I have not posted here for a while. Simply put, after Kanosis launched on May 1st, 2006 and obviously was not delivering what they promised, I decided to hold off and see if the ship would right itself. It did not, things steadily spun out of control with a management which seemed occupied mainly with blaming each other for the failures of the company, and could not re-group after that disastrous launch. Granted, some mistakes were made which were not easy to overcome, most notably with the third-party payment system, to be provided by Uniclear, which should never have been used in the first place if anyone had bothered to do due diligence on that company, for even by casual observation it was clear they did not have the wherewithal to perform at the levels Kanosis would have required.
And so it goes. Axiasoft appears to be working on other releases of the technology, which I still think holds promise, though I would assume that Kanosis as a business entity is irreparably compromised. Timing is everything, and I still think that if the technology and the marketing could have synched up a bit better, this company could have succeeded spectacularly and made history. Right now it would probably take a lot of money and an extremely competent management to make it happen, but in the meantime the field might have become too crowded.
Some cowardly anonymous recently posted the September 22 announcement of insolvency by Kanosis management as a response to one of my posts here. The text of that document reflects some of the facts, but also the underlying management problem. The "majority ownership" of the company even in a public document takes no responsibility for the fact that they were not apparently in control of the Kanosis finances during the launch period, and they adduce that claim in their defense, instead of taking responsibility for it. All of this leaves little hope that in anything close to its current form the company could ever succeed, never mind how good the software is.
Besides the bitter disappointment, the Kanosis experience however has inspired me to look further into this area, which I think is the absolute key to the future. Not only is it thin clients etc., but it's secure personal computing, and never again personal computers. A cell phone maybe, but not a computer. Use those boxes for doorstops, unless you absolutely must have one. Windows Vista in my modest view is an exercise in pointlessness. Nobody needs it. The world has moved on, and it ain't a Microsoft Windows world any longer, Windows mobile on phones will die out sooner rather than later.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Monday, October 30, 2006
Tuesday, June 13, 2006
BW on Web 2.0
BusinessWeek has provided some intersting comments on Web 2.0 phenomena. A little bit on the light side perhaps, but after all they are the People Magazine of Corporate America. Their role is to spot trends, and report on them, not to analyze them, or reach any final conclusions.
There are a zillion phenomena that would be part of Web 2.0, and predictions of success and failure are hard. When even the business model of Amazon.com is still in question, and nobody really knows why Skype was worth billions. However there can be no question that something is afoot.
That the corporate world doesn't get it is equally sure. Just like they didn't get the PC revolution, or the Web 1.0, certainly not in the beginning, but even now it remains shaky - "The Cluetrain Manifesto" covered a lot of that. However, people are too cavalier in thinking that the PC revolution was a success of sorts, when it really has brought about a set of new problems which are barely beginning to be dealt with, witness the explosive rise of on-line fraud, and data theft from corporations as well as individuals. So if the success of the PC revolution was ease of use, then we are living the failures of it in the form of explosive new risks. We're just starting to realize the overwhelming problems which have been created by the PC revolution, and its presumed "ease of use," which is a powerful tool in the hands of the wrong people as well as ourselves. And we don't even know for sure who the good people are...
The Internet, and what we may now regard as Web 1.0, extended functionality and ease of use, but exploded vulnerabilities and insecurity in a way that is increasingly overwhelming everything else. So we are now living at the time when some of the world is still discovering the potential of email, while at the other end of the spectrum people are already giving up on email because of spam and viruses on one hand, and because it is not in real time on the other. Web 2.0 is about doing things in real time.
The biggest single problem then is that the potential speed up also will exponentially magnify the potential for abuse. With email you have time to think about a 419 scam, and perhaps have second thoughts but on chat, you are far more vulnerable. Urgency, urgency.
So security and privacy are overriding issues on the Web, and if those are not adequately addressed, the backlash will be considerable until it does, for people will boycott the medium if they're beset by problems every minute. I unsubscribed from some lists recently, because of virus problems. It's not a reasonable thing any longer.
When we are within corporate walls we have a modicum of assurance that other employees are who they seem to be, but on the Internet we have no such assurance. False identities are perhaps a bit harder on LinkedIn, but not impossible even then. On the wide open net, all we have a lot of the time is an email address.
The underlying problem in networked computing is that "My Computer" is a meaningless term, if I have no way to assert that ownership, and the rights that it entails. To all intents and purposes, "my house" and "my appartment" are relatively clear concepts, and I can have reasonable security to restrict access or at least to know when someone trespasses. Not so with a computer, yet given our information dependence, a computer becomes the central repository of information in our lives, but we routinely have far less ability to restrict access to it, and in the age of networked computing ownership of the physical device is meaningless from the moment we connect it to the Internet.
