‘You’ The Brand and ‘Social Media.’

Social Media Iceberg

Image by Intersection Consulting via Flickr

“You can easily judge the character of a man by how he treats those who can do nothing for him.”

James D. Miles (1830 – 1914) Steamboat Captain in the Northwest

Some of you may remember, the television shows of the 80’s where TV series/serials, used to start with, ‘Previously on xyx.’I felt a bit nostalgic today, so I will start the same way. Previously on my blog, I have written about Social Media (SM) in various contexts. I wrote about the effect of SM on a friend’s daughter – The ugly side of social media, the conundrum facing CIOs – The Social Networking dilemma and the CIO, a quick primer on SM – Social Media Primer – Succeed by using LinkedIn and blogs, Toyota and its failure to use SM – How Toyota became the werewolf and the three step process to embrace SM: Organisations “Don’t get” social media (UPDATED, RECOMMENDED READING FOR THIS POST, with ALL NEW SM monitoring tools for both personal and business use). It is becoming evident though that some organisations have become adept at SM, as witnessed by Ford’s recent Ford Explorer, campaign. “We couldn’t think of launching a vehicle today without launching it early using social media,”Jim Farley, Ford’s Vice President for Global Marketing – Courtesy of Social Media Explorer.

Senior management need to understand the business and how IT can be utilised to provide competitive advantage – Leveraging IT for Competitive Advantage – Myth or Reality? The problem these days is that many CEOs start working at new employer’s without taking the time and effort to understand and appreciate the business and its culture. Without understanding fully, their business, there is no way for them to realise the potential within their existing or future procured IT systems. In addition, many businesses still have their IT chief’s reporting to CFOs. Without board level representation, IT cannot deliver any benefits to the bottom line. Within that context, Terry Leahy fully understood the impact of IT and allowed his CIO, Philip Clarke to analyse and innovate. In effect, Philip Clarke, successfully created, ‘Philip Clarke, the brand.’ Can anyone create a successful brand, using the Internet and Social Media? The answer has to be a resounding ‘Yes’. I will now outline the steps. The secret to leveraging the success of SM is to integrate, disseminate and monitor SM (automate as much of this as possible, especially if you are building your personal brand – due to time constraints).

Integration: If you are thinking of setting up a new business or personal brand, Google Apps could be the ideal platform for you. I covered this previously, Google Apps – The myth, hype and reality. Google Apps Premiere edition was recently named as  Google Apps for Business and now incorporates all the FREE apps that used to be available to personal Google/GMAIL account holders, such as my favourites, Google URL shortener and Alerts. Regardless, of whether you are a small business or corporate, the website needs to provide analytics to ascertain demographic analysis, page views, referrals (Which sites are referring your site) and statistics and words used for searches conducted, using tools such as Google Analytics. The website also needs a blog feature (Or if you are building your personal brand, enable a personal blog using WordPress/Blogger (Free)). The blog needs to auto connect with SM to deliver posts (Such as, Twitter, Facebook, Yahoo, MSN and YouTube) automatically.

Dissemination: A decision has to be made on which SM will be most effective in disseminating information (News/blogposts/articles) to your target audience. For example, with the launch of the Ford Explorer, Ford decided to use Facebook.  Appropriate profiles for various SM (Facebook, LinkedIn, MySpace etc) need to be created. There is plenty of information available on the Internet, to help in creating these profiles but the rule of thumb is that all of your SM profiles, need to be as similar to each other as possible, across all SM. Again, automate as much of this as possible, (especially if you are building your personal brand – due to time constraints)

Monitor: Once SM has been integrated and dissemination profiles/channels are completed start monitor ing‘key people and blogs and setup appropriate RSS feeds’ for content/people that your business needs ‘to follow’ in order to keep abreast of trends in your field. Monitoring also needs to be setup for adverse comments, as the case with Toyota (See above) highlights. As SmartPhones are prevalent now, appropriate phone apps need to be setup to provide the ability to monitor, regardless of location.

Finally, I wanted to leave you with some Twitter cheat sheets that also include other SM tools etc as well (Courtesy of the following):

Geneabloggers.com-Twitter-Cheat-Sheet

@gminks of Adventures in Corporate Education’s Cheat sheet

The Social Media guide.com’s Cheat sheet

The public you.com and Rich Sauser’s Cheat sheet

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Eric Schmidt (Ex CEO and current Chairman – Google) management style and CIO

Image representing Eric Schmidt as depicted in...

Image via CrunchBase

“If you’re not making mistakes, then you’re not doing anything.”

John Wooden (1910 – 2010) Hall of Fame basketball coach of UCLA

Eric Schmidt (1955 – ) Google CEO and Chairman from 4th April 2011 onwards

Today’s article is the sixth in a series of articles (1st Steve Jobs, 2nd Michael Dell, 3rd Warren Buffet, 4th Bill Gates, 5th Larry Ellison), analysing current and past leaders to ascertain how Chief Information Officer’s (CIOs) can learn better management by applying the management practices of leadership, practiced by these leaders.

This article also follows my previous articles on Google, Microsoft Googles Apple in 2011, Google Apps – The myth, hype and reality, Weather bulletin – Google Cloud and icy Microsoft downpour and Used iphone under a palm tree where I met android and formed a symbian relationship with a blackberry

Eric Schmidt arrived at Google to help Google’s inexperienced founders; Sergey Brin and Larry Page. He has led Google to become a globally recognised company with approx 24000 employees. Recently, he has stepped down to become the chairman and to pass the leadership to Larry Page (on 4th April 2011). Over the years, he has mentored the young founders and believes that the time is now right for them to take the helm. For his efforts, he leaves with a golden shake of $100 million in equity and shares worth 9.1% of Google stock.

