Silicon Valley: Old World v New World Technology Firms

During my most recent trip to the US West Coast, I visited a number of technology companies in Silicon Valley and Seattle. The objective of the trip was to get an in-depth update on the latest developments in the IT world ranging from Cloud Computing, Social Networking (for business) and End User Computing.

One of the things that struck during that trip was the obvious divide between 'old' and 'new' technology companies. The difference in approach and objectives were stunningly clear. The old behemoths of the industry are clearly challenged with embracing new technologies quickly while still aiming to make money from the current installed base and their past investments.

A good example of this is the whole concept of cloud computing where newcomers like Amazon AWS have invented new business models to provide maximum flexibility in capacility, utilization and price. Their public cloud is on one side of the spectrum. Older companies like Microsoft, EMC, IBM, HP, CSC and others talk about cloud computing more in terms of private clouds for existing customers (often without offering full flexibility in utlization and thus investment) or 'hybrid cloud'. Their customers' existing services may be able to be move to a cloud environment, but this should come with the flexibility and agility that is required in this area. Current leadtimes of months to set up any kind of environment will be increasingly challenged by customers who think that they can get it quicker elsewhere. Some of the old technology companies offering server virtualization will need to rethink their positioning of the products as well. Their focus should be on how to optimize the offering in the new world rather than trying to sell more of their older services and products.

I'm not arguing here that the new models are without challenges either. Moving your computing to an extreme public cloud environment means that IT departments in companies either will need to acquire technical architecture skills that they have outsourced during the last 10 years, continue to use existing System Integrators to do this for them or use so-called cloud-brokers to take care of both the commercial aspects and the technical architecture and set up. The issue with existing SI's is that they are not set up for this as they are used to operate their own environment and have difficulty moving away from their rather bureaucratic service models. Cloud brokers are found some different areas. AWS cooperates with a number of partners, like Wipro, Tata Consulting Services (TCS) and PWC, who assist customers to establish private cloud based services. An interesting newcomer in the area is Appirio a San Francisco based company focused on providing cloud brokage services. I believe that this is an attractive new area where in other markets, that are slightly behind in the emergence of cloud computing model, entrepreneurs should focus on both the Service Management required to manage IaaS, PaaS or SaaS as well as offering the technical expertise that many manufacturing and service companies have outsourced in the past.  

Another interesting area where the old versus new world technology firm battle plays is in Social Networking for business organizations. Microsoft has recently acknowledged that this is a boat they cannot miss and is now focusing on their SharePoint / Lync environment to provide this functionality to existing customers. As this will only be truly available with Windows 8, they might be too late as many organizations are formally or informally embarking on the adoption of Social Networking platforms for business. There is a range of offerings in this space from new companies (Yammer, Jive, Netgator) and older companies (Chatter by Salesforce.com - which interestingly has characteristics of an older technology company in this space - a new to be launced product from Oracle and internal tools from IBM). Based on Service Oriented Architecture, these new platforms are reasonably easy to interface with existing Active Directories or Sharepoint / Documentum type document management tools. Again it will be about the extend to which the old technology companies can adopt the agility and flexibility required to turn this into an attractive value proposition in a very short period of time.

Overall an intriguing battle in a new and quickly developing market. Time will tell who the few winners will be... Enjoy!


Frits de Vroet

Critical Success Factors for the Transition to a Chief Process Officer Function

In one of my earlier series of blogs, I have talked about the future of IT and indicated that we are getting to a point where the CIO function would either diminish to a provider of utility-like IT services or would assume broader responsibilities including shared services of both IT and non-IT nature, business process optimization and data/information management. Some authors have referred to the broader responsibilities as the arena of the Chief Process (and Innovation) Officer. In this edition, I will look at the key success factors in the journey from Chief Information Officer to Chief Process Officer.

Let's first talk titles. Unlike the well-established and recognized title of CIO, the CPO title is new and infrequently used. There are a few (dated) articles in which reference is made to the Chief Process Officer. Particularly, an interview with Michael Hammer (author of "Reengineering the Corporation: A Manifesto for Business Revolution (Harper Collins, 1993)" published on CIO Insight (http://www.cioinsight.com/c/a/Expert-Voices/CIO-as-Chief-Process-Officer-Not-Strategic-Leader) is quite insightful. 

