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Sunday, October 31, 2004

The History of Malls

Fortune magazine has come out with an excellent article chronicling the history of American malls and their future. Excerpts highlighting some interesting facts and observations:

America now has more shopping centers than high schools, for example—47,000 of them. The facilities attract more than 200 million shoppers each month, employ more than 17 million workers (about 12% of the nonfarm labor force), and generate nearly $2 trillion in annual sales (about three-quarters of the nation's retail activity, not counting cars and gasoline), plus another $84 billion in sales-tax revenue. A 2001 study by PricewaterhouseCoopers found that 19% of shopping malls were either dead or dying, a figure that won't surprise anyone who's seen the abandoned, weed-thicketed mall lots sprouting around America. Dead malls have become such a phenomenon that they're now the subject of websites, blogs, and urban reuse design competitions (finalists in one such program included proposals for a housing development, a women's prison, and a combination wetlands/wind farm).
"Eighty-five percent of the malls in America are more than 20 years old," says Paco Underhill, author of Call of the Mall and Why We Buy. "Many of them will meet their ultimate fate with Mr. Dynamite. And we've reached a critical mass in terms of population density and development density: Nobody is building malls in North America to serve a new audience; they're building malls to co-opt or steal somebody else's audience." Underhill thinks the mall will survive, but in a more complex form. "Many of the developers now want to be in the 'all' business, not the mall business," he says. "That means doing the hotel, the office block, and often the residential housing as part of an integrated community. It's a development process that's a better integration of public and private interests."
The other big challenge, of course, is the Internet. Several online retailers have made significant inroads, ranging from Amazon (which entered the 500 listings in 2001 at No. 492; it was No. 342 on the most recent list) to Apple's popular iTunes Music Store. The most successful model may be eBay, which is essentially the world's biggest mall. And more-exotic shopping technologies may be coming. One idea currently in development involves a special button on car radios that would allow drivers to send a "Buy now" signal for any product being advertised at a given moment. The signal would be sent to a satellite, which would in turn access the driver's preregistered payment and shipping information to complete the order. Virtual shopping technology will no doubt continue to evolve. But it's unlikely that cyberspace will ever completely supersede the mall, as some trend forecasters originally predicted, if only because most of us still like to see and touch much of what we buy. Besides, most people think going to the mall is fun, all the more so as malls have loaded up on entertainment features—you can't rappel down a climbing wall on the Internet.
Indeed a very interesting article about one of the pillar's of modern america's economy.

Baseline 500 Rankings - Paul Strassmann

Baseline Magazine in association with Paul Strassmann has come with Baseline 500 Rankings. The premise of the Baseline 500 rankings is that capital no longer constitutes the most important factor in the success of a corporation. How that company manages information is the key. In fact, if you take sales, general and administrative costs - essentially the costs to conduct a transaction - and compare them with capital costs such as land and equipment, SG&A outpaces capital costs by 3 to 1. In a global market, capital assets become commodities and don't even have to be owned. Land and equipment can be leased, for instance.
Information Productivity ranks companies by how well they manage information, the source of their competitive edge. The rankings are based on two benchmarks: one that measures the value added to a company's economic performance by good information management, called Information Value-Added; and one called Information Productivity, that incorporates this measure and the costs used in producing the added value. What are these things called Information Value-Added and Information Productivity? They are formulas, created and trademarked by Paul Strassmann, currently a consultant and formerly chief information officer at large organizations such as Xerox, Kraft and the National Aeronautics and Space Administration. They are designed to measure the effectiveness of an organization in an information age, as opposed to a manufacturing or agricultural era. To measure the economic contribution of corporate information management, you start with the end result: profit. "Profits always matter," says Strassmann. "And in the information age, information has its fingerprint on every component of it. Information is what ties all of it together." A look at some of the moving parts that affect profits: Inventory is a key asset; if it's not managed well, profit declines. Without information systems detailing what's in the warehouse and what needs to be replenished, profits will fall.

Labor also has a big impact on profits. Information management helps you get by with less labor and allows you to be a competitive buyer of workers and their time. Business is impossible without customers. Information is what gives a company an edge targeting its customers and markets.To measure only those parts of a business that are affected by the active management of information, the starting point is profit after taxes, tossing out any payment of preferred dividends, one-time charges and special adjustments. Then that profit is lowered to account for a basic fact of business: Its owners expect a certain return for the use of their money. Only if you exceed that expectation is there any value added. Thus the first unique measure, Information Value-Added, is, in its essence, profit less the cost of capital being invested in a company by its shareholders. But the ultimate measure of the corporation that manages information well is whether it generates that added value by spending a lot of money, or just a little. So Information Productivity — that final measure — takes the Information Value-Added generated by management and divides it by the costs of information transactions. These are the selling, administrative and general expenses of the company, not the costs of producing its goods or services. "Most cios are really [chief technology officers] responsible for just information technology," Strassmann says. "i.t. accounts for 3% of a company's success; information management is anywhere from 20% to 50%." The Top 500 list is available here . If you want to measure your enterprise score on Information Prodcutivity, you can use the Information Productivity Calculator available here. Overall, a very interesting and useful study.

Why Adam Kalsey Doesn't Recommend Firefox

Adam Kalsey, a Web technologist and CTO of Pheedo has written an article in his blog titled Why I don't recommend Firefox. The article makes good reading, but Kalsey adds, in his own words,"I am a user of Firefox and have been since Phoenix 0.2. I switched to it as a primary browser sometime during the 7 days in October where 0.3 was the stable version. For a period of time (around 0.7) I was using the nightly binaries. My list of installed extensions includes one I wrote myself. I never got around to compiling the source myself (although I did with Mozilla 0.8), so I suppose I can’t claim alpha-geek status". However what makes interesting reading are the 150 plus comments and counter comments that have followed Kalsey's blog about Firefox, clearly qualifying to be among the best discussion series about Firefox.

Disclosure: I use firefox regularly and is my choice browser and use IE only for browsing sites that are optimised only microsoft standard specific HTML features. Also read my earlier blog Firefox Taking Off and my affirmation in support of Firefox.

Saturday, October 30, 2004

A New Goliath In Big Steel

Businessweek covers the latest steel mill acquisition of Lakshmi Mittal in the process his group emerges as the largest steel producer in the world. Excerpts:
Mittal announced a deal that will create the world's largest steelmaker, with estimated annual revenue of $31.5 billion. The two-step transaction first unites Mittal's European companies -- Ispat International (IST ) and LNM Holdings -- in a $13.3 billion merger. The new entity, Mittal Steel Co., will then acquire International Steel Group (ISG) in Richfield, Ohio, for $4.5 billion. By enlarging Mittal's U.S. holdings with ISG, Wilbur L. Ross Jr.'s collection of once-decrepit but now revamped U.S. steel factories, the transaction unites four of the seven largest old-line U.S. steelmakers that existed in 2001 -- LTV, Bethlehem Steel, Weirton Steel, and Ispat Inland Steel. The move is almost certain to set off a new wave of global steel consolidation as competitors, such as Luxembourg's Arcelor and South Korea's Posco (PKX ), seek to match the scale and clout of Mittal Steel

Mittal has rarely made a misstep before. Like Ross, he's a big risk taker who has proven that new money can be made from an old industry. Shopping around the world whenever steel mills come on the market, Mittal has built a powerhouse that stretches from Europe to Africa and Latin America. He has been able to generate profits by using his scale to buy lower-cost raw materials and by importing modern management techniques into previously inefficient state-run mills. The consolidation will deliver better economies of scale. The new company will own three mills clustered on Lake Michigan, making it easier to centralize management, consolidate material delivery, and optimize what each plant makes. Thanks to its size, the combined company will have access to larger, lower-cost supplies of ore, coke, and coal. "We already run the lowest-cost, highest profit mills in the U.S.," says Mittal.Mittal Steel's rise opens a new chapter in the industry's consolidation. Till now, the game has been mostly regional -- with U.S. and European players tending to merge in their respective markets. Mittal's move globalizes this trend. The world's top producers have little choice but to bulk up to match Mittal Steel's post-merger output of 57 million metric tons. Moving forward, it is expected that Within five years,the highly fragmented world steel market will be dominated by six or so "super producers." Today, only Mittal Steel has entered that league.

I was amused by the tone of the article - it unduly focussed on Lakshmi Mittal's expenses of his party and family marriage rather than the very creditable acheivements of his past acquisitions , turnarounds and in creating several low cost operations in many countries - this is acheievment of sorts and his acquisition strategy has helped him form the largest steel group in the world - several good lessons are hidden inside - anycase his part expenses pale into insignificance when compared to US CEO compensation and perks enjoyed by some currently. As for the criticism that steel prices shall go up because of consolidation - elemenary business knowledge would negate this idea, any case with so many players around - it is impossible that this can happen and in a away the answer lies in Mittal's style itself -user industries would benefit by consolidating and procuring better. In a way this move would inject drive to accelarate efficiency in steel using manufacturers and the argument that steel prices would move up because of this looks totally absurd. Examples of such size abound in all industries - Oil, Minerals etc.. endless argument comes to my mind. The Rule of Three, US companies enjoying dominance in several industries,automobile clusters, entertainment industry etc etc.

web2.0 Presentations

(Via Jeremy Zawodny) The web2.0 presentations are available here. The slides includes amongst others presentation made by John Battelle, Peter Norvig, Bill Gurley,Mary Meeker,Jim Buckmaster,Craig Newmark,David Sifry,Tim O'Reilly and others.Another important reference is Jeremy Zawodny's web2archives available here capturing his notes about presentation in each session.