“As a CEO, Schmidt is more inclined to provoke than proclaim. “Google is run by its culture and not by me”, said Schmidt in 2009. In Google, when a key executive decision is reached, all interested parties are invited to the decision making process and are encouraged to share their opinions. Schmidt’s job is to oversee the whole procedure and make timely decisions. This bottoms-up way of decision making usually leads to a better buy in and a better decision.  Google allows employees to spend 20% of time on self-directed projects. To closely connect to Google’s frontline innovators, each week Schmidt and his senior associates spend up to six hours in dialogue with team members from across Google, who believe their projects have great potential. This unique management style has hatched a series of great products like Gmail and Google News.” Courtesy Vivian’s Tech Blog

PS: CIO is a generic term and other analogous titles are Head of IT, IT Director, Director of IT etc.

The Management Style

What can CIOs learn from Eric Schmidt’s management style? Let’s investigate while allowing you to decide.  (In no particular order and a few other sources utilised):

1. How do you run this company? – ES “It’s run in a strange way. We have a normal hierarchical structure. The company is organized ‘bottoms up’ from the standpoint of product creativity and ‘tops down’ from running the quarter and the financials and so forth. We encourage dissent, we encourage large group conversation, we encourage there to be somebody who’s opposed to the decision, and we work very, very hard to be not hierarchical in the way that decisions are made. Often if we can get a decision, we get the best decision if we have two decision makers, not once. We never make decisions in private; we always do them right in front of everybody.” Courtesy Marketplace

2. When the going gets tough, investment in people always pays: ES – “Getting the most out of knowledge workers will be the key to business success for the next quarter century. Here’s how we do it at Google.

At Google, we think business guru Peter Drucker well understood how to manage the new breed of “knowledge workers.” After all, Drucker invented the term in 1959. He says knowledge workers believe they are paid to be effective, not to work 9 to 5, and that smart businesses will “strip away everything that gets in their knowledge workers’ way.” Those that succeed will attract the best performers, securing “the single biggest factor for competitive advantage in the next 25 years.

At Google, we seek that advantage. The ongoing debate about whether big corporations are mismanaging knowledge workers is one we take very seriously, because those who don’t get it right will be gone. We’ve drawn on good ideas we’ve seen elsewhere and come up with a few of our own. What follows are ten key principles we use to make knowledge workers most effective. As in most technology companies, many of our employees are engineers, so we will focus on that particular group, but many of the policies apply to all sorts of knowledge workers.” – Courtesy 1000 Ventures

For more, read – Google’s ten golden rules for getting the most out of knowledge workers.

When Eric joined Novell, the company’s future was very much in doubt. He correctly recognized a culture of fear that pervaded the organization. Bright engineers with revolutionary ideas were reluctant to voice them for fear of being fired. The engineers however, complained vociferously amongst themselves leading to a culture of corporate cynicism. Recognizing this pervasive bellyaching, Eric asked two engineers he met on the company shuttle, to give him the names of the smartest
people they knew in the company. Eric met with each of them, and asked them in turn to identify the 10 smartest people they knew. In a few weeks, Eric had a list of 100 engineers he considered critical to Novell’s future. He met with each of them personally, encouraging them to take chances and follow their instincts. He removed the possibility of reprisals by their managers for voicing their opinions. This inspired the engineers and focused their efforts, resulting in innovative and improved products. These changes helped Novell transform itself from a loss of $78
million to a gain of $102 million”. – Courtesy Scribd.com

One person alone cannot handle everything. The secret is to surround yourself with employees that are smarter than yourself. These smart people will challenge organisations and force them to think differently. I covered this, under mobility of management when I covered; can IT Management failure be caused by a deadly disease? Part II. CIOs need to understand the importance of retaining and investing in people as one of the business’s most important assets is yet again confirmed by another business leader.

3. Business/IT Strategy: “At Google, Eric has stated the company’s goal as “…Organizing the world’s information making it universally accessible and useful”. An engineer working to index billions of web pages can easily identify with this laudable goal. As a practical matter the goal of making information universally accessible is a more
meaningful goal for the engineer, interested in making his mark on society, rather than a mundane goal of increasing Google’s revenues by $300 million dollars. Eric considers this transfer of ownership to be so important that while at Novell he created a quarterly in-house radio show modeled after NPR’s “Car Talk”. He even made tapes available for in-car listening.” – Courtesy Scribd.com

Sometimes it’s best to follow your instincts and to believe in yourself to do the right thing. Paralysis by analysis is often the cause that many organisations cannot do well. It’s as Nike says, Just do it!

4. Rating of employees’ performance: – In the past, I have reviewed many CEO’s management style but Eric Schmidt’s style is the closest fit to Deming’s ‘Annual rate of performance’ that I have yet come across.

“Eric management style is to let the team’s progress be reviewed by individuals the team respects. In most companies there exist a few individuals that are universally respected or at least more respected than everyone else.
These individuals have a way of articulating principles and have very good memories. Since they are considered impartial, teams are more open to receive feedback or decisions even if the decision goes against them. – Courtesy Scribd.com

5. Earn respect by ‘listening’: – ES “Listening to each other is core to our culture, and we don’t listen to each other just because we’re all so smart. We listen because everyone has good ideas, and because it’s a great way to show respect. And any company, at any point in its history, can start listening more.” Courtesy Andrew McAfee

6. Competitive advantage: This is an area of great interest, as currently, Google is the undisputed king of search but Microsoft’sa Bing is knocking on its doors. So, for the moment Google is able to keep its competitive advantage. The worry for Google has been the defection of key employees (who view Facebook as ‘cool and the place to be’) to companies such as Facebook. Social Media is an area where Google doesn’t really have a strong foothold and that is worrying for them while in the mobile arena, Android is not a huge money earner (albeit, earnings are approx $6 per user per year) when compared to Apple IOS. Google is in a battle with Apple, Microsoft and Facebook and it is ambiguous which markets Google ultimately wants to compete within.

CIOs need to ask themselves how they can help the business through leveraging IT to create competitive advantage. I covered this in my post, Leveraging IT for Competitive Advantage – Myth or Reality?

