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Monday, April 30, 2007

The Imploding Captives

I recently wrote offshore based'Captive' IT companies/units, serving dedicated western clients will have to consolidate to drive scale and increase attractiveness to talented prospective employees. The attraction for larger players to buy them out is on account of their highly trained staff and acquiring a marquee western client (or a few clients) in the process. Captive units of large global business providing offshoring business may also find the goings unattractive and may opt towards taking services from service providers. Third-party service providers generally outperform captive offshore facilities – a point that I have repeatedly highlighted.

The trend of establishing a "captive center" in offshore locations like India, China, or Russia continues to find converts – these are setup with an aim to lower the costs of product development or back-office operations. The recently released Forrester report report finds that the majority of the reasons firms cite for building their own facility versus outsourcing to a third party are flawed. Lack of management support, spiraling costs, skyrocketing attrition, and a lack of integration all contribute to the adding list of struggling captives. Forrester believes that more than 60% of captive centers set up in places like India fail to meet expectations. Common reasons for failure: a poor delivery track record, operational problems, a lack of scale, poor morale, rampant attrition, and high costs. The report points out that the loaded cost of captives with nil margin on transfer pricing may be more than the loaded cost of third party providers even after factoring in a reasonable margin. The problem is not just relevant to India but extends to wannabes like china, Malaysia etc. In fact research throw up same levels of attrition and wage inflation pressures as captives set up shop there. The best indication of how tough operations management in offshore comes from Manish who points to TCS challenges in china (though this is not related to a captive unit but is a pointer to the cahllenges even established players can face in retaining competitive talent). And more importantly the cultural idiosyncrasies of locations like Malaysia and Brazil tend to make staff much less amenable to travel and shifting work hours to better align with the parent country time zones. Today’s reality is that barring those that are focused on product development, or support functions involving multiple of hundreds of people working or those focusing on research – the R part of the R&D line item, most of them are grappling with which exit option to choose - ranging from closure to outright sale.

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Yahoo & Right Media : Execution Is The Key

The web advertising business has become too hot suddenly. Hot on the heels of Google Doubleclick deal Yahoo today announced acquisition of Rightmedia . While commenting on the Google-Doubleclick deal,I wrote that Google’s aggression is not only going to help its cause but very likely to drive Yahoo and Microsoft to come together. Its interesting to see what all a shrewd market leader can do – expand the market, consolidate its position and define what competition needs to do!! Well Yahoo has responded swiftly – they have acquired the remaining stake in Rightmedia,which runs an ad exchange, quite different from an ad network
Lets look at this : Historically, Yahoo has been the leading players in the banner display ads segment. Till recently, Yahoo had the highest traffic on the net and it used to charge advertisers to let their brand reach out to users and in the process collect money for this. Yahoo’s revenue stream used to be based on charging cost per thousand/million traffic for ads and this is not linked to clicks – much like a static TV audience coverage . RightMedia could help Yahoo go beyond, it can help bring together an ad exchange for display ads with something like an auction style pricing model. The key difference that is brought out here centers on the fact that Right Media owns an ad exchange, quite different from an ad network. While Ad networks typically aggregate ad inventory from publishers and resells it to advertisers ad exchanges are more like a marketplace where publishers and advertisers can come together – do a mix and match and finalise ads the way they want to be run etc. In this revised model, Ad networks become the consumers of the ad exchanges –albeit a very big class of customers by themselves. This is different from Google’s forte : text based ads that appeal to a broad based set of advertisers – typically small business.
On paper, this is a smart position for Yahoo to take – the market exchange brings together both the publisher & consumer as against just being a powerful context synthesizer with wider delivery reach like Google. With this RightMedia edge, Yahoo’s ability to build more and more traffic and rope in high quality advertisers would be very integral to its renewed success – execution will decide how smart this move is and whether the acquisition pricing is right. Yahoo publishing network could never compete effectively with Google’s adsense despite some occasional good reviews in its favour. Infrastructure like Right Media/DoubleClick would have to integrate well with the display engines like that of Yahoo/Google to produce lasting success. Terry Semel points out that supply and demand should be regulated by the marketplace, not a closed platform. Right Media provides a democratic model that empowers advertisers with all of these benefits. Fact is that with this acquisition, Yahoo gets a small chance to get one better than Google in the ad business – but one will have to see how fast and effective its execution would be to capitalize on this. Execution will make the difference.

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Egnyte : An Interesting Web 2.0 Application

I was reviewing the sandhill showcase innovators list when Vineet Jain, the co-founder of Egnyte pointed me to his company’s web 2.0 product. An interesting product addressing an important need. Lets look at this - today's information worker uses a variety of devices and applications to create information and works with distributed teams. As a result , it is getting harder to find , organize and share relevant information easily. A lot of time is spent finding and piecing together information on a topic. Despite advances in collaboration technology, there is a void for a powerful, yet, easy to use solution that lets individuals and teams archive, organize, find and share information. The current choices are, either expensive and complex Enterprise tools, or inexpensive but lightweight Web tools.
Egnyte is a Web 2.0 content sharing solution that combines sharing, automatic organization and a powerful search capability. Using continuous synchronization, Egnyte seamlessly integrates the desktop with the web.Egnyte delivers a web based application that uniquely combines sharing, automatic organization and a powerful search capability. Egnyte has drawn on web 2.0 concepts like tagging and search and blended them with traditional concepts like file versions and folders to deliver a powerful, yet easy to use application. Once posted, facilities are enabled to search data using the search field, create tags below to classify data, create a shared view to start sharing data with contacts. It is in the same space as the likes of Microsoft Groove or Tubes: applications that helps users categorize information in the desktop, back it up into the internet cloud when it changes, and upon need make it accessible across multiple computers.
Egnyte focuses on more than just files, letting users store and organize files, emails, IM and share this with others. By eliminating the manual posting (a major issue with large files), manual versioning and emailing that occurs when working in a team, Egnyte seamlessly 'synchronizes' the desktop to the web, automatically creates versions when changes are made , and notifies the team with the latest updates. The search and "browse" capabilities help quickly find any information using keywords or a range of other techniques. Egnyte is focused on consolidating information across multiple computers of an individual and the team that the individual works with. Egnyte offers search capability across all this informationEgnyte is targeted for small to mid-size teams and offers free 1 GB account. Egnyte claims that it has paying business customers and also have usage among certain classes of consumers. You can signup here.