ACM queue -special issue on RFID

ACMQueue has come out with an issue devoted to RFIDs. In an article written by Roy Want,Intel Research, RFID is equated to magic and introduced as an electronic tagging technology that allows an object, place, or person to be automatically identified at a distance without a direct line-of-sight, using an electromagnetic challenge / response exchange. Typical applications include labeling products for rapid checkout at a point-of-sale terminal, inventory tracking, animal tagging, timing marathon runners, secure automobile keys, and access control for secure facilities."

Initially, commercial deployment is likely to focus on pallet- or crate-level tracking in a warehouse, and depending on its success, may lead to item-level tracking in the future. RFID could improve the efficiency of warehouse management considerably. RFID tags would allow crate identities to be checked at a distance when entering or leaving the building, whether or not the tag is directly visible. A bar code used in the same application could well be facing the wrong direction, making it impossible to scan automatically. Once RFID has proved beneficial and has been well established, economies of scale such as mass production should help bring down the price. This would enable item-level tracking for high-value goods, and perhaps eventually, even tracking low-value items.

RFID provides a data transport mechanism between a tag and a reader, which can be extended to provide greater utility than returning a simple identification number. The three important extensions of electronic tagging are: sensing the environment, security, and electronic memory.
Apart from cost, the remaining technical issues for RFID are all solved. A number of issues, however, still present a challenge: tag orientation, reader coordination, multiple standards, stored data, range, cost, and customer concerns.Product Packaging Independence,Multiple Standards,Data Formats and wraps up with noting that progress is being made on Longer Range, Lowering Manufacturing Costs.

What Is Podcasting and Why Should You Care?

Amy Grahan introduces Podcasting in an interesting way. She writes, Podcasting - intriguing new online media channel,holds considerable promise for creative, diverse, and useful audio programming that can serve a wide variety of audiences and purposes. Podcasting is simply online audio content that’s delivered via webfeed. Think of it as radio on demand. However, it gives you far more options in terms of content and program style than radio. While the field of radio has generally settled into few established types of programs, podcasting reflects more of the variety that is available on CDs. Plus, podcasting is like TiVo for radio. That is, you can download whatever programming you want and listen to it whenever and wherever you want. You also generally have full access to the audio archives for the programs you like. This removes time, use, and content restraints. The article also lists ways in which podcasting can be used and also illustrates how to createand receive podcasts and provides resource references for further reading.

Why Outsourcing Isn’t Really the Issue

Fortune's David Kirkpatrick writes,In the Age of Globalization, outsourcing becomes just another way for U.S. companies to remain competitive with foreign counterparts —and ultimately keep jobs at home. Kirkpatrick addresses outsourcing critics quite intensly. Excerpts: Companies typically now see themselves competing in a global environment, with customers, resources, suppliers, and employees potentially being anywhere. The problem is that just about every American company now has non-American competition. Over time, companies from every country will have access to the same resources in any country. This is another one of those disturbing but world-changing facts that emerges from the existence of the Internet and a globalized economy. If there is an opportunity to reduce costs by outsourcing some functions to other countries but a U.S. company is prohibited from taking it, what happens if their non-U.S. competitor does? We risk not only losing the outsourceable jobs, but all of a company’s jobs as it no longer can compete.
But only a resolutely parochial or ignorant nationalist can deny that there are good aspects to these globalizing changes. It’s hard not to be sympathetic to the aspirations of the world’s poor hordes that are willing to work incredibly hard just to get a portion of the wealth that we take for granted. If you don’t think that the sheer numbers of such people will fundamentally alter our lives in coming decades, both for better and for worse, you simply aren’t paying attention. According to the Population Reference Bureau website, more than 90% of the world’s population growth through 2050 is projected to take place in poor countries. We are just 290 million in a world of 6.4 billion people. We need to start thinking harder about what that means. Kirkpatrick again writes brilliantly on this topic - he is quite right. Offshoring should be viewed as means to become more competitive and thats the way forward looking US corporations are beginning to view. US investors are asking tech entrepreneurs about India leverage strategy before making commitments to additional funds. Major tech companies( providing leadership to US) seeing the trend have rightly beginning to move engineering/support functions to India like Oracle. Google,Kana,SAP all follow - This is for not only maintaining leadership - in a few cases for survival itself.

Friday, October 29, 2004

The Future of Mobiles

Om Malik writes about the shape of things to come in mobile handsets.NEC’s 232 provides a glimpse of where mobile phones are heading.. An unremarkable, if technically solid tri-band GSM phone available in November, the 232 is NEC’s attempt to move past the mass market for cellphones. In a partnership with Fitness magazine, the 232 will come pre-loaded with a number of fitness applications—BMI index, calorie counting, max heart rate tracking, etc—designed to appeal to women interested in tracking their fitness routines.Matt Maier,in a guest review writes, segmentation is the future. Mobile penetration in most of the big cell phone markets—India being a huge exception—sits well north of 60 percent. Price competition is fierce for carriers and phone-makers alike, so both are desperate for mean to reach specific subsets, build a little loyalty, and hopefully milk a few extra dollars on data services. Nokia knows this. The N-Gage is an early example of this trend,it was a smart move the part of Nokia. Samsung also realizes this.Well in an effort to spread this message, they have repeatedly teamed up with fashion designers, especially in emerging markets such as India. However, they are now bringing that model to the US. They have teamed up with Vogue, and Diane von Furstenberg to develop a new line of products.

Challenge Of IT - Conquering Complexity

The Economist has an Information Technology Survey up that I highly recommend. The first article in the survey is Make it simple , about how unnecessary complexity prevents technology from being used to its fullest, or sometimes from being used at all. John Meada at MIT is researching to keep computing simple.“It is time for us to rise up with a profound demand,” declared the late Michael Dertouzos in his 2001 book, “The Unfinished Revolution”: “Make our computers simpler to use!” Donald Norman, a long-standing advocate of design simplicity, concurs. “Today's technology is intrusive and overbearing. It leaves us with no moments of silence, with less time to ourselves, with a sense of diminished control over our lives,” he writes in his book, “The Invisible Computer”. “People are analogue, not digital; biological, not mechanical. It is time for human-centred technology, a humane technology.” Greg Papadopoulos, chief technologist at Sun Microsystems, Ray Lane, a venture capitalist at Kleiner Perkins Caufield & Byers,Chris Capossela, the boss of Microsoft's desktop applications -all of them agree that complexity of computers is to be tackled for growth and better usage.
The economic costs of IT complexity are hard to quantify but probably exorbitant. The Standish Group,has found that 66% of all IT projects either fail outright or take much longer to install than expected because of their complexity. Among very big IT projects—those costing over $10m apiece—98% fall short.Gartner, another research firm, uses other proxies for complexity. An average firm's computer networks are down for an unplanned 175 hours a year, calculates Gartner, causing an average loss of over $7m. On top of that, employees waste an average of one week a year struggling with their recalcitrant PCs. And itinerant employees, such as salesmen, incur an extra $4,400 a year in IT costs, says the firm.Tony Picardi, a boffin at IDC, comes up with perhaps the most frightening number. When he polled a sample of firms 15 years ago, they were spending 75% of their IT budget on new hardware and software and 25% on fixing the systems that they already had; now that ratio has been reversed—70-80% of IT spending goes on fixing things rather than buying new systems. According to Mr Picardi, this suggests that this year alone IT complexity will cost firms worldwide some $750 billion. Even this, however, does not account for the burden on consumers, whether measured in the cost of call-centres and help desks, in the amount of gadgets and features never used because they are so byzantine, or in sheer frustration. Why the urgency now to tackle this?
The most obvious change is the IT bust that followed the dotcom boom of the late 1990s. After a decade of strong growth, the IT industry suddenly started shrinking in 2001. In early 2000 it accounted for 35% of America's S&P 500 index; today its share is down to about 15%. “For the past three years, the tech industry's old formula—build it and they come—has no longer worked,” says Pip Coburn, a technology analyst at UBS, an investment bank. For technology vendors, he thinks, this is the sort of trauma that precedes a paradigm shift. Customers no longer demand “hot” technologies, but instead want “cold” technologies, such as integration software, that help them stitch together and simplify the fancy systems they bought during the boom years.
This article interlinks to all of the other articles in the survey, which discuss additional topics such as feature creep, the “invisibility” of ubiquitous technology, and using “the Mom test” to determine simplicity. A lot of thought-provoking points here about the state of the industry, and things we should keep in mind if we want to be successful moving forward.
Steven Milunovich, an analyst at Merrill Lynch, another bank, offers a further reason why simplicity is only now becoming a big issue. He argues that the IT industry progresses in 15-year waves.
-In the first wave,(1970s and early 1980s) - companies installed big mainframe computers;
-The second wave - they put in PCs that were hooked up to “server” computers in the basement;
-The third wave,(breaking now) -beginning to connect every gadget that employees might use, from hand-held computers to mobile phones, to the internet.
The boundaries between office, car and home will become increasingly blurred and will eventually disappear altogether. In rich countries, virtually the entire population will be expected to be permanently connected to the internet, both as employees and as consumers. This will at last make IT pervasive and ubiquitous, like electricity or telephones before it, so the emphasis will shift towards making gadgets and networks simple to use.