Mathematically speaking, logically speaking "personal computer," and "personal computing," are meaningless terms if the user, the "person" is an ambiguous concept and today it is. I have more security on my Windows PC than many if not most, but it's still a sieve. I have individual log-ons for other members of the family who occasionally use the machine, and restrict all of their rights on my PC. Yet when I have a problem, and bring it into the store, the technician just casually reset my administrator password in order to do his job. To call that security is a joke. And on all current generation consumer devices this is the prevalent situation. Web 2.0, with a technical foundation in IPv6 offers the opportunity for much stronger virtual networking than has been the case heretofore, and this will make the lack of meaningful access security from edge devices even more of a joke.
Therefore the central value of Web 2.0 is indeed shaping up around the idea of instant collaboration, in real-time, compared to which email is a silly store and forward medium, not much better than snail mail, and equally overwhelmed by an avalanche of spam anyway, just like your physical mailbox is by junk mail. So we move on to chat, filesharing, and other forms of collaboration, between known users, defined either by corporate perimeters, or by memberhsip in a service. But today's common form of access, by username and password, offers little or no protection, no definition of who that user is, even if the service otherwise provides technically competent "security." It is time people should go to jail for marketing anything as "secure" when any fool knows that a username/password can be cracked in 25 seconds or less. It's a joke far worse than "organic produce," and for that at least there is some modicum of consumer protection now. There used to be such a thing as truth in advertising.
THE KILLER applications of web 2.0 will be the ones that satisfactorily solves the twin problems of security, including authentication, and privacy. And also of meaningful ownership of data, which means the ability to exert all rights of an owner, such as back-ups and copies, which I can store wherever I deam them safe, otherwise people have the single provider problem, which is a security threat in and of itself.
The biggest enemies of such solutions are the users themselves, and the legal systems and government policies in many countries. Governments have a habit of doing either too much or too little. Proper authentication, and security automatically provide the ability to do secure transactions over the Web, money transfers, digital signatures: business without borders. But the risks have to be statistically insignificant, so they become properly insurable, otherwise the system will fail. Instant communication, collaboration, filesharing, and social networking and other such features will all fail if they continue to be a constant source of abuse.
The prize will go to those providers who can succeed by proving that people will pay for security. And they will, regardless of what the naysayers think, for if it enables the functionalities described in the previous paragraph, without undue risk, only a fool would not use such services.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
There are a zillion phenomena that would be part of Web 2.0, and predictions of success and failure are hard. When even the business model of Amazon.com is still in question, and nobody really knows why Skype was worth billions. However there can be no question that something is afoot.
That the corporate world doesn't get it is equally sure. Just like they didn't get the PC revolution, or the Web 1.0, certainly not in the beginning, but even now it remains shaky - "The Cluetrain Manifesto" covered a lot of that. However, people are too cavalier in thinking that the PC revolution was a success of sorts, when it really has brought about a set of new problems which are barely beginning to be dealt with, witness the explosive rise of on-line fraud, and data theft from corporations as well as individuals. So if the success of the PC revolution was ease of use, then we are living the failures of it in the form of explosive new risks. We're just starting to realize the overwhelming problems which have been created by the PC revolution, and its presumed "ease of use," which is a powerful tool in the hands of the wrong people as well as ourselves. And we don't even know for sure who the good people are...
The Internet, and what we may now regard as Web 1.0, extended functionality and ease of use, but exploded vulnerabilities and insecurity in a way that is increasingly overwhelming everything else. So we are now living at the time when some of the world is still discovering the potential of email, while at the other end of the spectrum people are already giving up on email because of spam and viruses on one hand, and because it is not in real time on the other. Web 2.0 is about doing things in real time.
The biggest single problem then is that the potential speed up also will exponentially magnify the potential for abuse. With email you have time to think about a 419 scam, and perhaps have second thoughts but on chat, you are far more vulnerable. Urgency, urgency.
So security and privacy are overriding issues on the Web, and if those are not adequately addressed, the backlash will be considerable until it does, for people will boycott the medium if they're beset by problems every minute. I unsubscribed from some lists recently, because of virus problems. It's not a reasonable thing any longer.
When we are within corporate walls we have a modicum of assurance that other employees are who they seem to be, but on the Internet we have no such assurance. False identities are perhaps a bit harder on LinkedIn, but not impossible even then. On the wide open net, all we have a lot of the time is an email address.