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Sunday, April 29, 2007

Mingsha Sand Dunes

Camels travel across the Mingsha sand dunes on the outskirts of Dunhuang, Gansu province in China.(Picture courtesy :Reuters) This province is part of the silk route. China is constantly fighting an ever extending desert and some say it is fighting a losing the war. Beijing is in the periphery of one such extending desert. Technology and methods to prevent desert extension are quite preliminary and are generally of limited value.

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Saturday, April 28, 2007

The Ubiquitous Networks

In the past, "network" referred to a chain of radio stations hooked up by wire-and, long before that, to intersecting roads, canals, railways and telegraph lines. Nowadays the term might refer to viral marketing, a way of finding a job or spouse, the means by which Netflix or Amazon knows which movies you will like, a map of the brain, the sentinel nodes in an epidemic, a grassroots political campaign, the collection of experts who can solve an energy crisis, or a cell of terrorists.
The reality today is that networks are betting more and more powerful. You may not own a cell phone, a BlackBerry, a laptop or even a credit card. But, thanks to your Social Security number and your latest purchase at the drugstore, your information has probably been scooped up into a database with the records of millions of other people who hate technology, too. Connections are a fundamental condition of being human--from our neural and immune systems to families and friendships. Many of these networks thrive, in large part, because of the Internet. Digital technology creates new pathways to link like-minded people once separated by geography, economic status, ethnicity, religion or race.Social networks can help incredible scaleup of communities.
The 28 essays published as part of the Forbes Anniversary Edition may help you see networks you hadn't thought about before or make connections you never thought possible. Music, MySpace, massive multiplayer role-playing games-they are all connected here . Must read

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Michael Dell : Direct Sales Not A Religion

The direct model has been a revolution, but is not a religion, says Michael Dell in an internal memo. He positions this thinking as an improvement to its business model, and go beyond it, to give its customers what they really need. This is done, he claims by making improvements in pricing, product development and fulfillment, and customer experience. (Months back, his predecessor Kevin Rollins defended the direct sales model that Dell had embraced for a long time).
I like this part of the memo where he talks about embarking on a bold, long term initiative to radically simplify IT for our commercial customers. Centered around, what he claims as a set core beliefs of Dell, he outlines it :
• Information Technology shouldn't be as complex as it is.

• You should spend less on maintaining I/T and more on innovation.

• Every IT project should not require an army of consultants.

• Computing should have minimal environmental impact.

• Superior information drives efficiency in your IT environment.

We know our competitors drive complexity and needless cost into customers' environments. These so-called "service divisions" create a never-ending cycle of activity with unclear return on investment. We intend to break this cycle. We will build different kinds of services and offer key technologies that will help customers escape this complexity trap and unlock the true potential of technology.

Can Dell really move from a supply chain winner to that of a services player? Can its research efforts rise wide and fast enough to match those of IBM, HP and Sun? From pricing as a weapon in its armoury, it used to muscle in – a game which players like Acer and HP are getting better at.

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Friday, April 27, 2007

Quitting To Win

Dr. Spencer Johnson brought out the importance of change and how human beings should flow with change. He argued through his widely read book who moved my cheese that change should be viewed as a strong motivator in one's pursuit of wholeness and that change is to be expected and welcomed, not shunned away from
Seth Godin, one of my favorite writer, has a new site,The Dip, aimed at promoting his new book by the same name. The Street.com interview gives an insight into the theme of the book. Seth profiled a number of "quitters" who eventually went on to launch some of the most innovative businesses in the world – the likes of Bill Gates, Jeff Bezos, Michael Bloomberg. Seth argues that sometimes you just need to "quit" to break the mould and create the next best thing in life. A master communicator his words flow out so well. He adds, Beware of quitting when you're in the depths of the dip and the pain seems greatest & that being a quitter isn't enough - you have to be a premeditated quitter.

"The old saying is wrong - winners do quit, and quitters do win.
Every new project (or job, or hobby, or company) starts out exciting and fun. Then it gets harder and less fun, until it hits a low point - really hard, and not much fun at all.
And then you find yourself asking if the goal is even worth the hassle. Maybe you're in a Dip - a temporary setback that will get better if you keep pushing. But maybe it's really a Cul-de-Sac, which will never get better, no matter how hard you try.
What really sets superstars apart from everyone else is the ability to escape dead ends quickly, while staying focused and motivated when it really counts.
Winners quit fast, quit often, and quit without guilt - until they commit to beating the right Dip for the right reasons. In fact, winners seek out the Dip. They realize that the bigger the barrier, the bigger the reward for getting past it. If you can become number one in your niche, you'll get more than your fair share of profits, glory, and long-term security.
Losers, on the other hand, fall into two basic traps. Either they fail to stick out the Dip-they get to the moment of truth and then give up-or they never even find the right Dip to conquer."

Common sense is evident in its presence in good measure - one can see that when he says,” If you try to master a lot of things, says Godin, all of them will either fail or become lukewarm successes. "On the other hand, once you learn how to master something, you get good at mastery, and that skill will help you master the next one."

I almost finished compiling this post when I saw this humourous posts by fellow irregulars, Anshu Sharma & James Governor asking if Shai Agassi must have read this before he took the big decision.

So for those beginning to feel edgy in life – next step : Plan your quit moves. You may end up changing many things in your life and for the world.