UBS's Mr Coburn adds a demographic observation,saying that some 70% of the world's population are “analogues”, who are “terrified by technology”, and for whom the pain of technology “is not just the time it takes to figure out new gadgets but the pain of feeling stupid at each moment along the way”. Another 15% are “digital immigrants”, typically thirty-somethings who adopted technology as young adults; and the other 15% are “digital natives”, teenagers and young adults who have never known and cannot imagine life without IM (instant messaging, in case you are an analogue). But a decade from now, Mr Coburn says, virtually the entire population will be digital natives or immigrants, as the ageing analogues convert to avoid social isolation. Once again, the needs of these converts point to a hugely increased demand for simplicity.

Russell Beattie On Google

Russell Beattie, who last minute chnaged his mind from taking an interview writes,he is .not particuarly bullish on Google services and innovation going forward. He adds, "I like Google Search and I like Blogger, but everything else they're doing is disjointed. They're slowly creating a mess of services with no real cohesive plan and it's just not compelling to me. Orkut, GMail, Froogle, Desktop Search, etc. are all in beta and have no common thread or business plan. How many logins do I need? How is any of this stuff going to make money? Orkut even uses Microsoft tech on the back end, is that a joke? I compare Google to Amazon, eBay, and Yahoo and it seems like amateur hour over there.Also, I think that Google has shown a penchant for being duplicitous and mean spirited in a variety of ways, despite their motto of "don't be evil." Two examples: the arbitrary cutting of AdSense websites last year (and subsequent including a gag clause in their T&C after I wrote about it in this weblog) and their blocking of Chinese dissident websites from their news search to appease the Chinese Government. The latter is particularly galling because of their lame excuses about it. Jerry Yang gave a thoughtful and compelling reasons why Yahoo deals with China at Web 2.0. Google just seemed to make excuses". While the criticism's may look harsh, they are certainly valid. Google does not seem to have a good plan to keep its astronomical marketcap intact.

Championing a Wiki World

Businessweek in their Tech's Young Entrepreneurs section writes, Socialtext, Ross Mayfield's Web-collaboration outfit , is the antithesis of the cash-fat startup, but its aims are hardly modest. At first glance, Socialtext doesn't look like a company running on a shoestring budget. Founded less than two years ago, it now has more than 50 customers around the world, including Walt Disney and Eastman Kodak , which use its Web software to help people collaborate online. Yet a peek behind the slick Web site reveals a truly virtual company: no offices, only 10 full-time people -- all working at home, and a chief executive who answers the phone himself.Socialtext co-founder and CEO Ross Mayfield makes no apologies for the threadbare setup. Increasingly inexpensive and ubiquitous information technologies such as the Internet, wireless connections, and cheap computer servers, he says, allow him to run the company with far less money and fewer people than he could have a decade ago -- without scrimping on features or quality. Says the 34-year-old serial entrepreneur: "This is the prototype of the new Internet startup."

Socialtext sells so-called wiki software. Offered as a service over the Web, the software makes it quick and easy to set up Web sites with a simple browser.Anyone in a company or department can post material on these wikis, and anyone else, subject to approval by the creator, can edit or add to them. They've become a cheaper, more flexible collaboration alternative to both overtaxed e-mail and complex groupware such as IBM's Lotus Notes.Essentially, Socialtext's wiki software allows everybody in a group or even a whole company to literally stay on the same page -- that is, on their shared Web pages. That speeds up everything that involves coordination, helping to cut costs.

Socialtext has subsisted on less than $300,000 from friends and other social-software entrepreneurs such as LinkedIn CEO Reid Hoffman and Tribe Networks CEO Mark Pincus. Last month, it got another $300,000 from the Omidyar Network, the semi-philanthropic organization launched by eBay founder and Chairman Pierre Omidyar and several other individuals. That's in stark contrast to the boom, when multimillion-dollar initial rounds were all but mandatory.Surrvival secret -Partly by using his company's own wiki software to get things done. Mayfield does his work on Socialtext's internal wiki wherever his laptop is, from his home office to the nearby café that has free wireless Internet service. So do colleagues in places such as Silicon Valley, Chicago, Indianapolis, New York, Canada, and Taiwan. They also use free Internet-based teleconferencing and long-distance calling services. "The infrastructure costs are a tenth of what they used to be," says Mayfield. "We can do more work with lower cost because of teleconferencing and the Internet." They also use the Net to do all their marketing, essentially for free.

Analysts figure larger companies such as Microsoft and IBM could simply make them part of their suites of software. At the same time, Socialtext's niche is attracting attention from new rivals. JotSpot, a new company in Palo Alto recently launched by Joe Kraus and Graham Spencer -- two founders of the boom-era portal Excite , is backed with $5.2 million in venture capital. Kraus contends that JotSpot has a more ambitious goal beyond mere collaboration, allowing minimally technical people to write customized software The Tech World roars because of entrepreneurs with ideas and initiatives like these.

Ram Shriram Talks About - "The Google Story"

Matt Marshall blogs about angel investor
Ram Shriram's talk about -"The Google Story" Ram Shriram, the angel investor who counseled Google’s founders during the earliest days, says success has no magic formula, but stems rather from continual small “block and tackle” moves and,it helps to have a little book called “Ram’s Book of Mistakes” to guide the way. Key Takeaways:
--Success is pretty much a crap-shoot; there are too many unknown facts in a company’s early life to make all the right decisions. But good, quick judgment calls on multiple fronts helps multiply the chances of beating the odds.
--Not even the wise man can see it coming: Shriram took more than two months after seeing the demo for an investment decision.
--It’s the people. Bad hiring decisions are the most fatal.Shriram helped co-founders Larry Page and Serge Brin in the Menlo Park garage by consulting his “Ram’s Book of Mistakes,” which he said he started eight or nine years ago to help remind him of all the bad decisions he’d made.
-- It’s all in the grooming. Shriram set out to made sure Page & Brin hired only the very best, or “A” people. He cited the well-known Silicon Valley tenet: Hire only A people, and they’ll hire other A people. If you hire the B person, they’ll hire C or D people. Someone asked a good question: How did Shriram decide who are a so-called “A” people? Grooming is a part of it. “I try to find out who their mothers are,” he said. If they are raised well, they’re more likely to make good citizens, employees and entrepreneurs.
--Shriram counseled the audience: “Be bold and dynamic,” noting that there are huge opportunities afforded by the new Internet economy -- in China and India, especially.
--He noted that Yahoo, Google and eBay had created 24,000 jobs, and that Internet companies had created $200 billion in stock market value in the last 7 years.
--Launching a company is easy. The great thing about the Internet is you can launch and test an idea easily, and cheaply. If it doesn’t work, you can go back to the drawing board. “If you build your field of dreams, and no one comes, you can shut it down,” he said.
--The trick is small engineering teams. “Bite-sized engineering projects.”
Quite interesting.

Thursday, October 28, 2004

Legoland RFID Tracks Lost Kids, Collects Data

Here's an interesting article on how Legoland Denmark is using RFID on wristbands to help parents keep track of their children.ach season, Legoland Denmark welcomes 1.6 million guests, and about 1,600 of them end up getting lost. This spring, the theme park adopted an AeroScout RFID location solution, offering parents use of an RFID bracelet for their children at a nominal fee. If their children wander away from them in the park or try to exit unaccompanied, parents can receive instant text messages on their mobile phones telling them the location of their errant offspring -- within ten feet.The wireless Relevant Products/Services from Hewlett-Packard Mobility Solutions LAN technology chosen for this installation means Legoland had to invest in fewer readers than a traditional RFID system for a wider range of service. Parents view the product as a value-add, quieting their anxieties about lost little loved ones. Legoland management, meanwhile, benefits from the ease of child tracking as well as the data the tags collect on families' use of the park.Legoland collects data in the aggregate, not on individual users. Park officials may apply collected RFID information to improve its in-park restaurant service. For instance, consumers might be able to look at menus outside of the restaurants and order there, from a wireless system, and outdoor restaurants and food carts could have wireless cash registers. Legoland may also apply RFID to manage long lines, redirecting families to attractions with fewer visitors on queue, or to gauge consumer interest in new rides, even new Lego building sets. An interesting way to apply RFID for business purposes on top of usage for tracking.

Robert Frances Group: WebSphere vs. .NET: Comparing e-business platform for the enterprise

Few weeks back, we published in this blog details of a massive study that compared IBM WebSphere / J2EE against Microsoft .NET on a number of dimensions: developer productivity, manageability, reliability and application performance - the report was prepared by the Middleware Company. IBM blogger,Ed Brill points out to a new research report analysed slightly differently. The report available here , compares websphere and .net for suitability to adoption to ebusiness for the enterprise ,prepared by Robert Frances Group states,that some of the costs involved are not necessarily lower for WebSphere... but they are competitive, in terms of acquisition, development costs, and definitely in management and support.