The CPO title itself only covers a part of the accountability, but the process element of the title is critical in positioning the function as a business function. In enterprise architecture terms, it adds process design and optimization to the IT infrastructure (network, servers, user devices, etc.), application, IT security, integration and data stack. Joining the accountability for process optimization, information management (through the use of applications) and data structure (master data) will enable the CPO to add business value by ensuring that these elements are aligned and operate in harmony. This will reduce waste and rework, increase the speed of operation and implementation of new operations through process standardization. Today, in many organizations the disconnect between process and IT leads to failed IT projects and business optimization projects resulting in low credibility for either function.

So, when an organization makes the bold decision to establish a CPO function, what are the key success factors? I have found the following:

1. CPO needs to be founded on a strong enterprise architecture including data architecture, process architecture, application architecture and IT infrastructure. Without this foundation in place, building the house will be impossible.
2. Obtain buy-in across the business with strong support from the Board. Without this, the journey will be long and painful. The buy-in needs to be obtained prior and during the implementation of the function.
3. Ensure that the transformation is not only in name and that the process and information management elements work closely together. Make sure that the CPO function is not just a renamed IT organization with a few process optimization staff added in.
4. Don't loose the CIO. The management of IT remains critical both to provide end-users with services and to establish and manage the required application and IT infrastructure. The IT organization can either be stand alone or included in the CPO domain. 
5. Bring the best staff from the organization and industry to the CPO function. In particular, staff with a strong business background and in-depth understanding of the company's business activities.
6. There should be a business case and/or agreed performance objectives for the CPO function with an agreed end game. The latter is very much about a vision of how the business will operate in the future (which processes and IT platform) with lead performance indicators for key processes. Implementing a CPO function may require rethinking of the management approach.

The CPO function is quite new and arguably at the start of its development. I would be very interested in receiving feedback and other thought-provoking input on this topic.

Frits de Vroet

Beware: Hard Sell

My son received a call yesterday from an gentleman with an Indian accent asking whether he was speaking with Mr. X. Upon confirmation, the caller proceeded to identify himself as Peter Gabriel (by coincidence the same name as the rock star) from Microsoft or Windows and asked whether any of our computers was on and if we were aware that our computers had been attacked by hackers during the last few months. He asked my son to go to the computer and assisted him in looking up the Event Viewer within Windows 7. Obviously, this viewer showed a number of error and warning messages which are created by normal systems activities. The caller then tried to lead my son, who knew better and was playing along, to a website (something like www.fubbort.me). As expected, this website did not load and the caller wanted to use that as proof that our system had been infiltrated. The bad telephone connection with a lot of call centre background noise then gave way and disconnected.

After some 20 minutes, the same person called again and this time I answered the call myself. I asked him which company he worked for and he replied "PC Support and Care". I also asked his telephone number so that I 'could call him back' and to confirm the IP address of my computer (which they should know to be alerted to any infiltrations). He obviously could not provide this information and wanted to continue his hard sell. I asked him to advise whether he was trying to sell me something and then he got really upset and after a rant hung up the phone.

The call was made via a local West Australian number. When I obtained the number from the callback function in my home phone, it rang out as expected. There actually is a company called PC Support and Care and there are blogs/sites where victims discuss their experiences with their hard sell and overpriced support. Some people actually signed up for support at $129 per annum and others bought overpriced anti-spy software from them. They seemed to have been operating mainly in the US, but are now making their way to Australia. So, I thought it was about time for a warning.

When receiving these kind of calls, one should ask for the caller's contact details and for confirmation of details about your own computer such as IP address, operating system and ISP provider without volunteering this information (never provide personal information to strangers...). It sounds obvious, but never provide credit card or bank details to these kind of callers and verify from whom you would buy something in the first place - just like in the real world of brick and mortar. Also, rest assured, good PC protection software from reputable providers or ISPs will catch these kind of infiltrations when they happen.

I trust that Microsoft is aware that their name is used in vain by these kind of sleazy operators and understand it will be hard for them to do anything about it.

Be safe!

Frits

Findings from recent IT studies

This week IBM and Harvey Nash published their respective regular CIO Studies.

The IBM Global CIO Study is conducted by IBM through in-depth interviews with some 3000 CIOs. Key findings from this study are that there is improved alignment between business and IT, and that IT is moving up in the business food chain. CIOs are increasingly part of the most senior business forums and wear more and more the business hat in stead of the technology hat. CEOs and CIOs are remarkably aligned on key priorities such as insight, business intelligence, client relationships and people skills.