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Thursday, April 26, 2007

Tech Companies And R&D Spending

Booz Allen Hamilton came with a position recently that absolute levels of R&D spending offer little or now indication of how innovative a company really is, it is instructive every now and then to check out how much companies in the technology sector are spending on R&D. Recently, CIO Insight reported on the R&D spending patterns of the top 81 companies in the tech sector, pointing out that the top tech players like Microsoft, IBM and Intel are far and away the R&D spending champs. The top 10 companies on the list invested $32.5 billion in product development in their 2006 fiscal years. That was almost seven in every 10 R&D dollars spent among the companies. The biggest spender was Microsoft, with $6.58 billion. Hotshot company Google was able to devote just 11.6% of its revenue to R&D. It spent $1.23 billion on R&D. The median R&D expenditure among all the 81 companies studied , was at around 15%. of revenues. Some may see Apple & Google as the most innovative companies - they are not there in the top five spenders list. While these companies are spending a lot on R&D, it doesn't mean one may see these companies launching new products shortly. In fact investments and results may not have a direct correlation though one knows that well made investments in research could prepare a company for a better future.

As I wrote recently, there is no link between R &D, productivity improvements or innovation. One does not need to spend about five billion in R&D to find that the next big thing does not exist. Its clearly organizational interest, result orientation, quality of leadership and the latitude the research team has and the integration that business and research has within the enterprise that matters a lot. Clearly these are the factors that get severely affected when organization grows. It’s time to look at assessment of new product /new revenue streams coming out of enterprises lot more closely as they begin to grow. innovation today is more about services, process, business models or cultural innovation than just product innovation. As Michael Scrage recently wrote brilliantly, the simple fact is that "R&D spending is an input, not a measure of efficiency, effectiveness or productivity. Ingenuity, invention and innovation are rarely functions of budgetary investment & points to the fact that Wal-Mart, Tesco and Dell have miniscule R&D budgets, their quality, procurement and growth requirements have probably done more to drive productive innovation investment than any competing initiatives. Growing market competition, not growing R&D spending, is what drives innovation".

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Sunday, April 22, 2007

The Significane Of Google And Doubleclick

I am just back from a long period of travel and catching up on last weeks developments - need to fiish a lot before I set out to travel again.
John Battelle writes, the fact that DoubleClick went to Google strikes me as a seminal moment in the history of this industry. Microsoft could not win it, despite the cash it was willing to spend. He reports that he learns that Microsoft did offer to match it, and was willing to pay even more to insure that Google did not corner the online ad market. But for whatever reason, the private equity firm that owned the majority of DoubleClick’s shares decided to go with Google.

John Batelle builds his thinking on the basis of what he could gather from his sources and need to be seen as such.I wouldn’t just like that take it as fact that DoubleClick was offered more by Microsoft and that they turned it down. If what John says is true( I would imagine that this should be true given his connections), I do think that it is indeed a significant win for Google. I have dealt with DoubleClick in the past and know its vast potential. For Google, this is indeed significant – they outdistanced a potential big time threat – Microsoft but at the same time have expanded their core service offerings. The deal is not just that – it has helped Google to increase its customer base as well. Google paid 100% more than what it paid to acquire YouTube. Its no wonder why competitors like Microsoft, Yahoo, AT&T are crying foul. I think more than anything else the allure of cash must have helped Hellman-Friedman decide in favor of Google considering their acquisition cost was a mere one billion and odd dollars. My good friend and fellow enterprise irregular points out that Hellman-Friedman is not just a doubleclick pony. I think, at the least, this would help Google keep its focus on what it wants to do for securing its future, not worrying about competition for some time. Moves like this put pressure on players like Yahoo – particularly in its ability to get more value out the current set of raw materials. Google’s aggression is not only going to help its cause but very likely to drive Yahoo and Microsoft to come together. Its interesting to see what all a shrewd marketleader can do – expand the market, consolidate its position and define what competition needs to do!!

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Thursday, April 19, 2007

Changing Outsourcing Trends

TPI's Q1 index shows a changing trend :
- 1Q07 TCV and ACVSoft market, especially in the Americas and in BPO
- Adoption of Outsourcing activity in managed network services outsourcing within the relatively flat ITO market.
- Lessened restructuring impact on broader market
- Business Process Outsourcing recorded a recent low point by number and TCV
- Shift away from large multi-process BPO agreements to single-function contracts of a smaller size

This is surprising - one hopes that this is a passing trend considering that the year 2006 ended on a positive note for the outsourcing industry. Several positive datapoints clearly pointed to that. Some of them were:

- Market indices for contract length and value rose for the first time since 2003.
- "Megadeals" were on track to match or exceed 2005 levels.
- The number and value of outsourcing deals above $1 billion for an individual service provider, or megadeals, are poised to increase in 2006 after seven years of gradual declines.
- The average outsourcing deal contract value
increased 55%, from $201 million in 2005 to $312 million in 2006.

Today no one is feeling the pinch owing to reduced contract awards that much because there's no erosion of marketshare. Service players maintain that while there has been a talk about slowdown and all those things, they believe that the global IT service industry continues to show a strong growth.

Hopefully things will change moving forward vindicating this position.

Image courtesy : TPI

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Wednesday, April 18, 2007

Offshore Service Player Landscape

In my 2007 predictions for offshoring, I wrote,"there is a wave of capital chasing new ideas centering in offshoring and several small and medium enterprises, are actively pursued by various class of investors. We shall see the hithertho conservative players investing significantly in various things and mature into significant players in grabbing offshore deals".
It is interesting to see Deloitte India launch a private equity service focused just on small India based IT companies. The expectation is that the consolidation will occur among smaller IT services companies & these companies will need private equity services to help navigate the upcoming waves of buyout activity.