WebSphere deployments may involve more architectural elements and higher developer salaries than Visual Basic(VB).NET. However, better out-of-the-box security levels, higher functionality, higher server-toadministrator ratios, and more extensive management interfaces reduce long-term ownership costs, and make the platform a much better choice in the long run.WebSphere also addresses enterprise elasticity because it provides customers with choices should a hardware platform or operating system change be required. Strategic elements such as these can provide long-term benefits that can help a company meet aggressive growth schedules, weather tight economies, and address other business challenges. RFG thus believes WebSphere is generally the best choice for enterprise development projects.

P.S- The middleware group study was partially funded by Microsoft and Robert Frances Group study was partially funded by IBM.

Adapt Your Supply Chain—or Die Via HBSWK

Unless companies adapt their supply chains, they won’t stay competitive for very long. The secrets: trend spotting and supplier change - say, his Harvard Business Review article.Great companies don't stick to the same supply networks when markets or strategies change - such organizations keep adapting their supply chains so they can adjust to changing needs to build a sustainable advantage. In addition to unexpected changes in supply and demand, supply chains also face near-permanent changes in markets. Structural shifts owing to economic progress, political and social change, demographic trends, and technological advances force companies adapt their supply chains, to stay competitive.
Lucent - Lucent twice woke up late to industry shifts, first to the rise of the Asian market and later to the advantages of outsourced manufacturing. Lucent recovered the first time, but the second time around, the company lost its leadership of the global telecommunications market because it didn't adapt quickly enough.
The best supply chains identify structural shifts, sometimes before they occur, by capturing the latest data, filtering out noise, and tracking key patterns. They then relocate facilities, change sources of supplies, and, if possible, outsource manufacturing.
HP - Hewlett-Packard set up both its R&D and manufacturing divisions in Vancouver, Washington for manufacturing pprinters. HP wanted the product development and production teams to work together because ink-jet technology was in its infancy, and the biggest printer market was in the United States. When demand grew in other parts of the world, HP set up manufacturing facilities in Spain and Singapore to cater to Europe and Asia. Although Vancouver remained the site where HP developed new printers, Singapore became the largest production facility because the company needed economies of scale to survive. By the mid-1990s, HP realized that printer-manufacturing technologies had matured and that it could outsource production to vendors completely. By doing so, HP was able to reduce costs and remain the leader in a highly competitive market.
Companies that adapt supply chains when they modify strategies often succeed in launching new products or breaking into new markets.
Microsoft - When Microsoft decided to enter the video game market, it chose to outsource hardware production to Singapore-based Flextronics. In early 2001, the vendor learned that the Xbox had to be in stores before December because Microsoft wanted to target Christmas shoppers. Flextronics reckoned that speed to market and technical support would be crucial for ensuring the product's successful launch. So it decided to make the Xbox at facilities in Mexico and Hungary and later to china helping Xbox to wrest 20% marketshare from Playstation 2.
Smart companies tailor supply chains to the nature of markets for products. They usually end up with more than one supply chain, which can be expensive, but they also get the best manufacturing and distribution capabilities for each offering.
Cisco - Cisco caters to the demand for standard, high-volume networking products by commissioning contract manufacturers in low-cost countries such as China. For its wide variety of mid-value items, Cisco uses vendors in low-cost countries to build core products but customizes those products itself in major markets such as the United States and Europe. For highly customized, low-volume products, Cisco uses vendors close to main markets, such as Mexico for the United States and Eastern European countries for Europe. Despite the fact that it uses three different supply chains at the same time, the company is careful not to become less agile. Because it uses flexible designs and standardized processes, Cisco can switch the manufacture of products from one supply network to another when necessary.
Gap - Gap, too, uses a three-pronged strategy. Gap set up Old Navy's manufacturing and sourcing in China to ensure cost efficiency, Gap's chain in Central America to guarantee speed and flexibility, and Banana Republic's supply network in Italy to maintain quality.
Toyota - Toyota was convinced that the market for the Prius, the hybrid car, would be different from that of other models because it embodied new technologies and was in its infancy. The Japanese automobile maker had expertise in tracking U.S. trends and geographical preferences, but it felt that it would be difficult to predict consumer response to a hybrid car. Besides, the Prius might appeal to particular consumer segments, such as technophiles and conservationists, which Toyota didn't know much about. Convinced that the uncertainties were too great to allocate the Prius to dealers based on past trends, Toyota decided to keep inventory in central stockyards. Dealers took orders from consumers and communicated them via the Internet. Toyota shipped cars from stockyards, and dealers delivered them to buyers. Although Toyota's transportation costs rose, it customized products to demand and managed inventory flawlessly.

Building an adaptable supply chain requires two key components: the ability to spot trends and the capability to change supply networks.
- Companies must retain the option to alter supply chains. To do that, they must do two things:
They must develop new suppliers that complement existing ones.
• They must ensure that product design teams are aware of the supply chain implications of their designs. Designers must also be familiar with the three design-for-supply principles: commonality, postponement, and standardization.


Hollywood and Digital Content

Richard Hull of eContentmag writes abut, Film Industry Struggle with Digital Content. Excerpts :Almost a decade back, riddle of how Hollywood's content would merge with emerging digital technologies was dominant. The bigwigs at Microsoft made a bold march onto studio lots and proclaimed that they held the keys to the convergence kingdom. Yet in a short time, the two sides called a truce and returned to their respective corners, declaring that Hollywood would stick to content, while Microsoft would stick to technology.
Content : Now for the first time in years, Hollywood's online ad spending is up.Typically a minimum of 5% of overall marketing budgets for a film are being allocated for online promotion, and this is expected to go up. While these numbers can't compete with budgets for television and print, they do indicate a steady improvement in Hollywood's attention to online audiences.For Hollywood content-makers, the Internet boils down to only two things—marketing and distribution. And each represents a double-edged sword.Rather than being an end-all, be-all…the Internet has become simply a piece of the marketing pie.Just as with movie marketing in general, Hollywood learned that some audiences respond to online marketing, and some don't."While studios struggle with using the Internet as a tool to create box office punch, many Hollywood content-makers feel that using it to develop and extend a brand is the real untapped power of the Internet.The Internet for Hollywood is about community. If you build a branded community that people can participate in, they'll come back over and over." Levey points to Hollywood film franchises such as Spiderman, Harry Potter, and Lord Of The Rings. The online communities for these types of franchises can be huge when they emulate the ‘water cooler' atmosphere, giving visitors the ability to chat and exchange ideas between installments of movie episodes. Branding is important - each movie's branded marketing assets—logos, artwork, photographs, movie clips, trailers, and the like—must be created on very short timelines. Digital management of these assets is even more cumbersome.
Using INSCI's ActiveMedia digital asset management (DAM) software as its platform, Sony has created cineSHARE. cineSHARE is designed to move and share marketing materials and stock footage with post, print, finishing, and marketing houses,providing secure access to more than 20,000 assets, accessesible through the Web. Solutions like ActiveMedial together are wrapped up with a bow and become Sony's enterprise-wide solution. As a piece of this enterprise solution, cineSHARE enables access by producers, directors, lawyers, editors, and marketers alike to digital media from around the world and in all parts of the production cycle—digital dailies, location photos, head-shots, and production notes, among others. Because it is Web-based, collaboration can take place in near real time.

Distribution :
Legal online distribution of Hollywood's content to mainstream audiences appears confined to downloadable movie trailers and program clips. But, as the music industry has quickly discovered, things are changing…and fast. Whereas only a few years ago the download time for a full-length feature film was seven hours or more, widely used broadband connections have cut the time to less than one hour. A new study conducted by the Motion Picture Association of America and online research firm OTX reports that an astounding 58% of online users in South Korea—where 98% of the population has high-speed Internet access—have downloaded movies. Although the study claims that the number of Americans who have downloaded films is around 24%, the penetration of high-speed access for Americans hovers at only 46%.And this, 10 years after the start of "convergence," is where Hollywood and technology might be showing signs of becoming bedfellows. In addition to developing its electronic anti-piracy protection and digital rights management applications, Hollywood now seems willing to consider accepting the technology industry's latest overtures. Although each is wary of the other, there's no question that the ability to quickly and efficiently download a film opens Hollywood's content to all sorts of new platforms. This holiday season, Microsoft expects to debut its Portable Media Center, a handheld PDA capable of playing downloaded movies, music, and other recorded programming.If Hollywood indeed gets a handle on the piracy issue, the landscape is clearly moving rapidly towards allowing easily-downloadable, mainstream access to Hollywood content online. With distribution now set to be ingrained in the same medium that is currently seeing a resurgence in marketing attention, perhaps Hollywood will finally become focused enough to allow the two to work hand-in-hand online. It'll become imperative that DAM developers keep these Hollywood'ers supplied with fresh software (and strategies) that will allow them to quickly and consistently extend their properties and their brands online, and to do so in a way that safeguards the creative assets from unauthorized uses. And it'll be incumbent upon Hollywood to actually accept the use of this technology and leverage it to generate new revenue streams.