7. Talent acquisition – Hire ‘Action’ oriented employees: “I might have been mistaken, actually. Having your name and picture up on that big screen at End of Quarter may not be the biggest incentive. The thing that drives the right behavior at Google, more than anything else, more than all the other things combined, is gratitude. You can’t help but want to do your absolute best for Google; you feel like you owe it to them for taking such incredibly good care of you.” Source unknown, courtesy Oliver Thylmann

Google actively recruits recent Ph.D.’s and Ph.D. candidates. All 1,900 Google employees are researchers and developers in addition to their regular duties. Where other companies will keep their research departments and core businesses separate, Google places all their Ph.D.’s in the rank and file of the company. Workers at Google enjoy a company devoted to benefits (Stross, 2004). They also enjoy an informal company culture where employees have access to gyms, massages, pool and ping-pong tables, well stocked snack rooms and other recreational amenities (Google Culture, 2009). Courtesy Marty Andrade

A CIO needs to trust their gut instinct, as one can only learn a certain amount in an interview. I think, the strategic fit, is a very good measure. How will a new hire fit into the culture of the company? Will they enjoy it here? Have they worked in a similar culture before? The danger is that the culture could be so alien to the new hire, that they find it difficult to adjust.

Eric Schmidt has hired the smartest people who can ‘get the job done.’ Hire your friends and past colleagues, as they will have loyalty to you and as you know them personally, an informed decision can be made on whether they have what it takes to realise your ‘vision.’

8. Spotting opportunities and innovation: LE –  “innovation is the key to Google’s success, everything Schmidt does revolves around creating more innovation. Without it, Schmidt believes there is nothing to prevent another company from overtaking Google as the king of digital information.  Innovation is systematically encouraged at Google at all levels throughout the organization, including management. At Google, management follows the “70/20/10″ rule where seventy percent of their time is spent on core business projects, twenty percent is spent on projects related to the core business and ten percent is spent on projects unrelated to the core business (Battelle, 2005). Schmidt, in order to remain true to the 70/20/10 rule, actually divides these projects into different rooms and tracks his time spent in each of the rooms.” Courtesy Marty Andrade

For More Info:

The Daily Telegraph’s articles on Eric Schmidt

Google’s greatest innovation may be its management practice

Android OS is profitable, might generate $10 billion per year

Google CEO, Eric Schmidt: “We don’t have a 5 year plan.”

The New York Times: Eric E Schmidt

Google CEO, Eric Schmidt, will not talk about “Private conversations” with Apple about becoming CEO

Microsoft Googles Apple in 2011

Diagram showing overview of cloud computing in...

Image via Wikipedia

“It’s hard to beat a person who never gives up.”

Babe Ruth (1895 – 1948)

The quote above is apt when you are up against a person but what happens when you encounter organisations that are trying to outdo each other? 2010 was certainly interesting in that respect. Hunter Richard’s blog post on Microsoft (MS) is “All In” for the Cloud, but What About Dynamics? outlined Microsoft’s dilemma that is not limited to just MS Dynamics.

Microsoft is still trying its best to innovate as its key visionaries, such as Ray Ozzie (View Ray Ozzies’s – Dawn of a new day OR BBC’s summary) were falling by the wayside. At face value, it could be argued that MS is reinventing itself, as it has done so quite successfully in the past (WordPerfect vs. MS Word, Netscape vs. Explorer,……list continues),  but this time around, there is a caveat. Is MS actually listening to its own visionaries and customers?

MS knows that history is repeating itself once again as it has done so many times before and MS is trying its best to change and adapt, as it knows very well that if it doesn’t, it could wither away and die, just as it had slain Netscape and WordPerfect in the past. The secret to Apple’s and Google’s success is that they listen to us, the customer. They are finely attuned to what, we, the consumer want and need, just as my previous blog post Leveraging IT for competitive advantage, has alluded to. Secondly, this battle is not just about the hardware and software anymore, as all three companies go after our hard earned cash. Even Apple overtook MS, in terms of revenue this year.

Microsoft is a giant in the software world and one of the penalties it is paying for its enormous success is that:

1.        Its products are now so diverse that only IT experts can make any sense of them. Need convincing. Ask any non IT personnel to visit any Microsoft site and ask them to explain a particular Microsoft site’s products and what they can actually do for them.

2.        Sheer confusion. As a business owner, for my Microsoft IT system, where do I start? Microsoft Licensing and its payment model – Again, this is an open challenge to Microsoft. How many Microsoft employees can explain Microsoft licensing without referring to a price model manual? The correct answer should be at least half its workforce. Why? You cannot sell what you don’t understand (Microsoft have actually done remarkably well then!). Ah, would an employee be able to explain it all in a pub, though?

3. Microsoft’s entire business model is built on desktop/laptop client installation and as long as it has enough businesses that utilise that legacy because they have no other option, for the short term, it faces no financial problem. Office365 is a step in the right direction but unlike Google, MS products were never designed to ‘run in the cloud’ whereas as Rajen Sheth, Google’s senior product manager for Google Apps said, “It will be tough to build up the cloud expertise that’s been built into Google’s DNA since day one.”

So, where does that leave Google, Microsoft and Apple? They should all acknowledge their key strengths, concentrate and focus on those and licence each other’s products. That can be hard to acknowledge by ‘massive’ organisations such as these three but the reality is that sometimes other organisations just do it better than you can.

Let’s take a brief trip down memory lane. Novell was the King of network software, had the opportunity to licence its NDS to MS for its Active Directory, failed to strike an agreement and MS ended up killing its business because they could do it better. So, in hindsight, an effective licensing agreement by Novell would have been better. Then, we have Apple. MS Office is one of the best sold software for its desktop/laptop equivalent and Apple decided years ago that it would not concentrate its efforts on a ‘war’ to decide who could create a better office type software suite. Google became the king of search and MS decided to ‘take it on.’