Let’s look at the landscape: There are more than 3,000 smaller companies in the country focused on BPO, call centers and software development. These smaller firms are ripe for acquisition as their margins suffer from the combined effects of rising wages, difficulty attracting talent and now, rupee appreciation versus the dollar. Consequently the expectation is that a lot of smaller 'mom and pop' IT shops in India will be forced to sell to survive. The small shops lack the scale and customer base to weather 18% annual wage inflation on the back of rupee appreciation. 'Captive' IT companies, serving dedicated western clients will have to consolidate to drive scale and increase attractiveness to talented prospective employees. The attraction for larger players to buy them out is on account of their highly trained staff and acquiring a marquee western client (or a few clients) in the process. Captive units of large global business providing offshoring business may also find the goings unattractive and may opt towards taking services from service providers. Third-party service providers generally outperform captive offshore facilities – a point that I have repeatedly highlighted.

Some of the smaller players are at cross roads grappling with a number of issues:

Talent crunch hurts the more with limited brand pull and career options . The volume , process expertise and quality maturity all are related mostly to scale and margins.

Where they scale up – it invariably leads to a discpersed client base – further hurting specialization - vertical or horizontal. Operational issues overweigh and building the organization for the future with right vision and strategic investments that may be needed in time may not happen.

In all with the scale-ups happening faster and faster with Tier-1 players, there’s going to be a lot of churn with the players of the other tiers – while I do not think that all of them would get wound up, a lot of refocus and realignment is clearly on the cards.

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Thursday, April 12, 2007

Shai Agassi's New Blog

Shai Agassi has a new blog. Subscribed. His postings in the SDN used to be widely read. His farewell blog post at SDN was widely read and had emotional comments left by some of his admirers. My views on his departure from SAP is available here. He is now publishing a new blog. His first blogpost on enterprise software in his new blog opens up an interesting discussion. The debate on monolith vs best-of-breed software. Needless to say that Shai envisions a future where ERP's are core for enterprises for scaling up business. He views that closer to the core processes the harder it is to live with best of bread. But on the edges, he definitely sees things on the boundary line of ERP that will get interesting offers from many vendors.

Shai - welcome to the blogosphere this way outside the SAP world. My sense is that best-of-breed will again get more and more pronounced - after this consolidation binge peters out. Big companies take years and years to upgrade their software to cope with technological advances and when corporates struggle so much to upgrade to new versions- besides being costly, upgrades are becoming quite tough to execute. The joke amongst CIO community is that one-in-three CIO's may lose their job at the end of an ERP upgrade exercise( This is just a general comment).In general, customers also talk about difficulties in reconfiguring applications ( the reality is far from the easy reconfig flexibility that they hear during salescycle).

I went to the SAP SDN network site and searched for Shai Agassi. I wanted to get the URL of your hugely popular farewell note - but the results that appeared in the first page did not throw that result. Instead I got some URLS of posts made by others about your departure and threw 3 or 4 results that pointed to your presentations made years back. Neither timeliness nor relevance was the criteria there. Am sure a specialized search product would give more options for search and provide more relevant examples. That's where the best-of-breed players measure up well - for precision attack so to say as against carpet bombing. For example, even in the Apple example that Shai has higlighted in terms of implementation success( am quite sure that there's a solid story of SAP implementation there - like the case with several other of its global customers), I have seen other product vendors taking credit for being able to scale up their supply chain for their iPod distribution. Couple of years back, Phillip Merrick,the founder and ex- chairman of WebMethods shared with me how WebMethods has been quite critical for Apple in building their supply chain covering their logistics & fulfillment. The point here is best-of-breed may find takers at different points in time by business - though they may over a period of time try and consolidate, by then some other business in some other part of the world would fine best-of- breed to be appropriate for their immediate or specialized needs. Recent gartner estimates suggest that between oracle & SAP, they have just 40% of the enterprise application market - a vast % of market are served by a variety of specific solutions - some good, some average and some mediocre. This space is definitely not going to look only at stereotypical options and may like to experiment a lot owing to a variety of issues ranging from cost, legacy & specialization needs.Long before companies swith their core applications to SOA/Web services, the clod reality is that there will be something newer for IT to absorb. Am not just talking about future versions of Web services/SOA technologies “legacize” previous versions!

We will look forward to more of your thoughts Shai. Welcome again to the blogosphere outside the SAP World.

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Towards Building A Civilized Workplace

Jerks, both of the competent & incompetent grade are seen across orgnizations. In fact, there is a body of knowledge available in classifying and dealing with them as well.
They come in different shapes & sizes:
- The competent jerk, who knows a lot but is unpleasant;
- The lovable fool, who doesn't know much but is a delight;
- The lovable star, who's both smart and likeable; and
- The incompetent jerk, who...well, that's self-explanatory.

The truth is that good organizations take proactive steps to weed them out.
Came across this excellent note on Stanford University professor Robert Sutton's, new book, The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't. I first read about the book, when Rajesh wrote about it here, when it got published. Subsequently, I saw it at the various airports that I go through regularly.

Sutton argues that assholes - those who deliberately make co-workers feel bad about themselves and who focus their aggression on the less powerful—poison the work environment, decrease productivity, induce qualified employees to quit and therefore are detrimental to businesses, regardless of their individual effectiveness. He also makes the solution plain: they have to go – without doubt or delay!!

Lets look at it : Nasty people don't just make others feel miserable; they create economic problems for their companies. There is a business case against tolerating nasty and demeaning people. Companies that put up with jerks not only can have more difficulty recruiting and retaining the best and brightest talent but are also prone to higher client churn, damaged reputations, and diminished investor confidence. Innovation and creativity may suffer, and cooperation could be impaired, both within and outside the organization—no small matter in an increasingly networked world. if word leaks out that your organization is led by mean-spirited jerks, the damage to its reputation can drive away potential employees and shake investor confidence.

Outlined Solution:

Publicize the rule by word and especially by deed

Plante & Moran, a company on Fortune’s “100 Best Places to Work” list for nine years in a row, proclaims its rule openly: “The goal is a 'jerk-free’ workforce at this accounting firm,” and “the staff is encouraged to live by the Golden Rule.” At Barclays Capital, COO Rich Ricci says that “we have a no-jerk rule around here,” especially in selecting senior executives. “Hotshots who alienate colleagues are told to change or leave.”