What commoditization means for IT spending

Ed Sim , the well known venture capitalist writes on this topic -"The numbers are coming out, and it is clear we are moving to a low growth environment for corporate IT spending in terms of dollars spent. Companies spent too much in the 90s and are being cautious about how they spend their hard-earned cash. Total cash and savings for companies in the S&P 500 have doubled since 1999 and is equal to half a trillion dollars which means companies have added almost 300 billion dollars to their balance sheet in the last 5 years. While companies have so much more cash these days versus 5 years ago, they are spending roughly the same amount on IT.. After all there is a ton of cash out there and corporates have to invest the cash or give it back to shareholders. The funny thing is that the commoditization trend means that companies can do more with less. What that means is that companies can keep the same IT budget and accomplish the same amount or more without increasing their capital expenditures. Competitive forces make customer the king in negotitating better prices. Both of these factors obviously work against significant increases in IT spending. In fact, customers have so much power these days (and rightly so) that companies like GM are forcing vendors like Sun and Microsoft and Cisco and Microsoft to work together, to standardize and integrate with one another".
Steve Lohr, writing in the New York Times writes about the IT market having matured and the industry enjoying the benefits of low cost computing. Robert Carter, CIO of fedex, points to that conclusion. "Technology is coming to us in much smaller bundles that cost a lot less," where budget is slightly more than $1 billion. "Our intent is to hold the line on I.T. spending and get more bang for the buck." The flat spending does not suggest any lack of enthusiasm for technology at FedEx, a sophisticated corporate user of technology. Mr. Carter reels off a series of projects for helping customers use the Web, e-mail alerts and wireless messages to track inbound and outbound packages, trim inventories and fine-tune operations. "The global interconnectedness and technology services available are growing at an unbelievable pace," he said. "We are at an inflection point in the adoption of these technologies."
This theme of doing more with less continues to ring aloud with CIOs and technology arhitects. Many corporates are going through a fundamental rearchitecture of their systems to a service-oriented model, one that will take a number of years, but one in which startups will have plenty of opportunities to thrive even with flat to limited growth in IT spending. It would be great if corporations continue to grow their IT budgets. However,the great news is that new architectures and hardware equals lots of new software opportunities. There will be plenty of chances to make great investments in this environment.
Norm Waite, writes,For large IT departments, of which R. Carter's at FedEx has to be a leading example, and for considering "chances to make great investments in this environment", the total spending is not a very interesting number because: (1) Some huge fraction for, say, people and leases, has to continue year after year with relatively little change. (2) The spending on PCs should be strange now because (A) there is not much reason to replace PCs quickly now and (B) replacement costs keep falling quickly. So, total numbers give little view of the opportunities for selling new products and services. Information technology can look like it is achieving "commoditization" if we look only at personal computing for small organizations, but for a large organization personal computing is usually only a small part of the whole and for the rest "commoditization" is not a very appropriate word. E.g., the whole picture would not much change if Dell sold their standard popular desktops and laptops for $10 each.Broadly there is a severe problem with the popular media in their remarks on information technology: Because the writers are users of personal computers, they assume that they have 'fingertip feel' for 'information technology' in large organizations; this assumption is inappropriate. At FedEx, CEO F. Smith's view from the beginning was to be a leader in exploitation of information technology; I doubt that he has changed that view at all. FedEx was a leader in computer-based fleet scheduling, exploitation of wireless (e.g., work of C. Brandon), computer-based package tracking and handling (e.g., work of M. Basch), their corporate digital communications network (e.g., work of R. Carter), and the Internet. The world of information technology moves on; I am sure that Smith will want FedEx to continue to make the best exploitations.Few CEOs are as ambitious about information technology as Smith; in being effective with such ambition, he is close to unique.Still, it is a rash CIO or CEO that will conclude that IT is a 'commodity', seek only to reduce IT spending keeping only the obvious essentials, and turn a deaf ear to solid proposals for high ROI.
Really, the main challenge for all concerned is just good ideas, ones that clearly offer high ROI. With such ideas, anyone involved would be foolish to say "Great idea, but it doesn't fit the budget." There is plenty of cash on the corporation balance sheets, in the VC 'overhang', etc. Again, the main bottleneck is just the good ideas.


Why Open Source Software / Free Software (OSS/FS)? Look at the Numbers!

David A. Wheeler, the well known expert on systems programming, security and author of several technical books publishes a blog as well. David has come with a massive paper on opensource/freesource software covering market share, reliability, performance, scalability, security, total cost of ownership and a well written background note on the origins, development and adaptation of the open source movement. This is a well researched and well wriiten paper that all open source enthusiasts and IT service professionals must read. The conclusions that David arrives at about using opensource is indeed insightful -it reads, " OSS/FS has significant market share in many markets, is often the most reliable software, and in many cases has the best performance. OSS/FS scales, both in problem size and project size. OSS/FS software often has far better security, perhaps due to the possibility of worldwide review. Total cost of ownership for OSS/FS is often far less than proprietary software, especially as the number of platforms increases. These statements are not merely opinions; these effects can be shown quantitatively, using a wide variety of measures. This doesn’t even consider other issues that are hard to measure, such as freedom from control by a single source, freedom from licensing management (with its accompanying risk of audit and litigation), Organizations can transition to OSS/FS in part or in stages, which for many is a far more practical transition approach.Realizing these potential OSS/FS benefits may require approaching problems in a different way. This might include using thin clients, deploying a solution by adding a feature to an OSS/FS product, and understanding the differences between the proprietary and OSS/FS models. Acquisition processes may need to change to include specifically identifying OSS/FS alternatives, since simply putting out a “request for proposal” may not yield all the viable candidates. OSS/FS products are not the best technical choice in all cases, of course; even organizations which strongly prefer OSS/FS generally have some sort of waiver process for proprietary programs. However, it’s clear that considering OSS/FS alternatives can be beneficial".

Wednesday, October 27, 2004

Google may have set the pace for searching information, but Yahoo! may be setting the pace for new ways of serving information!

( Via CBS Marketwatch) Mary Meeker, sees money in blogs.Morgan Stanley's Internet analyst says the hottest things on the Web now are RSS, blogs and Yahoo.In a new research report, Mary Meeker writes that the inclusion of syndicated news feeds -- known as RSS, as in "rich site summary" or "really simple syndication" -- in Yahoo's My Yahoo page is playing a key role in driving blog readership and RSS usage. More readers translate into more advertising revenue opportunities, she reasons.Ultimately, Meeker wonders whether Yahoo could "accept smaller payments for access to certain content" and split the fees with blog publishers. Inserting ads into syndicated news feeds, as Weblogs Inc. has begun doing with Engadget, is another option, she said. We believe Internet usage should continue to grow rapidly (20-30% annually for the next few years) as broadband usage continues to grow and as content providers continue to ramp their creativity and increase user engagement. Monetization of the usage—driven by improvements in advertising tools and targeting and integration of online
payment systems—should rise at an even faster rate (30%+). We see the potential for next-generation content to positively affect Internet leaders including Yahoo!, Google and eBay as they leverage their distribution channels and/or
content and services. In general, we believe ongoing improvements in the following areas will be important to watch:
1) search;
2) personalization;
3) user-generated content (including blogs, reviews, images and audio);
4) music;
5) short- and long-form video; and
6) accessibility (including mobile devices and the PC desktop).
Net, we are moving nicely down a path toward every Internet user, in effect, having a personal media server… and if Yahoo! has its way, My Yahoo! will be the front-end to the server. The full report is available here.

EDS offers early retirement to U.S. staffers

Infoworld reported, Electronic Data Systems Corp- ( EDS) offered voluntary early retirement options to about 9,200, or 17 percent, of its U.S. employees, as part of its ongoing efforts to reduce costs. EDS Chairman and Chief Executive Officer Michael Jordan said last month the company plans to eliminate between 15,000 and 20,000 jobs over the next two years as part of an effort to slash $3 billion in costs.An EDS spokeswoman said the company is taking steps to prevent problems related to losing older workers. EDS has succession plans in place across the organization and the retirement offer excludes certain employees, such as some government account workers with high security clearances. Employees in the AT Kearney consulting wing and most workers on the General Motors account also are ineligible. In addition, the retirements will be staggered through Sept. 30, 2005, "to ensure service quality is maintained," EDS said in a statement Tuesday. Some big churn is definitely happening in the IT professional services market. Yesterday we covered the rise of India based outsourcing companies the rise of India based outsourcing companies giving a tough time to the global professional service organisations.

Nominations Open For the Best Software Essays of 2004

Nominations are open for the Best Software Essays of 2004 The papers selected here shall become part of a book on this theme. The best software essays published anywhere -- on the web or in print during 2004 shall be considered for nomination and the book shall be titled -"Joel on Software" in honour of Joel. More details are available here.

Google buys satellite image firm Keyhole

( Via News.com)Google announces the acquisition of satellite image firm Keyhole . Google, one of first of the truly Web companies, is increasingly a Windows-Web company.
- In July, Google acquired Picasa, a digital photo management company. The application only runs on Windows PCs.
- Google's Desktop Search application, launched earlier this month, is Windows-only.
- Today, the company announced it had acquired Keyhole , which does digital mapping in amazing ways. All these run on Windows platform.