The underlying problem in networked computing is that "My Computer" is a meaningless term, if I have no way to assert that ownership, and the rights that it entails. To all intents and purposes, "my house" and "my appartment" are relatively clear concepts, and I can have reasonable security to restrict access or at least to know when someone trespasses. Not so with a computer, yet given our information dependence, a computer becomes the central repository of information in our lives, but we routinely have far less ability to restrict access to it, and in the age of networked computing ownership of the physical device is meaningless from the moment we connect it to the Internet.
Mathematically speaking, logically speaking "personal computer," and "personal computing," are meaningless terms if the user, the "person" is an ambiguous concept and today it is. I have more security on my Windows PC than many if not most, but it's still a sieve. I have individual log-ons for other members of the family who occasionally use the machine, and restrict all of their rights on my PC. Yet when I have a problem, and bring it into the store, the technician just casually reset my administrator password in order to do his job. To call that security is a joke. And on all current generation consumer devices this is the prevalent situation. Web 2.0, with a technical foundation in IPv6 offers the opportunity for much stronger virtual networking than has been the case heretofore, and this will make the lack of meaningful access security from edge devices even more of a joke.
Therefore the central value of Web 2.0 is indeed shaping up around the idea of instant collaboration, in real-time, compared to which email is a silly store and forward medium, not much better than snail mail, and equally overwhelmed by an avalanche of spam anyway, just like your physical mailbox is by junk mail. So we move on to chat, filesharing, and other forms of collaboration, between known users, defined either by corporate perimeters, or by memberhsip in a service. But today's common form of access, by username and password, offers little or no protection, no definition of who that user is, even if the service otherwise provides technically competent "security." It is time people should go to jail for marketing anything as "secure" when any fool knows that a username/password can be cracked in 25 seconds or less. It's a joke far worse than "organic produce," and for that at least there is some modicum of consumer protection now. There used to be such a thing as truth in advertising.
THE KILLER applications of web 2.0 will be the ones that satisfactorily solves the twin problems of security, including authentication, and privacy. And also of meaningful ownership of data, which means the ability to exert all rights of an owner, such as back-ups and copies, which I can store wherever I deam them safe, otherwise people have the single provider problem, which is a security threat in and of itself.
The biggest enemies of such solutions are the users themselves, and the legal systems and government policies in many countries. Governments have a habit of doing either too much or too little. Proper authentication, and security automatically provide the ability to do secure transactions over the Web, money transfers, digital signatures: business without borders. But the risks have to be statistically insignificant, so they become properly insurable, otherwise the system will fail. Instant communication, collaboration, filesharing, and social networking and other such features will all fail if they continue to be a constant source of abuse.
The prize will go to those providers who can succeed by proving that people will pay for security. And they will, regardless of what the naysayers think, for if it enables the functionalities described in the previous paragraph, without undue risk, only a fool would not use such services.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Saturday, April 29, 2006
MSWin Integration: Scotch Tape and Bailing Wire
Good programming must rest on a rigorous foundation, or, as my mentor Edsger Dijkstra used to point out, it is a branch of applied mathematics, and anyone who forgets that, risks irrelevance. However good programming is also a craft. And sometimes in the evolution of design we become the victims of a paradigm, which needs to be broken before progress can happen.
Under the link of the title is an article from one of my favorite columnists, John C. Dvorak, on the death of Internet Explorer, titled "The Great Microsoft Blunder." I always enjoy his columns, not because I always agree, but because he has a strong opinion and is provocative. This time I also agree with him. Internet explorer is a dead duck, and the only place I used it is if I absolutely must download something from Microsoft.com, which tends to misbehave with alternative browsers, on purpose. Other websites that are not browser-friendly I simply ignore any longer, for the independent browsers are winning, and within six months those sites will be forgotten if they don't conform.
One of the mysteries around Internet Explorer is the question of why Microsoft would have made such a fuss over it, and have put themselves in a massive state of corporate fear over the appearance of Netscape, and successfully killed it off in the market place, only to forget about the whole opportunity after they killed their prey? This is a classic mistake in business, if you focus on beating your competitor, you forget about delivering service to your customer, and thereby you hasten your own demise, all the while thinking that you are perhaps succeeding in killing the competition. Opera, Firefox and many others have demonstrated superior browsing for years now, and are making steady inroads as people grow tired of IE and its problems. Meanwhile Microsoft is grudgingly fixing security problems but failing to deliver functionality. And Dvorak is right, the defense of coupling IE to Windows, with the idea of protecting Windows, is what helped kill it as a platform. That may not be evident to consumers yet, but it is evident on the margin of the technology world, in those places where fast growth does happen, and where economists know you need to look to see what is really going on. Microsoft's biggest problem right now is that it's making money hand over fist, and therefore is in a delusion of being successful. The stock market is starting to have second thoughts, though. Corporately it is squandering its resources on numerous rear guard actions to defend what it has, rather than to build value for its customers. And that's deadly.