Weave the rule into hiring and firing policiesPerkins Coie, a Fortune "100 Best Places to Work" in 2007, for the 4th year in a row, reject rainmakers for just this "no jerk" reason. As senior partners Bob Giles and Mike Reynvaan report, "We looked at each other and said, 'What a jerk.' Only we didn't use that word.”

Teach people how to fight

By all means build and encourage the culture of "constructive confrontation". Methods like “disagree and then commit,” are fine as second-guessing, complaining, and arguing after a decision is made sap effort and attention and thus make it unclear whether the decision went wrong because it was a bad idea or because it was a good idea implemented with insufficient energy and commitment.

Apply the rules to customers & clients
Organizations that are serious about enforcing the no-jerks rule apply it not just to employees but also to customers, clients, students, and everyone else who might be encountered at work. They do so because their people don’t deserve the abuse, customers (or taxpayers) don’t pay to endure or witness demeaning jerks, and persistent nastiness that is left unchecked can create a culture of contempt infecting everyone it touches

Manage the little moments
Putting the right practices and policies in place is useless if they don’t set the stage for civilized conversations and interactions. People must treat the person in front of them, right now, in the right way, and they must feel safe to point out when their peers and superiors blow it.

Enforcing the no-jerks rule
Executives who are committed to building a civilized workplace don’t just take haphazard action against one jerk at a time; they use a set of integrated work practices to battle the problem. At the workplaces that enforce the no-jerks rule most vehemently and effectively, an employee’s performance and treatment of others aren’t seen as separate things. Phrases like “talented jerk,” “brilliant bastard,” or “a bully and a superstar” are oxymorons. Jerks are dealt with immediately: they quickly realize (or are told) that they have blown it, apologize, reflect on their nastiness, ask for forgiveness, and work to change their ways. Repeat offenders aren’t ignored or forgiven again and again—they change or depart.

The most important single principle for building a workplace free of jerks, or to avoid acting like one yourself, is to view being a jerk as a kind of contagious disease. Once disdain, anger, and contempt are ignited, they spread like wildfire. A swarm of jerks creates a civility vacuum, sucking the warmth and kindness out of everyone who enters and replacing them with coldness and contempt.

In professional lives, never allow such things to happen –start by enforcing this in your immediate environments. If you are about to join a new organization, you can even do a reference check on your prospective boss says, Guy Kawasaki, aiding with a checklist of issues to be assessed prepared by Bob Sutton. On a related note, read this lovely article by Larry Bossidy on what your leader expects of you and what you can in turn expect.

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Wednesday, April 11, 2007

Google, Salesforce.com & Enterprise Information

Salesforce.com’s foray into content management space has made different people look at the development in many different ways. I was slightly amused to see Nick Carr’s perspective that this could lead to a fight between Google & Salesforce.com!! I think that Nick is probably overlooking several issues here:

A. SFDC is far more entrenched than Google within its customer base
B. Google’s non paying customer base far exceeds it s paying customer base by several degrees as against SFDC’ s paid subscribers.
C. There’s a business model issue here – Hosted solution is a defacto one for Google as against SFDC selling hosted solution as part of its value proposition.
D. Google & SFDC are currently working on API’s that can extend their applications reach (for that matter every other hosted solution player is trying this)
E. Google does not offer content management facility for its customers – though it has by al means built an excellent content management system that it uses internally in applications like news.google.com or finance.google.com. There’s no mention that Google may make this available in future for its customers – if that happens, with API extensions, it would be a serious play – no competition can expect to come anywhere closer to it – in terms of its capabilities and feature list
F. Google Apps Premier, is on paper extending new enterprise level customization and integration capabilities. Google’s partners are said to be developing a variety of solutions based on its APIs, including email gateways, enhanced security, Google Calendar synchronization, third-party integration with Google Talk, as well as offering deployment, migration, and additional support services.
G. SFDC’s sales machinery and customer relationships may appear to give it a leg-up but Google’s search capabilities and whole host of new offering would endear it more to customers

While with Google Apps, Google may end up creating new forth like what SFDC did with its entry year back – I do not see SFDC acquiring these capabilities across the board to be in reckoning for competing with Google – Clearly Google's ability to manage content is streets ahead and Marc Benioff would know this for sure. In fact it is entirely possible for Google to technically aggregate its products and features and deploy a pretty strong strategy in many markets - potentially taking SFDC head on.It could be a case of minimal unavoidable overlaps but both these smart players know where not to tread into each others(s) shoes. Is there a case for these two players to work together - very much given SFDC's enteprise reach and Google's engineering prowess in harnessing information.

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Showcase Innovation Winners In Software Space

Innovation would be the mantra for growth & survival for enterprise software players, including those seen as walking dead – In the valley it is innovation driving the growth

It is refreshing to see sandhill group recognizing the Top 25 Software Innovators. Released few weeks before the software 2007 meet with the theme,"Powered by Innovation” the list makes interesting reading. Innovation Showcase is comprised of four categories - Fast Track(demonstrated market traction. With substantial revenues), Software(younger than their FastTrack counterparts, these companies are generating real revenues with real innovative ways to apply software to business., International(pioneers are building substantial businesses addressing real needs around the world) and Software-as-a-Service (the next generation of pioneers that are filling out the suite of Software-as-a-Service applications across critical business divisions.)– that represent growth, innovation and are likely to experience material events in the next year. The list is well strcutured and covers a wide range of new breed of players.

I recently wrote,atleast in respect of the enterprise software, which is closer to the heart of CIO’s its clear – as I had always been telling - while vendors are addressing market realities to keep their industry vibrant and with consolidation fever ahead - one could clearly hear the voice :whether customers would benefit a lot because of this, add the need to make more innovation happen and absorb faster. No,I am not talking about Marc Benioff finding SAP innovation free, while I certainly agree with his perspective that observers tend to overestimate the creativity and innovation that entrenched technology companies can bring to a particular problem and underestimate the effect of business-model conflicts that lurk behind the scenes ( as applicable to all majors). Innovation need not not be always of the disruptive type but every type of Innovation counts. In today’s hypercompetitive world ,simply put innovation is non-negotiable and innovation streak is of very high value to enterprises.