Keyhole, founded in 2001, offers software that lets Internet users view geographic images collected from satellites and airplanes. The technology relies on a multiterabyte database of mapping information. The software gives users the ability to zoom in from space level; in some cases, it can zoom in all the way to a street-level view. The company does not have high-resolution imagery for the entire globe, but its Web site offers a list of cities that are available for more detailed viewing. The company has focused most on covering large metropolitan areas in the United States and is working to expand its coverage. The software lets viewers tilt and rotate an image. Users can also search for information such as the locations of hotels, parks, ATMs and subways.

Given Microsoft's monopoly status, it's almost impossible to compete with Microsoft without simultaneously boosting the monopoly. Lets hope that Google is not abandoning its Web roots. But its increasing Windows-centricity, at least on the desktop, sends an unfortunate message to Mac and Linux users -- and to those who believe in diversity and open standards. Also ironic is the fact that Google search servers are all Linux Based yet the end user products they seem to have in line are only WinTel. The fact that Google is making windows only products surprises many. One of the great things about the Google search engine is its simple interface and the fact that you can use it from any computer on any platform with a web browser.

Digital infrastructure must get smarter

(Via Dan Farber)Keynoting at the Digital ID World conference, VeriSign CEO Stratton Sclavos outlined how the move toward digital infrastructure, like the build out of railroad, power grids and telephone networks before it, almost went off the rails during the frenzy of the dotcom boom, survived the bust and has now emerged as the driver of economic growth and societal transformation. "About a decade into every build out, it almost goes off the rails," Sclavos said. "There is such a rush, and it gets swamped. You can't support both a massive amount of usage and the complexity introduced. An intelligence layer gets built on top." For the digital world, the challenge is dealing with from 50- to 200-percent growth rates in Internet users, broadband, ecommerce, and wireless access.The railroads used the telegraph to provide intelligence (operators could signal ahead about incoming traffic), aviation got air traffic control systems and the telephone SS7 networks. Digital infrastructure needs intelligence built in to drive further innovation. Sclavos identifies strong authentication and identity management as a foundation for leveraging the digital infrastructure. It's not an insignificant problem. Internet users have an average of 17 passwords, which cost about $85 each to replace when lost or scammed. Most users are more willing to give up vital information about their online identity than to enter their credit card info for an ecommerce transaction. Identity theft will impact an estimated 10 million users in 2005. With RFID, hundreds of millions of products have IDs, which will result in trillions of lookups per day (currently VeriSign does 14 billion DNS lookups per day), requiring trace-and-track mechanisms to deal with supply chain management, Sclavos said.Identity management–including authentication and authorization–is tightly bound to the issue of security and regulatory compliance. Security is a race between good guys and bad guys that has no end point, Sclavos said. It's a game of leapfrog. "If you look at infrastructure build outs, guess who follows the money–criminals. Every time the economy moves, so do the crooks," Sclavos said.

The Rise & Fall Of A Dot Com Pioneer

In the 18 months since Andrew “Flip” Filipowski’s watched as his high-tech incubator-turned-integrator, Divine Interventures Inc., was sold in pieces at a bankruptcy auction, he has regained several of his former companies, created a new entity—— SilkRoad Technologies ,an enterprise blogging and CMS company ——and found new challenges and success in North Carolina. Filipowski, an iconoclastic sort who was often described by his appearance——sporting a pony tail and Hawaiian shirts——had wowed the high-tech world through his use of strategic alliances and acquisitions to build an integrated software company——Platinum Technologies, Inc.——guide its growth for 12 years and then sell it in 1999 to former rival Computer Associates for $3.5 billion.And since the Divine bankruptcy sale in May 2003,he appears to have done well.“He has this core of people that he worked with since he started Platinum,” said Darcy Evon, the executive director of corporate relations and international studies in the development department of the Illinois Institute of Technology who has chronicled the Divine saga as former owner of I-Street.“There’s a huge loyalty factor in all of Flip’s relationships, not all, obviously, because some people burned him and he burned others,” Evon said. “But if you get to be his friend, you’re usually his friend for life.” Irrepressible indeed!

Outsourcing Realities: Time to Stop Whining

Edward Yourdon, well known consultant, author and lecturer has recently published a book, “Outsource: Competing in the Global Productivity Race”, writes in the Editorials and Opinion section of the Software Development Times focussing on white-collar jobs, particularly IT jobs that IT workers in the west should stop whining about loss of opportunities due to offshoring and focus on reskilling and upgradation of knowlegde. He adds,"Information technology was the first of the white-collar industries to have experienced offshore outsourcing, but the phenomenon has now spread to call centers, help desks, tax processing, mortgage approvals, medical technicians and a long list of other knowledge-based professions. Yourdon tells IT professionals -Stop whining. Stop waiting for someone else to solve the problem. Take charge of your own jobs, your own career and your own future. Yes, of course tax loopholes should be eliminated to provide fair competition and level playing field for offshore work, just as we have done in various blue-collar industries. We should ensure that offshoring of knowledge-based work doesn’t create security problems and privacy problems. But that’s not going to eliminate the offshore-outsourcing phenomenon; at most, it will simply slow things down a little. Proof - Auto industry, Steel industry and Textile industry.

But there are some key differences between the IT industry and the blue-collar industries that first started moving overseas 20 to 30 years ago. Our knowledge-based industries are not going to be wiped out, or reduced to a mere shadow of their former selves: None of the serious economic forecasts suggests that 60 percent, or 80 percent or 100 percent of IT jobs are going to move to India and China. Instead, the predictions are that 10 percent to 20 percent of IT jobs will move elsewhere. While the loss of 10 percent to 20 percent of IT-related jobs would indeed have a significant impact on the overall national economy (assuming that such jobs were not replaced by other, economically equivalent jobs), the personal impact of such a scenario is fundamentally different than it was for the auto workers, steel workers and textile workers a decade or two ago.
In a Darwinian world, the same is unfortunately true for the hard-working, well-meaning veterans in that vulnerable 10 percent to 20 percent economic bracket: They’re not “entitled” to jobs if there is an alternative supply of lower-cost, higher-quality, higher-productivity people. Understading how one can add consistent value to enterprise, learning new skills/toolsets, are ways of insuring against being rated redundant.You need to understand how your “economic value” is determined by your employer, vis-à-vis alternatives from India. It’s trivial to determine that your salary is four times higher than an Indian programmer with equivalent education and experience, but is your productivity four times higher? Is your defect rate four times lower? Is your “value” four times higher because of your specialized knowledge of your company’s undocumented business processes? Do you have detailed, quantitative metrics with which to make a credible cost-benefit calculation that demonstrates your superior value to the employer? Will your employer respond in an objective, rational fashion if you present such economic figures?Several outsourcing decisions may be taken out of poor judgement and for other reasons - a few of them may fail and a few may meet the objectives.The high-tech boom of the 1990s masked the growth of the Indian IT industry, but now that we’re in a situation where supply exceeds demand, it’s no surprise that employers are looking for what they perceive to be the best source of cheap, productive, high-quality labor. Yourdon states the realities of IT offshoring in a manner that is direct, easily understandable digestible, for the apprehensive IT employee.


Tuesday, October 26, 2004

Infosys, Outsourcing –Next Frontiers

John Heilemann writes in Business 2.0 - Accenture and IBM,Watch your back, Infosys is racing ahead . Excerpts:

Nilekani's consulting gambit exhibits both in abundance. It's based on a premise that Infosys's outsourcing model is not only a cheaper mousetrap but also a better one. "Like Dell , l Wal-Mart , we've created a genuine business-model innovation," he says. "We've created a new way of organizing workers without regard to distance." Having firmly established Infosys's back-end credibility in code writing and system integration, Nilekani sees the front end -- consulting and services -- as its next frontier. "It's like Wal-Mart getting into groceries or Dell getting into printers," he says. "On top of our global delivery model, we're adding these new capabilities at the point of customer contact."

On competition - The incumbent IT services giants face a rocky road themselves. "They have the relationships and domain knowledge," he says, "but their delivery models are obsolete. For them the challenge is to retool, to adapt to our model, to take costs out of their supply chains. And we think that transition will be more painful for them than ours will be for us."

Nilekani may be right about that, but Infosys has more than one transition on its hands. In India, where the company has long had the pick of the litter when it comes to hiring engineers -- every year Infosys receives an astonishing 1 million job applications -- competition for talent is intensifying and wages are rising. At the same time, countries such as Russia and China are likely to emerge as players in the worldwide tech economy, undercutting India as a provider of low-cost engineering. Finally, there's the possibility that this year's outsourcing controversy in the United States was only a mild preview of a full-scale backlash to come -- one that could include protectionist measures designed to kneecap Infosys and its compatriots.
Infosys's chances of turning into the kind of dynamo Nilekani has in mind looks high. It's not merely the company's history that makes me think so, or even its CEO's manifest strengths as strategist and leader. Instead it boils down to tidal forces that are destined to transform tech. With the cost of communications falling constantly, IT software and services will become truly global markets. (As Nilekani puts it, "We're on the verge of a global supply chain, whether it's for products or people.") And India, with its educated, English-speaking labor pool, will become one of the world's major IT powers. Given all this, it seems to me that Infosys is simply on the right side of history. I can't think of a company better situated to capitalize on these changes now unfolding.
I would think that the same factors hold good for the other India based IT majors like TCS , Wipro and Satyam , as they have laid out distinctive plans to capitalize on the circumstances in India and the opportunities globally.