In the study, 83 per cent cited business intelligence (BI) and analytics as the key tool to enhance their organisation’s competitiveness. Mobility solutions also ranked highly; some 74 per cent of CIOs identified mobility as the next best way to boost competitiveness. This must be satisfying for IBM as these are key strategic areas for the global systems integrator.

The IBM study outlines four CIO groups, which the IBM has termed ‘CIO mandates’. The categories include:

• Leverage: Streamlining operations and increasing organisational effectiveness (doing more with less)
• Expand: Refine business processes and enhance collaboration
• Transform: Change the industry value chain through improved relationships with customers
• Pioneer: Innovate products, markets and business models.

Read more on the IBM Study at: http://www.ibm.com/ciostudy

The Harvey Nash Global CIO Survey 2011 was conducted online among about 2600 CIOs and IT leaders. The study finds that CIO job satisfaction, salaries and standing within the organization have increased compared to last year. The study shows an expansion of their roles and improved standing inside their companies. The number of CIOs with global responsibilities increased to 37 per cent in 2011, from 32 per cent in 2010. Nearly 70 per cent of IT leaders believe they're perceived more strategically inside their organizations this year (69 per cent), compared to last year (64 per cent). Their role on their companies' executive management teams backs up their perceptions: Half of respondents are members of the executive management team, up eight per cent from 2010.

Despite the growing number of CIOs who think their peers view them as strategic business partners, the majority still don't report to the CEO: Only 32 per cent call the CEO their boss, though that number is up three per cent over last year. Approximately one in five CIOs (18 per cent) reports to the CFO. CIOs are according to the study still primarily focused on operational activities and cost savings with only 37 per cent of the IT organizations having a key focus on innovation.

A third, perhaps less authoritative, Internet based survey showed however that IT and the Internet are still becoming increasingly important in (men's) daily life. In a survey of some 200 men aged between 18 and 45, 64 per cent revealed they would give up sex for a week before giving up their ability to get online. The survey also revealed that some 92.6 per cent of respondents would give up alcoholic beverages before giving up online access, and that 88.5 per cent would choose the internet over vanities including a toothbrush and footwear. When asked what their reaction was when their internet went down, 63.5 per cent said they calmly searched for a solution while 22 per cent they would steal someone else’s Wi-Fi signal. Other key findings were that men predominately spent their time reading and sending emails at 87.5 per cent, and that YouTube came in a close second with 72.5 per cent.

Frits de Vroet

Tablet (iPad) apps review

In this blog, I will share some of my experiences with iPad apps. I have been using an iPad for about 6 months and have been quite eager to try out productivity apps. I must admit that I have initially mainly focused on free apps. My Dutch tightness shines through (a friend once characterized Dutch people as having short arms and deep pockets...) and I haven't really mind the ads coming with the free versions. One does want to try out an app before buying and many app developers should consider giving either free apps or introducing a trial period.

 

As with all (new) things, it is largely about identifying potential winners among the many options. Betting on the right apps will secure long term availability, ongoing improvements and higher likelihood that the app will be available on various platforms (iPad, PC, Android, WebOS, mobile, etc.). This is especially valid for productivity apps that one would like to use on a day to day basis while incorporating the use of the tablet into daily life.

 

Apple includes mail, calendar and notes in the base set up. Mail works very well for both Gmail and other mail clients. It allows to handle multiple inboxes and is very easy to set up. It generally works in 'conversation' mode where messages belonging to the same thread are shown together in a sub directory. The archiving of multiple messages is only possible by sliding across the main message in the inbox. Multiple deletion is not possible. Calendar provides good calendaring functionality and is quite nifty integrated with Mail where dates are recognized and hyperlinked for easy calendaring. Multiple calendars can be integrated or shown separately.

 

The notes application is rather limited and does not have location identification and basic time stamping. Individual notes have only one page and can only be edited in simple text. I have used Catch and Evernote as alternative notes apps. Catch is similar to Notes but provides location identification, tags (need to use # in front of the tag in the title or note text) and time stamping. Catch notes are cloud-based and can be accessed from any computer after establishing an account. Evernote is my favourite notes app. It uses 'Notebooks' to files notes as well as tags through an easy interface. Evernote includes audio recording, HTML pages, photos, files (different formats including PDF) as well as input from Noteshelf (a handwritten notes app). Notes can also be send in by email (Evernote provides you with an email address to which input for notes can be sent as part for your account) or 'printed' to Evernote from other apps on the tablet. Like Catch, Evernote notes are cloud-based and can be accessed from any computer. Evernote provides users with 60MB free upload allowance per month in the cloud. Evernote is searchable and has a location function albeit not as intuitive as the one in Catch. There is an Evernote Premium that allows 1GB upload, searching within PDFs and, most importantly offline access to notes. I would expect Evernote to be a winner in the space due to it's broad functionality, strong integration with other apps and good development potential.