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Monday, April 09, 2007

SFDC & Information On-Demand

Salesforce.com announces ContentExchange, a new addition to its portfolio of online business software. Taking a dive into the Web 2.0 concepts, such as user-generated ratings and tags, SFDC claims that it is unveiling a service that will make retrieving corporate data much more intuitive and efficient than the current system of files and folders. This is claimed as yet another step towards our vision of managing all information on demand. Traditional SFDC products enable quick share and access of “structured" data. Such applications are typically geared toward things like customer service and sales, because the databases contain customer contact information, sales leads and so forth.

With this new offering, SFDC promises ability to interconnect the so-called unstructured content –covering the likes of HTML, office documents, email messages etc. Tagging facilities are enabled, with a variety of labels, descriptions and ratings facilitating easy retrieval of information. Unstructured data today is about 6/7ths of corporate data an any good solution aimed at managing them has a ready market. An attractive announcement is Apex Content, which would provide the underlying technology for other software developers to create products based on unstructured data. The idea is to enable developers build software for the company's eBay-like applications marketplace can incorporate the new content-sharing capabilities. The thinking is that with Koral, on part of the workflow chain of office management is well covered and on extension with the addition of other online products, the entire workflow across the space can be managed well within form SFDC - a move with very good potential. Corporates cautious about using on-demand solutions may like to experiment with this ligher applications having less sensitive data/content. Without doubt, this is an interesting space that SFDC is trying to muscle into.

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Saturday, April 07, 2007

Globalization & Common Sense (Right Sense!)

Steve Hamm writes,

We’d all be better off if the Congress would forget about the phony crisis of immigration and concentrate on doing things that improve the health, education, and job opportunities for America’s less fortunate masses. That would be a worthy cause for Dobbs to get behind, too.

I just can’t avoid referring to John Hagel's insightful and thought-provoking article on this topic. Few days back, I read his brilliant rejoinder titled, “blindness to globalization” that he published on the perspectives shared by economist Alan Blinder in the Wall Street Journal. Amongst other things, Blinder claimed that the US can potentially lose some 40 million jobs to outsourcing in the next few years.
Hagel's builds the rejoinder on multiple fronts: He thinks that these projections are faulty in that they are much too static in their view of potential job movements.

They rely on the infamous ceteris paribus qualification – i.e., all other things being equal. Of course, other things are never equal and the dynamics in competitive strategies and talent development initiatives could shift the actual movement of jobs significantly in one direction or another. He argues quite brilliantly that, it's a mistake to assume jobs are zero-sum: outsourcing can actually create jobs as well as move them.
He also adds that America should prepare its future generation to think more globally.
The offshoring trend needs to be understood within this broader context. We are moving from a world where demand can be forecast and resources "pushed" to the right place at the right time to a world where we need to flexibly "pull" resources wherever they reside when they are needed.

He concludes
Traditional educational institutions represent classic examples of push programs. We project far in advance what students should learn and then develop curricula and programs to push that knowledge at the appropriate time. Just like the push programs in business, that model is now coming apart at the seams.

The answer is right within these statements – education and mindset change is the key to prosperity – in this globalizing world, this is true for both developed economies & developing economies!! Some solutions are universal & absolute in nature!!

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Do You Think Microsoft Is Dead?

The future of microsoft is always a matter of high degree of concern –for quite some time. Paul Graham writes, no one is even afraid of Microsoft anymore. They still make a lot of money— so does IBM, for that matter. But they're not dangerous. He goes on to write that his venture has not bothered to even invite them to the demo days organized for startups to present to investors, while Yahoo and Google and some other Internet companies routinely get invited. He thinks Microsoft is in a different world.

Four things, all of them occurring simultaneously in the mid 2000s killed Microsoft :

A. The most obvious is Google. Read this note here
B. The second cause of Microsoft's death: everyone can see the desktop is over. It now seems inevitable that applications will live on the web—not just email, but everything, right up to Photoshop. Even Microsoft sees that now. Read this earlier note - end of PC era.
C. The third cause of Microsoft's death was broadband Internet. Anyone who cares can have fast Internet access now. And the bigger the pipe to the server, the less you need the desktop. Read this earlier note bandwidth is microsoft’s enemy.
D. The last nail in the coffin came, of all places, from Apple. Thanks to OSX, Apple has come back from the dead in a way that is extremely rare in technology

One of the reasons "Web 2.0" has such an air of euphoria about it is the feeling, conscious or not, that this era of monopoly may finally be over.

As I wrote before, Microsoft dropping the passport initiative is clearly a demonstration of not being able to make it work well enough despite its size and pursuing a powerful idea at hand. I am still baffled why Microsoft (other than for being selfish about its interest) as to why Microsoft is not considering providing a hosted solution - when enterprise application software vendors are beginning to provide and stepping up aggression in pushing. Microsoft may end up to be a pale shadow of its present –that would be sad indeed – but the risk is indeed high for Microsoft. Microsoft is lucky that currently there is no one alternative that can dislodge it in key arena's - starting particularly in the desktop segment. It’s high time that the world gets into a position to bid goodbye to Microsoft’s monopoly.

As I wrote here, in the tech world, one should just note the Microsoft example – where the deflationary effect of the internet was getting more and more pronounced, Microsoft was probably struck on beliefs held based on its historic success. As I wrote while writing on Microsoft's missed chances,the platform of the future shall not be focussed on controlling the hardware but it is going to be around access, community, collaboration & content. - clearly the rules of the game are changing & Microsoft is clealry lagging behind in adopting to the internet medium.
Microsoft now is in a very tough situation in its lifetime more than ever in the past- It is beyond doubt that Microsft is getting weakened on most of the fronts.I do think that Microsoft is appallingly falling behind in its ability to be creative and seems to be losing touch in respect of making new roll outs win in the market - MSN portal, MSN search , declining attraction towards hotmail, the non starter called spaces.msn.com etc - all conclusively point to this. Glorious past is certainly no pointer to great success in future.

