity we lose track of the longer-term need for alternatives and we stick with what we know. That’s one reason we don’t have a more aggressive energy and transportation policy. But when we’re feeling sanguine about energy we’re also riding an economic roller coaster up and then down because higher prices inevitably choke off growth. So we find ourselves in a position where the economy gets a little better then a bit worse with the peaks never reaching the previous troughs and the moving average is ever downward.
Alternatives do not simply mean smaller cars or windmills. If you can find a way to do business with fewer energy inputs, you could call it conservation but in reality you are developing an alternative path to profits and that’s where CRM can add so much.
First off, the huge move towards social technologies is one example of using alternatives. Social (along with analytics) enables us to communicate with and understand customers without jumping on a plane or into a car all the time for a face-to-face meeting. But there’s more. We are rapidly approaching a time when the videoconference has to replace at least some face-to-face meetings. Video conferencing can be easily built into CRM applications and as a stand-alone it is a great way to communicate with people.
Some companies are using video conferencing to knit together enterprises strung together across time zones and supply chains. Others are embedding video chat into customer service — another good practice because it produces a more intimate interaction and improves the customer experience.
Companies are looking over unified communications solutions right now but few seem to have the interest in pulling the trigger. That’s to be expected. Big companies like ATT, ShorTel, Siemens, Cisco and Microsoft are offering solutions though I don’t know any CRM vendor with an eye on the subject just yet. It’s too bad because I think unified communication is where social was about 5 years ago — on the periphery but moving inexorably into the CRM suite.
Given unified communications’ upside and relatively modest down side it’s a wonder to me why more companies — vendor and customer alike — are not swarming this solution class already. Business is a game of thrust and counter thrust and everyone must be ready for change or risk being road kill. This is our next challenge and CRM is right in the middle.