 

The discussed notes apps can be used for text input which then can be copied and pasted into other applications be it productivity (MS Office, Pages) or in web-based environments. There are many other text editing apps on the market. I have typed this on Draftpad, a very simple notepad. Draftpad comes with an Assist Library through which text can easily be copied, deleted or uploaded into Evernote. Assist Library also allows users to search Draftpad entry in Google or Safari. Draftpad saves your work regularly and keeps a timeline of your various versions.

 

So far, my views on some of the Notes and Mail apps. In a next blog, I will write about Utility apps such as Dropbox, Task apps and handwriting notes apps.  

PhD Thesis Abstract

Prior to my CIO career, I completed a PhD research project on Competitive Advantage of Overseas Chinese firms in South-East Asia. This is obviously quite a different topic, but I thought it worthwhile to post the Abstract of my findings here as part of my blog. Anyone interested in receiving the full thesis in PDF format is more than welcome to contact me on frits.devroet@gmail.com. Any comments or insights will be appreciated as well.

Thanks,

Dr Frits

Title:

Overseas Chinese Business Performance: An Investigation into Competitive Advantage of Overseas Chinese Business Firms

UQ Business School, University of Queensland, Australia

September 2004

Abstract

This study examines the competitive strategy of Overseas Chinese firms in South-East Asia. The literature on Overseas Chinese business performance indicates that Overseas Chinese firms are a significant business force in South-East Asia and that these firms have been very successful. The literature seeks to explain this success and advances two main strands of explanation: one attributes success to features of the business environment faced by the Overseas Chinese in South-East Asia, the other to Chinese cultural values. Reflecting on this extensive body of literature, one point stands out: there is no clear definition of what is meant by ‘success’. Moreover, both strands in the literature essentially treat Overseas Chinese firms as one homogeneous group. No one has asked whether Overseas Chinese firms do business in ways that give them competitive advantage relative to indigenous (e.g. Malay or Javanese) or Western firms.

This thesis introduces the resource-based view of the firm (RBV) as new discourse to the study of Overseas Chinese business performance. The RBV seeks to explain why some firms consistently outperform competitors and focuses on a firm’s distinctive capabilities as an explanation of a firm’s ability to obtain competitive advantage. In this research, the competitive strategies of Overseas Chinese business firms have been analysed using insights from the RBV. The research explores whether, within the same industry and the same business environment, individual Overseas Chinese firms pursue competitive strategies that are very different both from each other and from those of competing Western firms.

The methodology used in this research is termed scientific realism. The research design is based on an approach in which theory is built from case studies. The data collection followed two methods: industry analysis and case studies. Eleven firms operating in the latex glove manufacturing industry in Malaysia were studied. The relative recent inception of this industry in Malaysia in 1987 allowed for a retrospective analysis of the case study firms’ competitive strategies from their establishment until the time of the interview.

The research found that there are two main types of Chinese firms in this industry: the professional Chinese firm and the traditional Chinese firm. A ‘competitive and corporate strategy matrix’ was developed to indicate the relative position of the case study firms in terms of competitive strategy (i.e. degree of involvement in marketing, product and production process development, and brand development) and the degree of focus of the firm’s corporate strategy. The business strategy of the two types of Chinese firms differs in the extent to which the firm is involved in product development and the marketing of its products to end-users. The corporate strategy of the two types of Chinese firms also differs with the traditional Chinese firm following a corporate strategy of diversification. The traditional Chinese firm often manages a portfolio of unrelated businesses and adopts an opportunistic approach to investment in the businesses. The corporate strategy of the professional Chinese firms is more focused and allows them to stay in the glove manufacturing industry for the long term by making long term investments.

The theory developed through this research is that there are different types of Overseas Chinese firms that have different competitive and corporate strategies. A combination of a competitive strategy, in which the firm has a high involvement of the marketing of its products to end-user and uses the feedback obtained from this involvement in the development of new products and production processes, and a corporate strategy that allows the business unit to have a long-term commitment and focus on the business activity, will lead to the development of distinctive capabilities. These distinctive capabilities may lead to a competitive advantage of the firm over its competitors.

(c) Frits de Vroet