Reader’s views are invited

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Friday, April 06, 2007

Michael Hammer On Business Process Audit - II

This is in continuation of Part 1 of the post on Dr. Michael Hammer’s framework on process audits. One of the criticisms of BPR used to be that it is static in nature and in the absence of a commonly defined framework , periodic improvements were in general tough to measure and measures of performance defined as part of a BPR initiative would me more of an aggregate measure and may fail to track the specifics contributing to the MOP’s and that’s where I think the best usage of the new framework could be useful. Dr. Hammer shows how to measure using the framework with color coding mechanisms as well. He defines the The Process and Enterprise Maturity Model as encompassing 5P's &4R's:
There are five process enablers…
Design: The comprehensiveness of the specification of how the process is to be executed.
Performers: The people who execute the process, particularly in terms of their skills and knowledge.
Owner: A senior executive who has responsibility for the process and its results.
Infrastructure: Information and management systems that support the process.
Metrics: The measures the company uses to track the process’s performance.
…and four enterprise capabilities.
Leadership: Senior executives who support the creation of processes.
Culture: The values of customer focus, teamwork, personal accountability, and a willingness to change.
Expertise: Skills in, and methodology for, process redesign.
Governance: Mechanisms for managing complex projects and change initiatives.
Companies can use their evaluations of the enablers and capabilities, in tandem, to plan and assess the progress of process-based transformations. The process maturity framework and the enterprise maturity framework have been conceptualized quite rigorously.
Dr. Hammer believes that form influences function—that is, process design determines performance and holds the view that , redesigning processes is often the only way to improve their performance dramatically. Doing so eliminates many of the nonvalue-adding activities that are the source of costs, errors, and delays and helps companies come up with process innovations. The framework warrants closer study, coming from the original proponent of re-engineering, as contrary to widespread assumptions, designing new business processes involves more than rearranging work flows—who does what tasks, in what locations, and in what sequence. The revamped business process needs employees to focus on a broad, common outcome; if the organization measures performance as it has always done, it will reward people for focusing on narrow, functional goals. The road to process management need not be unmappable anymore.

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Michael Hammer On Business Process Audit - I

Peter Drucker wrote that the single greatest challenge facing managers in the developed countries of the world is to raise the productivity of knowledge and service workers. This challenge, which will dominate the management agenda for the next several decades, will ultimately determine the competitive performance of companies. Even more important, it will determine the very fabric of society and the quality of life in every industrialized nation. So much so that before 1914, when everyone else worked at least 3,000 hours a year. (Today even the Japanese work no more than about 2,000 hours each year, while Americans average 1,800 hours and West Germans 1,650.)
Many different management ideas & techniques and the ubiquitous IT are all aimed at enhancing global levels of productivity and Business Process Re-engineering is an integral part of sever
Post Dr.Michael Hammer’s seminal article Reengineering Work: Don’t Automate, Obliterate, published in 1990, it is now common knowledge that enterprises generally accept that by redesigning business processes they can realize significant improvements in cost, quality, speed, profitability, and other key areas. Dr Michael Hammer has conceded that despite their intentions and efforts, enterprises often are unclear about what needs to be changed – by when and to what degree. It is extremely demanding and looks like crossing a rough terrain – this holds true for even proclaiming success out of such initiatives. There is little doubt that process re-engineering is extremely touch – the demands made by such a change permeates redefinition of work , culture and more importantly performance management measures of people across the enterprise – starting from front-office to all aspects of enterprise. Consulting firms have made tonnes of money in trying to help organizations accomplish this and each and every firm have taken their own approaches – based on their strengths and predilections.
Dr. Hammer now comes with a framework aimed at helping enterprises appreciate, plan , assess and enact process -based transformation efforts.

Michael Hammer identifies two distinct groups of characteristics that are needed for business processes to perform exceptionally well over a long period of time. Process enablers, which affect individual processes, determine how well a process is able to function. They are mutually interdependent—if any are missing, the others will be ineffective. However, enablers are not enough to develop high-performance processes; they only provide the potential to deliver high performance. Dr.Hammer holds the view that an enterprise must also possess or establish organizational capabilities that allow the business to offer a supportive environment. Together, the enablers and the capabilities provide an effective way for companies to plan and evaluate process-based transformations. PEMM is different from other frameworks, such as Capability Maturity Model Integration (CMMI), because it applies to all industries and all processes. We shall see in next part the specific details that Dr.Hammer shares in building the framework.

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Thursday, April 05, 2007

WebMethods Picked Up By Software AG

Software AG has agreed to buy SOA vendor webMethods Inc. for US$546 million in cash. This is 2.6x sales value. I was thinking that it could be HP. May be its systinet acquisition gave it enough. It may also be noted that Sun’s acquisition of SeeBeyond has not been any noteworthy success. For Software AG, long considered an XML specialist and the seen as strong in the integration of legacy systems, it desperately needed a makeover as a leading SOA (Services Oriented Architecture) company. WebMethods seemed to fit in well from that perspective. It shows three things:

A. European company paying cash to acquire a predominantly US strong company
B. In SOA space, you have to have scale to see success
C. The much awaited SOA uptick may indeed be happening in the near future.

A recent survey showed that SOA adoption is experiencing slow, but steady, adoption among large and mid-sized enterprises, it finds that SOA is still in very early deployment cycles. The report based on extensive structured survey finds that the early implementers of SOA are primarily taking a technology-led approach to SOA deployment as against the widely held belief that many early adopters were viewing SOA as needing to be a business-led initiative and many initiatives are at early planning stage or at trial deployment around legacy application integration.