Fortune's David Kirkpatrick covering Infosys and its CEO Nandan. Excerpts:
Nilekani believes his company's move into consulting foreshadows a transformation that will remake the entire global industry. "We think the future is building a foundation of global delivery and combining that with world-class consulting skills," he says. The new consultants, for example, will work with customers to remake a company's supply chain with a more intelligent application of IT. "But because the execution is done in India they can spend more time and thought on the business problem," he says, referring to the much lower costs available to companies that take advantage of Indian programmers. "So we can deliver superior value." Nilekani has formulated a new acronym for what he thinks his company is practicing—the Global Delivery Model, or GDM, by which he means considering any country or region fair game for sourcing work. He explains: "People are realizing that outsourcing is a genuine business innovation. It's a smarter way of delivering value by leveraging workforces all over the world. Today, fine, this is predominantly in India. But it could be in any part of the world."
"GDM has been made possible by technology and process. The world has gotten wired," he says. But he also notes that Indian outsourcing firms like his did something akin to what Japanese automakers did in the 1950s. While W. Edwards Deming developed his theories about manufacturing and quality in the U.S., it was companies such as Toyota that first took him seriously. Now look who leads the global industry. Nilekani says Infosys and several other Indian software firms similarly adopted U.S. ideas about how to write software of demonstrable quality consistently and with crystal-clear documentation. Many of these techniques had not received sufficient attention from American software and services companies. Nilekani concedes that Indian firms had to be better in order to get in the customer's door. "We have brought in superior predictability of output along with the cost benefits," he says. "We bring the project in on time. You can go to sleep at night." He claims Infosys already has more knowledge about business processes than any of its Indian competitors. "Operational excellence is not a commodity—it's a differentiator. Look at Dell, or Wal-Mart. Ten years ago they weren't into groceries, or gas. They have a business model which is efficient, to which they can add new product lines."
"Incumbents like IBM or Accenture have all the consulting stuff but very little GDM," he explains. "Their challenge is to reach the same endgame. But think of the structural problems—they have to rebalance their entire global workforce, which causes intense conflict internally. The more they recruit in India the more disquiet it causes in their existing employee base. "It's not that I have to get that big. My customers just have to know that the opportunity exists. I have a lot of customers who also have long-standing relations with the incumbents. Now they're going back to them and saying you have to give me that same deal that Infosys is giving me."

India Inc. Is Growing Twice as Fast as Japan Inc.

The US/IT Analyst View( Via AMR Research ) : India Inc. is Twice as Fast as Japan Inc - Erik Keller, Research Fellow, AMR Research and Ex Vice President, Gartner, Enterprise Software Group writes, Japan Inc. took almost 30 years to obtain a strong position in key U.S. industries, such as Automotive and Consumer Electronics. It will take half as long for India Inc. to do the same for service -oriented industries with IT leading the charge. The term India Inc.,an embodiment of the new competition arising from India in IT and other service areas. For manufacturers, this has a similar resonance of Japan Inc., a term that came about in the 1970s as Japan attacked key U.S. manufacturing industries, including Automotive, Steel, and Consumer Electronics. Many U.S. and European companies continue to underestimate the impact of India Inc. and have not made the needed changes to their business and employment models. The fastest change is occurring with the major software vendors that have moved much of their core product development to India. For example, nearly all of SAP’s BW product development and much of NetWeaver resides in India. Oracle and PeopleSoft have accelerated deployment of Research and Development (R&D) and support resources in India; Oracle has more than 6,400 people now employed in India and plans to have nearly 10,000 by the end of 2005. Some companies, such as Kana, have taken an extreme view and have sent all R&D to India. Venture capitalists require that any startup have a plan and capability to deploy R&D in India. While technology-oriented companies have embraced offshoring, most end-user organizations continue to be cautious about how much and how fast they can offshore IT operations. In the next few years, however, their internal IT cost models will prove too high and force them to change.
Like Japan Inc., one of the initial attractions of India Inc. is low-cost labor. Ironically, India offers lower cost labor than Japan ever did, but higher quality than is delivered by many companies today. This paradox is not readily understood and is why many U.S. and European companies continue to ignore the potential of India Inc. Indian software companies hold the highest number of Level 4 and 5 Software Engineering Institute-Capability Maturity Model certifications, which is the software equivalent of Six Sigma certification for defects in manufacturing.Along with this enhanced quality comes enhanced delivery of value. The perception that India is only capable of low-cost, tactical work is as true as the false perception that the Japanese cars of the 1980s were cheap U.S. knockoffs. The establishment of low-cost offshore delivery centers in India for traditional IT service providers / Systems Integrators (SIs) is well underway, as are business processing outposts for all the services industries (Financial, Telecommunications, Legal, Engineering, etc.).And unlike many of their U.S. and European counterparts, upwards of 50% of all SI/ Business Process Outsourcing (BPO) jobs are profitably taken with a fixed price bid. The high stock price of many Indian offshoring companies, as well as pre-tax margins in excess of 20%, illustrate that these companies have management expertise and execution quality.
The availability of inexpensive and reliable network and computing technology implies that any job or task that does not require the physical presence of a person can be sent offshore. India followed by others, is creating a sophisticated pool of highly specialized and educated workers who have shown the ability and willingness to deliver high-quality, low-cost work. Using many of Japan Inc.’s techniques of continuous improvement, quality circles, and process innovation, India Inc.’s 30% annual growth in IT services is being replicated in other service industries. U.S. and European companies need to reevaluate their worldwide employment models to ensure that they can benefit from India Inc. rather than be consumed by it. U.S. automakers and consumer electronics firms ignored Japan Inc. for decades until it was too late to recover; IT and other service providers do not have nearly as much time to recover from a similar misjudgment.

The Indian industry view about this development:( Via The Hindu BusinessLine): Across every industry spectrum, there is potential for knowledge work to relocate to India - G.B.Prabhat of Satyam , argues that India would soon become a hot favourite work destination for foreigners. As India grows as a centre for knowledge work, exciting times are ahead, not only in terms of a broad spectrum of knowledge work coming here, but also in foreign nationals opting to work out of India. This trend is clearly visible across sectors, says G.B. Prabhat, Director, Enterprise Business Solutions, Satyam Computer Services. "Across every industry spectrum — pharmaceuticals, market research, IT, or even manufacturing — there is potential for knowledge work to relocate to India," he says. When knowledge work relocates in small chunks there is little attraction for a foreign workforce to relocate to India. But when this happens on a much larger scale, many foreigners will face the prospect of either relocating to India or losing their jobs. There are already foreigners who are specifically asking for positions in India "because they see the future being here. They know that eventually India will provide them with everything that the western world gives them now, plus more if they are lucky. So they're asking for jobs here," says Prabhat.
On why foreign nationals would want to work out of India, Prabhat says, "The worldview they are all adopting is that all manufacturing will, in some manner or the other, eventually centre around China, and India will clearly take the lead in information flow. They believe there is a long-term future in industries relating to information flow, which will also involve knowledge work. Given our educational infrastructure, English-speaking ethos and the bias towards intellectual work in India, there is no choice but to relocate here." And in this phenomenon, clearly the early birds will derive a greater advantage. And, in many ways, foreigners opting to work out of India will also get a higher quality of life at a much lower price. "For one thing, they will not be spending much time on menial tasks of the day which can be done by domestic help here. They're also looking at larger, more spacious houses and increased material comforts in what they can buy. But what they cannot buy are the roads, electric supply, etc, but these will improve," he says. Indophiles, while getting ecstasic,about these developments need to be well prepared as Thomas Friedman pointed out in New York Times article, Making India Shine ,which we covered earlier. A few days back we covered in this blog, Offshoring in reverse saying, India Headquartered software companies are hiring US nationals for top jobs and how well the trend is entrenched and seen to be a success. The effects of globalisation beginning to touch professional lives is there for everyone to see.

RFID and Barcodes shall coexist !!

This brief article in VNUNET says, Potential adopters of radio frequency identification (RFID) spend too much time speculating about the arrival of cheaper tags when they should be evaluating the business benefits of the technology, Gartner has warned."RFID technology holds exciting opportunities for almost every business, But rather than ask at what price does RFID become effective, retailers should identify if a specific business case exists for the technology in their business based on today's price."The use of RFID to improve efficiency of data flow across global supply chains could be one of the most significant developments in business strategy since companies first recognised the importance of information flow.Companies will go through a two-phase adoption of RFID, predicts Gartner. The first - the creation of RFID-enabled business processes, using RFID within the context of existing business processes - is expected to achieve only "marginal benefits".However, the second phase, when companies adopt RFID-centric business processes, involving a radical re-engineering of business processes, has the potential to deliver substantial enhancements, according to the analyst, Stephen Smith.
A word of caution - "RFID technology and the business benefits it promises will not arrive with a big bang," "High capital costs, imperfect read rates, unproven systems and uncertainty around standards will all need to be addressed before retailers can adopt and benefit from the technology. This means that, over the next 10 years, retailers will continue to use barcodes and gradually introduce RFID tagging, creating an environment of co-existence."There are conflicting problems with assembling low-cost tags. Vendors are currently unable to resolve the paradox that they must work to reduce the size of the chip to reduce costs, when this process itself actually increases production expenses. Passive tags today cost from 40 cents to $10. Active tags usually start at $4 to $5, increasing to hundreds of dollars. By 2009 the most competitive RFID tags will cost 20 cents, predicts Gartner. Net-net, RFID and Barcodes shall co-exist for some more time.