I would argue that all of these companies need to innovate more. Apple and Google innovate, quite successfully. I would argue though that as innovation is stifled at MS, MS have not released a single innovative product in 201o. MS did finally catch up with Apple (iPhone) and Google (Android) with a WM7 marketplace though! We even saw new releases of old software, such as Windows Mobile 7 and for those who want to argue and labour the point, did anyone release anything groundbreaking as Apple’s iPhone equivalent in 2007 or the iPad this year?

Oh and let’s not forget, Office365 still has no marketplace equivalent!

For more:

What is Cloud Computing? Its Pros/Cons and making it work

Microsoft announces Office 365 beta: test new cloud-based Office one year before its launch

Office 365 Beta: a first look

Steve Ballmer speech at UW: “We’re all in” for cloud computing

Microsoft Straightens Out Cloud Strategy — Finally

The 7 sins of Windows Phone 7

Apple iOS vs. Google Android

Top Tech Company of 2010: Apple

Will Google Apps survive Office 365?

The road to Office 365: The future

Office365 vs Google Apps

A guide to Office 365 versions and pricing

Windows Marketplace

Larry Ellison’s (CEO Oracle) management style and CIOs

Used iphone under a palm tree where I met android and formed a symbian relationship with a blackberry

Bill Gates (Chairman Microsoft) management style and CIOs

Choosing technology over customers

Google Apps – The myth, hype and reality.

Cloud based ERP. Fact or fiction?

Weather bulletin – Google Cloud and icy Microsoft downpour

Steve Job’s (CEO Apple) management style and CIOs

Back to basics Enterprise Resource Planning

Search wars – Past, Present and future – Bing, Google or new entrant?

Leveraging IT for Competitive Advantage – Myth or Reality?

Microsoft and Apple Tablets, pens and swords

The wonderful world of FREE Windows 7 applications

Houston, Windows is counting down 10,9,8,7…

The future is bright but is it mobile?

Bill Gates (Chairman Microsoft) management style and CIOs

Bill Gates selling windows

Image by niallkennedy via Flickr

“There is no security in this life. There is only opportunity.”

Douglas MacArthur(1880 -1964) American General

Bill Gates (1955 – ) Microsoft Chairman and philanthropist

Today’s article is the fourth in a series of articles (1stSteve Jobs, 2nd Michael Dell, and 3rd was written on  Warren Buffet, analysing current and past leaders to ascertain how Chief Information Officer’s (CIOs) can learn better management by applying the management practices of leadership, practiced by these leaders.

Gates has led Microsoft from start-up to‘software giant’ with quite an unorthodox style of management. On Microsoft’s website, he measures Microsoft’s success as, “We’ve really achieved the ideal of what I wanted Microsoft to become.”

PS: CIO is a generic term and other analogous titles are Head of IT, IT Director, Director of IT etc.

The Management Style

What can CIOs learn from Gate’s management style? Let’s investigate while allowing you to decide.  (In no particular order and a few other sources utilised):

1. Create and nurture ‘the correct culture.’ – ‘John Battelle co-founded Wired Magazine. He says Microsoft was the pioneer of the new-agey workplace, making work as comfortable, inspiring and fun as possible so workers would spend lots of time there.

John Battelle: And as a matter of fact, at Wired we adopted that stuff. We had a chef and a masseuse, all sorts of services, because we wanted our employees to stick around. I believe Microsoft gets a lot of credit for that.

Bill Gates didn’t even finish college, but the office culture he created at Microsoft is now being taught at the country’s top business schools.’ – Courtesy of Marketplace

2. Develop a Clear Vision–and Stick to It. – From the beginning, he dreamed of developing Microsoft into a corporate giant. For CIOs this is one of the most important traits that MUST be part of the toolbox.

CIOs need to clearly identify to themselves and communicate to the environment that they work in ‘the vision’ that they have set out to achieve. They then need to have the confidence to deliver that vision.

3. Hire ‘Action’ oriented employees. – CIOs usually have exposure to many different environments and come across many employees. Some will be better than others, while some will be outstanding. Gates has always hired the smartest people who can ‘get the job done.’

Hire your friends and past colleagues, as they will have loyalty to you and you personally know whether they have what it takes to realise your ‘vision.’

4. Relax and feel at home – According to Matt Richey, ‘Microsoft has a simple way of maximizing its employees’ productivity: It allows each individual’s office to be as individualized as one desires.

That means making the office more like home. Everything from real offices (not cubicles) to windows in most offices, from free soft drinks to no dress code, from an open supply room to anything-goes work hours. Quite simply, these policies improve employee morale, and thus increase overall productivity.’

5. ‘Image’ is everything. – Gates has successfully changed his image over the years from a geek to corporate leader and philanthropist.

CIOs need to change their image from just being technology leader to leaders who understand business and can apply their strategic IT and business skills to the wider business.

6. Successful innovation and success in general may be built on failure: Yep, Gate’s has constantly had Microsoft innovating along. Currently though, as many large IT businesses employ smarter and smarter employees, time will judge who can innovate the most and bring to market technologies that have ‘stickiness.’

The question these companies have to ask themselves is that can employing ‘smarter’ employees stop the next Google , or Microsoft from raising its head?

For those who have been following my blog, I mentioned this ‘war’ state in Google Apps – The myth, hype and reality , Weather bulletin – Google Cloud and icy Microsoft downpour & Search wars – Past, Present and future – Bing, Google or new entrant?

Microsoft has proved that failure can lead to success and continues to innovate by investing in many technologies. Some will inevitably fail while others maybe huge successes. Many businesses lack of innovation is due to their fear of failures.

7. Be ‘shrewd’ and keep the team on its ‘toes.’ – Gate’s, is known for his sharp cross examination of employees who present new ideas, innovations etc.

He analyses information quite quickly and gets to the bottom of the matter at a rapid pace. Employees have criticised this approach and associated quick, sharp, snappy analysis that at times is uncomfortable (in employee’s views). These qualities of Gate’s have enabled Microsoft to dominate personal computers (PCs). CIOs need to understand employee perspectives and ‘effectively quiz’ their teams on solutions being proposed.