Of course this little reflection only serves as an intro to my favorite topic of late, Kanosis and the COIL(r) operating system. By way of an introduction let me share an experience. I talked to an old friend about Kanosis, and he told me that he and his partners had just had a meeting and were bemoaning the fact that they all hated ACT! but had been unable to find an alternative. I started to laugh, for the first victim on my desktop after I decided to move to Kanosis, will be ACT! That is already a given, though I'm taking my time getting there. My friend is presently evaluating Kanosis, but I don't know today if the consumer version will be viable in his business, though if it is, his partners will soon start using it also.
ACT! is a program I have used since its inception, and it has struggled to provide meaningful integration in the Windows environment, and has consistently failed to deliver. This is not per sé their fault, within the given paradigm they pursued a strategy that seemed reasonable, but the reality is that in the Windows environment integration is done with Scotch Tape and bailing wire, and is a very delicate affair, prone to constant breakdowns, something which my experience with ACT! constantly demonstrates, and in recent years, the more features they add, the more I don't use. In fairness I will not totally abandon ACT!, because for some telemarketing work it can be useful, because it allows me to keep a database separate from my own data, but for my own work ACT! will not be seen any longer, and all its wonderful "integration" features are therefore useless to me.
What I'm finding sofar in Kanosis -- and I'll write more on it after the launch on May 1st -- is an integration of a number of functionalities in a way that promises huge leaps in productivity both for myself by integrating my own desktop, and for any collaboration, as I'm presently experiencing in my collaboration with one of my associates in Kanosis, as we are starting to use the Kanosis interface in our marketing work for Kanosis. The convenience of drag and drop functionality in collaboration with others, for file-sharing and soon for payments etc. is not to be missed.
Another way of looking tat this issue is that Microsoft's ace in the hole is always unnecessary associations which compromise elegant architecture, but which benefit their marketing. An example is the needless "personal" in computer, and the compromise of one's data and information by that association. Presently in the Internet age, a service like Kanosis offers to separate the personal from the computer, and provide professional management of at least some critical set of your data, with mirroring and backup, and thus much reducing the risk of data loss or compromise. If you switch to using Kanosis, you will see yourself increasingly becoming indifferent to the hardware you're running on, and you're then free to pick the hardware that's best suited to other tasks you wish to perform, be it Apple, Wintel, Lintel, a Sun workstation, a Wyse workstation, or Linux on PPC, any of them will do, as long as you have an internet connection a browser, and Java.
Stephen van Zutphen has expressed publicly that his vision was that of a "personal operating system" as opposed to a computer operating system, and based on the previews sofar of the "beta version" of COIL/Kanosis, he is well on his way to delivering on that promise, and the release of the final version on May 1st should fill in most of the remaining blanks. The result seems very important to me, also in the context of the discussion John C. Dvorak raised. At the launch Kanosis will offer an integration of upto twelve applications into one interface, and thereby offers the opportunity of drastically simplifying anyone's desktop. And, in the case of a user like myself, who works at times with Windows, or with Mac or with Linux, this Kanosis interface is the great equalizer, to make me platform independent because it provides a core of applications, so that without any further worries about integration problems, I can use Mac for what it does best, and Linux for what it does best, and Windows... well really only because other people do, and my business requires it for that reason. In other words, the corporate world moves slower than I do, but they'll catch up eventually. And that is where I've been headed for the last ten years, ever since I set up my first dual-boot Linux machine, when the first kernel was going around.
It is very funny that the Kanosis phenomenon should hit the market now, just when Apple has made itself furthermore technologically irrelevant by switching to Intel. I have a publishing business, for which I was planning to switch to Apple, and Kanosis provides me with the last missing link to make such a mixed environment feasible for a small business without huge integration costs and diseconomies of scale. I may end up still acquiring one of the last PowerMacs G5 with the last dual-core Power processors, but meanwhile DTP on Linux is far enough along, that in two years I'll probably be running my publishing work on a PPC- or AMD64-based Linux box, or on a Sun workstation, and most likely not on a Mac. In other words, whatever else Kanosis may be, to me just now it has removed the last remaining inefficiencies and worries of integration of Mac, Linux, and MSWin in a small business setting. And therein lies the rub.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Under the link of the title is an article from one of my favorite columnists, John C. Dvorak, on the death of Internet Explorer, titled "The Great Microsoft Blunder." I always enjoy his columns, not because I always agree, but because he has a strong opinion and is provocative. This time I also agree with him. Internet explorer is a dead duck, and the only place I used it is if I absolutely must download something from Microsoft.com, which tends to misbehave with alternative browsers, on purpose. Other websites that are not browser-friendly I simply ignore any longer, for the independent browsers are winning, and within six months those sites will be forgotten if they don't conform.