Google helps promote Windows XP via Infoworld

Joris Evers of Infoworld writes, Google's Deskbar is included in Microsoft's Partner Pack for Windows, a collection of Microsoft and third-party products released last week that Microsoft describes on its Web site as "the ultimate application package" for a Windows XP PC. The Deskbar adds a search box to the Windows taskbar, allowing users to search the Web with Google without having to start a Web browser.Joris wanted to know how Microsoft could seemingly promote Google technology while competing against it. Joe Wilcox,Jupiter Research analyst offers this explanation. . Microsoft's biggest challenge right now is promoting Windows XP's capabilities. JupiterResearch views XP's adoption as modest, at best, with most businesses still running older versions of the operating system and most households running XP and/or another Windows version. Over the last couple months, Microsoft has stepped up XP evangelism, in part by showing the capability of partner products that extend the operating system’s capabilities. The products available with the Partner Pack are consistent with that approach.At the same time, the MSN division, which brings a fraction of what Windows Client contributes to Microsoft revenues, is looking to expand its search capabilities in competition to Google and Yahoo!. It makes sense that Microsoft would choose to promote competing Google technologies. After all, Windows is Microsoft’s cash cow and most valued asset. And like many other Microsoft competitors, Google also is a valued partner. Notice that Google’s recent desktop search utility, while competing with MSN search capabilities coming in the future, runs only on Windows. So, Microsoft has as much reason to promote Google technology as compete with it.
The apparent contradictory behavior with respect to Google illustrates a much bigger Microsoft problem. The company has evolved from a strictly platform provider into one that also offers applications. Increasingly, the approach puts Microsoft in competition with partners providing valuable technologies for the Windows platform. Google is a classic example of a partner-competitor. While the MSN Search folks may be in hot competition with Google, for the Windows platform Google is a valuable partner. Hence, Microsoft’s apparent contradictory behavior, where executives publicly target Google as a search competitor, while the software giant promotes its competitors’ technology in the Partner Pack.
The platforms and applications businesses as creating unnecessary conflict between Microsoft and its partners, a situation that makes Linux more appealing than Windows to some developers. Windows succeeded because third parties could make money on the platform. That is not as sure a prospect when Microsoft’s applications business competes with its platform developers’ products.

Monday, October 25, 2004

Depot Goes Digital - Bob Nardelli's Approach and Vision

Bob Nardelli is managing a $2 billion technology transformation of Home Depot. The transformation is so insightful and full of detail, we shall publish some selective excerpts that appeared in Chief Executive magazine in two parts. This is Part 1 of the series.

On Understanding and High Level Technology Vision Push
- When I got here, it was important to really be a dry sponge and kind of immerse myself into the business. You know what you know from a leadership standpoint. That’s probably 75 percent of the job. But the other 25 percent you’ve got to absorb. I always felt it’s incumbent on the CEO to be on a vertical learning curve. Bob Says, He saw a lot of labor, a lot of tasking going on. It was a little bit like the adage, “When in doubt, add a body.” The example I always use about the inability to do emails. I walked through the store and I saw people manually doing inventory, counting boxes.I walked into receiving and I saw data entry, bills of lading and invoices. So what I saw within the four walls of the business was a tremendous amount of human intervention. And I knew that it was ripe for the opportunity then to take that valuable resource through digitization, and reapply it to sales. This is not about digitization for elimination. This is about digitization for reapplication. I’m getting more pull than push through communication and demonstration that would ever be envisioned for pushing the technology.
On self-checkout - That’s 40 to 60 hours that can be shifted to the selling floor, as opposed to tasking. We’ve gone out and done some benchmarking, for example, with UPS. And you look at finger bar code readers. And you look at the ability to get certified receiving. You look at bar coding for inventory taking, if you look at perpetual inventory replenishment. Those are all huge opportunities.
Bob Nardelli says, For all the productivity we’ve delivered in the past three years, we have the ability to deliver that much more. So you should feel good about where we are positioned, relative to productivity and earnings per share and cost leverage, because we’ve got that much more opportunity in front of us.” We’re only touching the mega-platforms right now. We’ve implemented PeopleSoft, and I don’t know another company that flipped the switch like we did last month on SAP, on the full suite. We closed the (financials for the) month of June, right out of the box. We have an opportunity in logistics and in supply-chain management, we have the opportunity in merchandising. There hardly is a place in the business where we can’t use existing technology. I kind of kiddingly say we’re taking a major leap to the present. For some retailers, it’s old hat. For Wal-Mart to have point-of-sale, to be able then, at the register, to regenerate inventory replenishment, is something we’re moving to.
On How the team was put together with the skill sets needed to undertake this technology revolution - A. It wasn’t like I showed up cold. I knew we had to change our approach to information technology. We were somewhat of a deli counter: first in, first out. We really didn’t prioritize the return on investment relative to our overall operating strategy. We needed some mega-platforms. At the same time, we needed some kind of quick hits, so that we could show the legitimacy of what we’re doing, because people had been disappointed here in what IT delivered. So we immediately said we need to get somebody best in class. We need somebody who’s been there, done that. We needed somebody with a lot of scar tissue, who had been seasoned, who was used to dealing with mega-volume, i.e., Bob DeRodes from Delta and Citibank. Sometimes you put people in a job to grow them. Sometimes you put people on the job to grow the job. Bob, in his own right had his own revolution going on at Delta, really changing the culture, changing the expectation, raising the bar on accountability and one creating business pull versus IT push.
On The Approach: - Then what you want is somebody who can do architectural design at the mega-platform level, so the sum of the systems plug together, so that the sequence of implementation is right. It doesn’t do any good to create a system and then find out that the data flow that goes into it is not clean or is not automated. We did a lot of mapping on this.Then Bob started to very systematically bring in best in class again. We scoured the globe to bring in these individuals who have proven track records. In some cases, they were chief information officers themselves in smaller business but were excited about joining a bigger business whose leadership team embraced information technology.

On getting straight answers:
I hope we have created an environment here where the unvarnished truth can come out and we can deal with an issue honestly, up front and in a constructive manner. It’s only when you hide those things from each other and the business that you have these major conflicts. So I think this integrative process, these program reviews, these project reviews, the visibility to project status (red, yellow, green) not only from a financial standpoint, but from a tasking standpoint, has all been healthy for us.

So the overall technological transformation is working?
A. I think it’s working extremely well. We have legitimatized technology at the Home Depot. If you read the book The Ten Deadly Sins of K-Mart, and I’m not pointing a finger, one of the biggest sins is technology aversion. To a certain degree, we had that within the company. We thought we didn’t need technology, we were better than that, we could overcome it with passion and energy.” What we’re finding is we want passion and energy and technology to really be competitive in today’s world. Is it without angst? Is it without moments of anxiety? Are there not moments of confrontation? No. But my business compass tells me we’re headed in the right direction, and that we are building credibility and capability as we go along. The issue now is, going faster. Customer survey data has shaped everything we have done. The customer said, “ we love Home Depot. You have more convenient locations by a factor of two than your nearest competitor. We love what you’re doing on store modernization—cleaner, brighter, more navigable stores. Get me out faster.” We now have over 800 stores plus with self-checkout, with over 30 percent customer utilization and 40-some percent reduction in queue time. Then we went to the cordless scan gun. You get the pro customer out faster, because you don’t have to unload the cart and reload the cart. The cashier is no longer tied to a cord, and it’s not only cordless scan guns, but it’s two-way. In other words, they can actually see on a screen what’s showing up on the cashier screen. It’s not a dumb trigger. So, No. 1, we get them out faster. No. 2, ergonomically, it’s a home run. Associates aren’t bending over, picking up bags of concrete. They’re not pulling off sheetrock. Third, it’s a big help on shrink (inventory loss). The accuracy of, you know, you got ten sheets of dry wall, two sheets of OBS, you’ve got two by fours … before, the cashier was kind of counting, running back, push it in. So our shrink has improved
It was a lot of investment. We installed 5,000 miles of cable, 90,000 devices last year. Now we’re working our way from front to back, from customer to back room. So that’s why we’re working on back-end automation receiving, automated receiving. . Now what we want to do is digitize the internals of the store, introducing scanning into receiving, so that we can get certified receiving, so that we can get accuracy and speed. If I have certification on the back, I got POS on the front. I now can do automatic replenishment. We are aiming for the Wal-Mart model.
On RFID (Radio Frequency Identification Devices): - Wal-Mart’s using, and I was thinking, Before I can use it, I have to have the store wired to be able to read the RFID. That’s an emerging technology. If it works, we shall be there.
. Part II shall be published shortly.
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