8. Ruthlessly protect your ‘budget.’ – According to Matt Richey, ‘Even with its billions upon billions in cash, Microsoft is as frugal as Ebenezer Scrooge. It’s a company that buys canned weenies for food, not shrimp. Until last year (1999), even Bill Gates and his second-in-command Steve Ballmer flew coach. (For scheduling reasons, the company purchased its first corporate jet.)

Bucking the trend of most large, wealthy corporations, Microsoft remains in start-up mode where tight budgets are the rule. When you sit back and think about it, this frugality is less surprising and even explain how a company can come to accumulate such great hoards of cash.’

9. ‘Stop’ the ‘mad bureaucracy’ – I have mentioned this before in a post (can’t think of which one though) and it gets reiterated again by Microsoft. As Matt said, ‘The plague of most big companies is bureaucracy and stupid rules. Thielen gives the example of an un-named high-tech company that sent a four-page memo to all of its employees on proper security badge procedure, including infinitesimal details on how and where to wear the badge.

To that, Thielen states, “Does Microsoft manage to avoid this type of inane garbage? By and large, yes.” Unlike most companies, Microsoft actually assumes its employees are smart. Rules at Microsoft are few and far between, and the ones that exist tend to make sense. Having only a few important, logical rules means that employees actually remember and follow them.

Some Sources of Information and further reading:

How to be the next Bill Gates

Former MS employee recalls Bill Gates’ management style

The 12 Simple Secrets of Microsoft Management

Fiedler Model and Level 4 leadership

Choosing technology over customers

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

Warren Buffet (1930 – ) World’s most successful investor

I recently received a blog post from Software Advice on – Why the Technology Matters – An Analysis of Consona’s Acquisition of Compiere. That blog post made me think about my recent posts over the last few months on Cloud Computing and Google Apps etc in May, June, my blog post last year on ERP and this year’s – Leveraging IT for Competitive Advantage – Myth or Reality? The ERP blog post covered the recent acquisitions that had happened within the competitive ERP arena and Leveraging IT for Competitive Advantage – Myth or Reality? attempted to address whether competitive advantage could be realised through effective use of IT.

Now, as we all know from the blog post, Warren Buffet’s (World’s most successful investor) management style and CIOs, the technology business is not considered a viable investment by him as he admits that he doesn’t understand technology and considers technology too volatile.  So, when Don Fornes wrote that he thought Consona had acquisitioned Compiere ‘because the Compiere product is built on a very modern technology stack and is designed to run in a cloud computing environment’ it made sense.

This was also confirmed by a quote by Consona’s CTO, Steve Bailey, ‘Compiere is the world’s leading open-source ERP solution and the products are brilliantly architected. They run on a fully open-source stack (e.g., Java, Linux, JBOSS, Postgres), utilize a browser-based AJAX UI based on the Google Web Toolkit, and are fully operational either on premise or on a utility cloud platform like Amazon…’

Don went on to say, ‘While Consona has acquired a number of software companies based on this model, that doesn’t seem to be the strategy behind the Compiere deal. Compiere brings only 130 customers to Consona and I doubt Compiere’s open-source business model was generating big profits. Instead of buying customers and profits, Consona seems to be thinking ahead about how they can lead the market in the next generation of technology. The acquisition is more about growing organically – selling more Compiere systems – than it is about harvesting customer support contracts.’

‘Why is this all relevant to software buyers? Because there is a big shift underway from client/server systems installed “on premise” to cloud-based or software-as-a-service systems that are hosted in a secure data center and accessed through a web browser. Moreover, the open source movement is producing underlying technology that is not only free, but increasingly really good stuff. Software vendors that don’t make the transition will wither on the vine.’

‘To highlight the significance of this model, consider that a bunch of brilliant Google engineers built some cutting edge user interface technology (Google Web Toolkit) and open sourced it. Compiere turned around and used it in their products. Google did a big part of Compiere’s engineering for free…and will continue to do so. Now that’s efficient development.’

‘Compare that to an application software company that has to pay ongoing royalties to an infrastructure software company for the privilege of developing on its outdated database or development tools. The smart engineers long since left both companies so they could work on cooler projects at more modern software companies. The mediocre engineers that remain are having a hard time developing new features on old code. Sales are declining and customers are defecting (albeit slowly because it’s hard to switch).’

‘You don’t want to be that customer that is trying to defect but fears the switching costs. You want to be the delighted customer that loves their software because it works today and will work tomorrow, regardless of what new requirements emerge.’

As we are constantly bombarded by marketers and pushed towards cloud computing models, please remember that (as Marcela Cueli said in his article),

‘For a start, cloud computing is not a technology but a model of provision and marketing IT services that meet certain characteristics. Cloud is all about computer services, not products:

* The infrastructure is shared. Multiple clients share a common technology platform and even a single application instance.

* The services are accessed on demand in units that vary by service. Units can be, for example, user, capacity, transaction or any combination thereof.

* Services are scalable. From the user’s point of view, services are flexible; there are no limits to growth.

* The pricing model is by consumption. Instead of paying the fixed costs of a service sized to handle peak usage, you pay a variable cost per unit consumption (users, transactions, capacity, etc.) that is measured in time periods that can vary, such as hour or month.

* Services can be accessed from anywhere in the world by multiple devices. The cloud model leads to basically two different kinds of clouds: private and public. The public clouds are those that offer IT services to any customer over the Internet. Private clouds offer IT services to a predefined group of customers, with access through Internet or private networks. You might have also heard about internal and external clouds. The former are a subgroup of the private clouds, and provide services within the same company or corporate group. The latter may be public or private and provide services to other companies.’

To conclude, this is exactly what I have been discussing in my blog posts over the last year or so. Don’s thoughts are increasingly reflective of the technology blogosphere as technology writers’ such as Don and I understand the repercussions of the effects of cloud computing on traditional client/server models and associated revenue streams, licensing etc.