How can these companies come together: On paper, it appears that should be able to leverage SOA capabilities to fuse together their offerings in such a way that the features & functionalities may be combined in intelligent ways. WebMethods BAM/BPM solutions could give a legup to Software AG in the fast growing BPM space. It would be very interesting to watch SOA players coming together and creating greater value. Watch out for more action in this space. Some may be centered around well known name like BEA, Tibco etc. They may choose to acquire smaller companies or they may run the risk of getting acquired.

The consolidation shall be accelerated due to the active interest shown by private equity players in the enterprise software. With hundreds of billions of dollars under management, private equity firms need toinvest and chalk up predictable returns, enterprise applications vendors have become an investment class as dependable as batteries and diapers for their steady revenue streams.

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Wednesday, April 04, 2007

H1B Visa Quota Exhausted In Half-A-Day :Amazing!!!

Forbes reports that the immigration service has stopped accepting visa applications from employers hoping to hire skilled foreign workers, one day after it started the once-a-year process of accepting the forms.The agency began accepting petitions Monday for the fiscal year starting Oct. 1 and said it received about 150,000 applications by mid-afternoon. Congress allows for 85,000(including all special quotas) of the H1B visas to be issued yearly. The limit is almost half of what the US used to provide 2/3 years back. Employers seek more temporary visas for skilled workers, contending that the economy needs the workers. Bill Gates amongst other other leaders slammed the reduced visa quota policy calling for limitless visa's to be extended for skilled professionals. The agency said it will use computers to randomly pick visa recipients from the applications received Monday and Tuesday. It will reject the rest of the applications and return the filing fees. This process, it says may take several weeks, given the high volume of applications received. This development may also hurt the offshore players, some of whom are affected by the currency fluctuations. This is not a good development for US based employers as well, given that salary levels would rise further. Time to review this program in its entirety - given that beneficiaries pay the fed taxes and contribute to the american economy directly.

Update : The Software and Information Industry Association (SIIA) has called for congressional reform of the visa process after the announcement by U.S. Citizenship and Immigration Services that it has reached its cap on H-1B visas for the 2008 fiscal year.“The continued leadership of the U.S. technology industry is dependent on the ability of American companies to hire highly educated, highly skilled workers,” said Ken Wach, SIIA President. “The USCIS announcement that it met the cap on H-1B visa petitions on the first day of eligibility is further evidence that the current visa allotment system is broken. If Congress does not take action to reform the system, the global competitiveness of many American companies will be threatened.”

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Monday, April 02, 2007

Service Firms : Investments Make The Difference

The Goldman Sachs IT spending survey predicts continued growth for services. IDC, Saugatech, Alinean – all confirm healthy & sustainable growth for the tech industry and by extension for the service industry in the near future. Business around the world look towards technology for shaping business models.

Vinnie writes about building the middle layer more aggressively in service firms. I do think that large offshore players are really working hard in building this layer – otherwise, the choices are quite limited for them to grow – which no mainstream offshore player can afford to ignore. A quick look at the qualitative assessment of quantitative numbers of a well established global name(not an offshore player) provides interesting insights – this is only for illustration – I hold the company that am discussing in very high esteem and that's the reason, am taking their data as reference – this is more to show that nature of business and the inter-operational forces shaping the services industry as such:

Look at some numbers (based on publicly disclosed data):

- They added roughly 40,000 plus employees in 2006 and are projected to add 50,000 to 60,000 employees this year. (Scale is non-negotiable)
- The attrition rate is hovering around 18% (Global phenomenon !! – the global company does not publish countywide attrition rates)
- Utilization is at upwards of 85% ( Highest levels of efficiency!!)
- Average revenue per employee is coming down – coming down by more than 10% ( Not sure if this is just due to offshore mix)
- Recent assessments show that for this global leader,to get 1% additional revenue, they may need to add 1.5% to 2% of their workforce. (Interesting trend)
- In 2007, they may have the same number of consultants as that of theier competitor & marketleader, but may globally report half their revenue. (Business model effect?)

In general, since scale, range of service offering & global reach is quite a differentiator for service firms, the issue that need to be closely monitored is essentially the quantum of investments that firms are making and where they are directed towards (not just the headcount increase or making more lateral induction of specialists). For example, Accenture recently reported investments on SOA centric technologies. IBM has made huge investment commitments towards research centered on SOA. Many service firms make skimpy investments (am not singling out or alluding to any),but investments are the key that would ensure quality of growth. Many large firms have attained substantial capabilities in institutionalizing processes, the differentiators for growth would come in terms of acquiring deep capabilities in acquiring cutting edge horizontal & vertical skills. Some try to do this by hiring industry veterans and asking them to build a competency and engagement around their specializations and reinforce this with aggressive partnerships with industry players. Some do targeted, niche acquisitions for specific industry or technical skills – like what Wipro & TCS have done in the bygone quarters. Some build truly worldclass training infrastructure to generate quality consultants & good leaders. Several other players continue to make investments aimed at creating various differentiating value to their operations and by extension their customers.

Unlike these, there are some who think that by creating a good recruitment machinery, one can be infinitely scaling up in services business – definitely not. Falling profit margins and slower growth will sooner than rear its ugly head.

The key thing would be to see the level of innovation and differentiable IP’s that service firms can showcase – this needs to be tied to increased productivity and reduced cost for customers. Ultimately, service players that have invested in emerging areas well ahead and in right measures, stayed close to customers, and focused on efficient execution are well positioned to capitalize on the market as it improves. Companies that will succeed in the services market going forward will be those that embrace the evolution of the software environment, collaborate closely with partners and customers, possess a strong understanding of industry-specific business processes, and have a mature and seamless global delivery capability – all these are achievable only by making right quantum of focused investments in the right direction at the right time. So, if you want to see where the well established service firms are headed – I would think look at their business model, closely scrutinize the investments that are being made – the quantum & nature of such investments. All other things being equal, this would make the difference between winners and laggards.

Update : Vinnie responds.

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