There are many facets that I have covered over the last year or so that lead companies to be in this vulnerable position where they have to resort to acquisitions to remain contenders within their marketplace. My blog posts mentioned earlier have considered these, so apart from the above posts, I will leave you with some other posts that should help companies and their management become successful.

What is Cloud Computing? Its Pros/Cons and making it work

Lawmakers question the security of cloud computing

Can IT Management failure be caused by a deadly disease? Part I

Can IT Management failure be caused by a deadly disease? Part II

I listened, you spoke but did we communicate?

IT benchmarking

The CIOs agenda and memberships

Challenges facing CIOs at the UK’s leading companies

 

Cloud based ERP. Fact or fiction?

“Don’t do what you know. Do what you don’t know about what you know.”

Mile Davis (1926 -1991) American Trumpet Player, Bandleader and Composer

Following my post on 19th May, Cloud based ERP is fast establishing itself as an increasingly dominant force within the ERP arena. Ubiquitous Internet connectivity combined with access to more bandwidth at affordable prices, both by businesses and consumers have propelled cloud based solutions as being commercially viable. Cloud based ERP solutions are also challenging existing licensing models. The larger providers such as SAP and Oracle are struggling to compete with this new model and are looking at ways to combat this new threat to their established revenue stream. Newer established entrants within the mid tier market continue to embrace cloud computing and are increasingly vying for competitive advantage.

In my view, Google Apps will increasingly challenge established players providing enterprise systems, such as Microsoft. The likes of Google Apps will also challenge established ERP players as more offerings become available. For example, Netsuite will soon be available on Google Apps and My ERP seems like a credible solution for smaller businesses and is FREE for the first two users! One of my readers, Houston Neal, recently had a roundtable discussion on the state of the manufacturing ERP software industry, including solutions popular among small and medium enterprises that provides an interesting insight into many facets of ERP software.

Cloud based ERP providers available at the moment are: Acumatica, Agresso, CDC Software, Consona, Compiere, DataXstream and virtualised SAP, DSP managed services – advisors for Cloud based Oracle E -Business suiteDynacom, Epicor, Global Shop Solutions, IFS, Intaact, IQMS, Lawson, Microsoft, MyERP, Netsuite, Oracle Cloud Computing Centre, Openbravo, Plex systems, Sage, SAP Business by Design, Salesforce and Glovia Cloud Solution, Syspro

ComputerWeekly, recently ran an interesting and complete 4 part Buyer’s Guide to ERP software that discussed quite intensely both the traditional and new, cloud based ERP models. Following are excerpts that I have used from part 1, glued together to form the following and then I will list articles that provide further in depth analysis and reading, courtesy of ComputerWeekly and others:

In Part I, Cliff Saran wrote, ‘The idea behind enterprise resource planning (ERP) is to provide the business with a single product that provides software to support the main business functions in a company. The major products such as SAP and Oracle claim to encompass the best ways to run business processes. But since they cater for large complex businesses, such systems are often too sophisticated for smaller organisations that may not have the same requirements in terms of scale and complexity of business operations.

SAP and Oracle may be great for providing enterprises with industry-standard business processes, but standardisation erodes the unique selling point in smaller businesses. George Lawrie, principal analyst at Forrester Research says, “SMEs are worried by the high maintenance fees and complex implementations associated with major ERP software.”This is why a market has grown for ERP aimed at SMEs. “Mid-market ERP tends to offer vertical specialisation,” says Lawrie.

Suppliers such as Salesforce.com have made it possible to put customer relationship management (CRM) systems in the cloud, but core enterprise resource planning (ERP) has so far remained untouched. If IT departments can make considerable savings switching from in-house systems to cloud-based software-as-a-service (SaaS), why stop at CRM? Businesses should consider using the cloud for ERP.

Andrew Vize, who as propositions director runs Computacenter’s CIO panels, says, “The efficiency of services from Google and Amazon is superb. They offer the lowest power costs and are five to 10 times cheaper than traditional small datacentres.”

It makes sense for an IT director, but the major ERP suppliers have been reluctant to move to cloud computing. SAP has been touting its Business ByDesign SaaS suite for smaller companies.

Meanwhile, Oracle offers its middleware and database products on Amazon Elastic Compute Cloud (Amazon EC2), but does not recommend putting E-Business Suite ERP software in the cloud.

Oracle states in a blog post, “Since Amazon EC2 uses a virtualisation engine that is not supported by Oracle and has not been certified with E-Business Suite, this environment is not supported for production usage of E-Business Suite. Using Amazon EC2 for hosting E-Business Suite may be suitable for non-production instances, such as demonstrations, test environments and development environments.”

In fact, it is far from clear how the major ERP suppliers will charge for cloud-based ERP. The significant ongoing revenue they receive from annual software maintenance from on-premise applications makes it harder for established ERP companies to offer considerably cheaper software licensed on a monthly subscription basis.

However, smaller software companies are making cloud ERP float.

Cloud computing company NetSuite has unveiled workflow management software, SuiteFlow, which enables users of cloud computing business suites to automate and streamline complex business processes. NetSuite says SuiteFlow allows businesses to customise workflows to support the way they need to work.

Companies can use SuiteFlow to develop and deploy new business processes. NetSuite says it can be used to support processes such as contract renewal workflows with tasks, reminders and customer notifications, sales processes that include mandatory data entry, follow-up tasks and rep notifications, and customer support processes, including inactivity reminders, escalations and service level agreement (SLA) enforcement.

Lawson Software, which has mainly focused on traditional ERP, has moved into the cloud by offering its core Enterprise Management Systems and Talent Management suite on Amazon EC2 infrastructure. The products will be included in the Lawson External Cloud Services offering, which is part of the company’s Cloud Services portfolio.

Lawson’s cloud ERP service is targeted at mid-sized companies and organisations looking for a more affordable, flexible and agile deployment option for full-function enterprise software.

“We are making it easier for our customers to license, use, keep current and even pay for Lawson full-function enterprise software. This should be great news for CFOs and CIOs who worry about lengthy and complex on-premise installations, the cost and inefficiency of their datacentres, the best way to allocate IT staff, and the complexity and difficulty of maintaining software versions and upgrades,” says Jeff Comport, senior vice-president of product management at Lawson Software.

Similarly, open source ERP provider Compiere, which is used by companies such as Specsavers, has developed a version of its product that works on Amazon Web Services in the cloud.

Some experts believe it is unlikely ERP will move wholesale into the cloud. The major ERP systems tend to be architected as large homogenous IT systems, which may not be such a good fit for delivery via the internet cloud. Licensing major ERP systems to deploy via the cloud is still immature. Instead, niche software companies are likely to build cloud-based services that do many of the functions of ERP.

“We will have much more specialist systems that do a slice of ERP,” predicts David Bradshaw, IDC research manager for software and services in Europe.’

Cloud-based ERP could be the way forward for small- and mid-sized companies. Both Oracle and SAP offer products aimed at smaller businesses such as JD Edwards from Oracle and SAP Business ByDesign. These may have a better fit with certain organisations, But implementing on-premise traditional mid-market ERP systems will be the most likely approach businesses take until cloud computing has matured.

Gartner sees an increasing availability of software-as-a-service (SaaS) ERP systems, and, unlike in large enterprises, where SaaS ERP use is limited, SaaS ERP is playing an increasingly important role in both back- and front-office applications for mid-market companies. Cost reductions in implementation and operation are one of the important drivers for SaaS ERP, and SaaS offerings avoid the need for upfront capital expenditures because they can be funded as an operational expense. However, when analysing the total cost of ownership of SaaS ERP over five years, Gartner finds that SaaS is not necessarily less expensive than on-premises ERP.

NetSuite is the largest example for a SaaS-based ERP suite. It offers a broad range of application modules, including financials and accounting, purchasing, payroll, order management, inventory control, and employee management, as well as built-in integration with its CRM and e-commerce capabilities on the same platform. Gartner has spoken to customers that expressed a high level of satisfaction with NetSuite’s offerings.

Other notable SaaS ERP players are Plex Online (previously Plexus Online) and Glovia. SAP has also announced an on-demand ERP solution called SAP Business ByDesign.

Open source has been used extensively in infrastructure components, but it has a limited impact on ERP at this point. In the past two years, however, some new open-source software ERP suppliers have emerged with a focus on leveraging open source software to reduce the total cost of ownership of business applications, and to enable customisations that would be difficult to achieve without access to source code. Although we have doubts as to whether open source software business models actually confer these advantages on open source software ERP, these early stage offerings are nonetheless promising and should be evaluated. Examples for open source software ERP suites include Compiere and Openbravo.

Although increasing in importance, none of the SaaS or open source ERP solutions met the inclusion criteria for this Magic Quadrant, because of their number of sales or product focus. Gartner’s ERP Magic Quadrant, (2010 Quadrant) criteria do not explicitly exclude SaaS or open source packages. The analyst firm is actively tracking their progress and expects their inclusion in future versions of its Magic Quadrant.’

For more:

Detailed research lists from the largest USA ERP installations

Search Manufacturing ERP

Part I Buyers Guide to ERP: Alternatives to SAP and Oracle ERP suites

Part II – Buyers Guide to ERP: the mid-tier market

Part III – Buyers Guide to ERP: Agile ERP

Part IV – A guide to ERP for small and large businesses

Putting ERP in the Cloud

How to achieve ERP success: part 1 – the A-Team

How to achieve ERP success: part 2 – the software

ERP software suppliers – Essential guide

Buyers Guide to ERP: Midlands Co-op case study

Make your ERP rollout succeed

Lawson’s New Amazon Cloud-Based ERP Supports Customization

Epicor Takes the Wraps off Cloud-based ERP Solution

Amazon.com Offers Compiere Enterprise ERP via the Cloud

ERP and Cloud Computing trends

Lawson Software Introduced Cloud-Based Services

Weather bulletin – Google Cloud and icy Microsoft downpour

Updates 13.12.11

Why not read, something different – Influential Slaves, Bigots and Size Zeros

‘It is not the strongest of the species that survives, nor the most intelligent, but the one that is most responsive to change.’

Charles Darwin

I looked at the quote above from my post a few weeks ago and was quite surprised as it quite aptly grasped my thoughts for this post (so I’ll leave it there for this week as well). Last year, I wrote a post, What is Cloud Computing? Its Pros/Cons and making it work. Before, I start, I want to clarify that the Microsoft platform (includes all its business software) is, in my eyes, legendary. The world would be completely different, if it wasn’t for Microsoft’s computing vision. I trained on Microsoft, (MS-DOS days) as Novell started to falter and Microsoft continued with its visionary flare. Keep reading and all will be revealed!

Nine months is a long time within the IT world and for the past few weeks I have been researching Cloud Computing again. Hang on, now, let me finish. This time around, I have asked myself three questions:

  1. Can I create an IT strategy, infrastructure and business systems for a small business on Google Apps?
  2. Is Microsoft future proofed with Web Apps?
  3. Cloud based ERP. Fact or fiction? (I will post this separately soon)

This week, I will attempt to answer the first two questions and follow up with an answer to the third question soon. Now, don’t forget, there is no right or wrong answer to this question, just opinions (Pre-requisite: Visioning hat required). To make this a great debate, I welcome opinions from both camps (This is a test in social media monitoring as well; let’s see if Microsoft and Google are monitoring the web). It goes without saying that I value readers’ opinions, so feel free to have a say. So…

  1. Can I create an IT strategy, infrastructure and business systems for a small business on Google Apps (Announced 9/3/10)?

‘Seek and ye shall find.’ So, I did. The answer (in my opinion) is a resounding YES. Why, well, because, the cloud allows a business to do the following:

  • Fast ubiquitous accessibility 24/7, 365 days a year (Increasingly easily available Wifi and Internet connectivity).
  • Enables quicker, cost effective IT start-up for new businesses.
  • Faster product/application development.
  • Not machine dependant (Requires only a browser).
  • Accessible on entry level machines.
  • Cost savings through lower machine, maintenance and software costs.
  • Scalability can be provided very quickly.
  • Opex vs Capex costs.
  • Less environmental impact through virtualisation of hardware/software and other areas.

AND, Google Apps allows:

  • Entire Google Apps infrastructure built towards a vision of cloud computing.
  • Access to the Premier edition that contains a comprehensive suite of apps.
  • Access to a growing number of applications including ERP, Social media etc from the Apps store, many are free for 1-3 users .
  • A flat fee licensing system (£33 per user per annum) vs Microsoft licensing that even Microsoft don’t understand!
  • Collaborative features are enabled from the start allowing, for example, multiple users to edit documents simultaneously.

In effect, Google have created the perfect platform for a small business. It provides the infrastructure and a starter IT system. Once Google Apps are combined with the available ERP and social media solution, the IT system is raring to go.

Obviously, the larger an organisation and the larger the investment in Microsoft and/or other IT systems, the harder it will find to move into the cloud. As I said, in last year’s post, there are other considerations that need to be considered as well. Google, meanwhile continues to blow its trumpet for acquiring 2 million users and counts the USA city of Los Angeles move to Google as a major feather in its cap!

2. Is Microsoft future proofed with Web Apps?

The answer (in my opinion) is NO. Why, for a number of reasons.

According to CIO.com, ‘On the Microsoft Office side, price for the full suite range from $150 to $680 depending which of its many versions you are looking for. With Office 2010, Microsoft will be offering Office Web Apps, free but not fully-featured online versions of Word, Excel, PowerPoint and OneNote.

There will be three versions of Web Apps: One for consumers supported by ads; a hosted version for businesses that pay for hosted accounts on Microsoft Online Services, which is powered by SharePoint; and a corporate in-house version for enterprises with volume licenses for Microsoft Office and a SharePoint server.

Office 2010 will launch for businesses on May 12, but Office Web Apps are not scheduled to launch until mid-June.

Microsoft also has BPOS (business productivity online suite) – now superceded by Office365, in its arsenal, a part of Microsoft Online services that includes online versions of SharePoint, Exchange, Office Communications Server and Live Meeting for $10 per user per month for all four apps.

A version for OEMs will allow Office 2010 starter edition (Word and Excel 2010 only) to be shipped with the computer.’

REASON 1

Microsoft is a giant in the software world and one of the penalties it is paying for its enormous success is that:

  1. Its products are now so diverse that only IT experts can make any sense of them. Need convincing. Ask any non IT personnel to visit any Microsoft site and ask them to explain a particular Microsoft site’s products and what they can actually do for them.
  2. Sheer confusion. As a business owner, for my Microsoft IT system, where do I start? Do I need Office 2010? (What does it have that will improve my productivity?) What version do I use? (Client installation? Which one of the three Office Web Apps, do I need? What the hell is the BPOS (business productivity online suite) – now superceded by Office365?)
  3. Microsoft Licensing and its payment model – Again, this is an open challenge to Microsoft. How many Microsoft employees can explain Microsoft licensing without referring to a price model manual? The correct answer should be at least half its workforce. Why? You cannot sell what you don’t understand (Microsoft have actually done remarkably well then!). Ah, would an employee be able to explain it all in a pub, though?
  4. Microsoft’s entire business model is built on desktop/laptop client installation and as long as it has enough businesses that utilise that legacy because they have no other option, for the short term, it faces no financial problem. In the long term though, I believe businesses will start to abandon ship. Afterall, Google and others will start to offer simple (in licensing terms, products’, versions, etc), cost effective, non business owned infrastructure. Look at what happened to WordPerfect, Novell and many others.

Let’s continue with CIO.com, ‘Google itself concedes that any overnight success in the enterprise is unrealistic, yet remains fully committed to the enterprise, citing rapid growth in Google Apps’ short three-year life span.

“Google Apps have only been in the market since 2007 and we’ve gone from zero to two million business customers,” says Rajen Sheth, Google’s senior product manager for Google Apps. “There’s so much potential here and we’re in it for the long haul.”

Where Microsoft is trying to migrate its products into a cloud environment, Google is fundamentally a cloud company, says Sheth, and has gone to great pains to build extremely large data centers designed specifically for nimble Web-based applications.

“It will be tough to build up the cloud expertise that’s been built into Google’s DNA since day one,” Sheth says.’

REASON 2

That, as they say, is the fundamental problem. Google is fundamentally a cloud company as Sheth said.  Microsoft never was and never will be. It’s just not in its ‘DNA.’

FINAL THOUGHTS

So, Microsoft should be very worried. Microsoft should not get carried away with analyst reports that paint a rosy future but start to listen to customers, such as the city of LA. The paradigm is shifting and it’s shifting fast towards the cloud. After all, the other promise of the likes of Google is not just the simplicity of the entire model but the entire spectrum of cost savings!

It’s the dawn of a new era, where even financial wizardry by Gordon Brown could not save him. Globally, change is happening. The question to ask though within IT is, ‘Who will win this war, Google or Microsoft?’ Or, is there room for a coalition?

WANT TO READ MORE?

Search wars – Past, Present and future – Bing, Google or new entrant?

Will Office 2010 Shred Google Docs?

Microsoft Office vs. Google Apps: The Business Brawl

Google Apps vs. Office Web Apps: Can Microsoft compete in the cloud?

Microsoft Web Apps Will Force Google’s Hand

Free Microsoft Office – with Ads

Microsoft Office 2010: 3 Reasons to Switch

Microsoft vs. Google: Tech Giants’ Turf War Heats Up

Google and Salesforce: composite applications for better enterprise lift

Microsoft counterattacks Google for Apps sales pitch

Office 2010 goes into the cloud

Top 10 Google App Add-Ons for Business Users

Design Your Business Model With Google Docs!