One of the mysteries around Internet Explorer is the question of why Microsoft would have made such a fuss over it, and have put themselves in a massive state of corporate fear over the appearance of Netscape, and successfully killed it off in the market place, only to forget about the whole opportunity after they killed their prey? This is a classic mistake in business, if you focus on beating your competitor, you forget about delivering service to your customer, and thereby you hasten your own demise, all the while thinking that you are perhaps succeeding in killing the competition. Opera, Firefox and many others have demonstrated superior browsing for years now, and are making steady inroads as people grow tired of IE and its problems. Meanwhile Microsoft is grudgingly fixing security problems but failing to deliver functionality. And Dvorak is right, the defense of coupling IE to Windows, with the idea of protecting Windows, is what helped kill it as a platform. That may not be evident to consumers yet, but it is evident on the margin of the technology world, in those places where fast growth does happen, and where economists know you need to look to see what is really going on. Microsoft's biggest problem right now is that it's making money hand over fist, and therefore is in a delusion of being successful. The stock market is starting to have second thoughts, though. Corporately it is squandering its resources on numerous rear guard actions to defend what it has, rather than to build value for its customers. And that's deadly.
Of course this little reflection only serves as an intro to my favorite topic of late, Kanosis and the COIL(r) operating system. By way of an introduction let me share an experience. I talked to an old friend about Kanosis, and he told me that he and his partners had just had a meeting and were bemoaning the fact that they all hated ACT! but had been unable to find an alternative. I started to laugh, for the first victim on my desktop after I decided to move to Kanosis, will be ACT! That is already a given, though I'm taking my time getting there. My friend is presently evaluating Kanosis, but I don't know today if the consumer version will be viable in his business, though if it is, his partners will soon start using it also.
ACT! is a program I have used since its inception, and it has struggled to provide meaningful integration in the Windows environment, and has consistently failed to deliver. This is not per sé their fault, within the given paradigm they pursued a strategy that seemed reasonable, but the reality is that in the Windows environment integration is done with Scotch Tape and bailing wire, and is a very delicate affair, prone to constant breakdowns, something which my experience with ACT! constantly demonstrates, and in recent years, the more features they add, the more I don't use. In fairness I will not totally abandon ACT!, because for some telemarketing work it can be useful, because it allows me to keep a database separate from my own data, but for my own work ACT! will not be seen any longer, and all its wonderful "integration" features are therefore useless to me.
What I'm finding sofar in Kanosis -- and I'll write more on it after the launch on May 1st -- is an integration of a number of functionalities in a way that promises huge leaps in productivity both for myself by integrating my own desktop, and for any collaboration, as I'm presently experiencing in my collaboration with one of my associates in Kanosis, as we are starting to use the Kanosis interface in our marketing work for Kanosis. The convenience of drag and drop functionality in collaboration with others, for file-sharing and soon for payments etc. is not to be missed.
Another way of looking tat this issue is that Microsoft's ace in the hole is always unnecessary associations which compromise elegant architecture, but which benefit their marketing. An example is the needless "personal" in computer, and the compromise of one's data and information by that association. Presently in the Internet age, a service like Kanosis offers to separate the personal from the computer, and provide professional management of at least some critical set of your data, with mirroring and backup, and thus much reducing the risk of data loss or compromise. If you switch to using Kanosis, you will see yourself increasingly becoming indifferent to the hardware you're running on, and you're then free to pick the hardware that's best suited to other tasks you wish to perform, be it Apple, Wintel, Lintel, a Sun workstation, a Wyse workstation, or Linux on PPC, any of them will do, as long as you have an internet connection a browser, and Java.
Stephen van Zutphen has expressed publicly that his vision was that of a "personal operating system" as opposed to a computer operating system, and based on the previews sofar of the "beta version" of COIL/Kanosis, he is well on his way to delivering on that promise, and the release of the final version on May 1st should fill in most of the remaining blanks. The result seems very important to me, also in the context of the discussion John C. Dvorak raised. At the launch Kanosis will offer an integration of upto twelve applications into one interface, and thereby offers the opportunity of drastically simplifying anyone's desktop. And, in the case of a user like myself, who works at times with Windows, or with Mac or with Linux, this Kanosis interface is the great equalizer, to make me platform independent because it provides a core of applications, so that without any further worries about integration problems, I can use Mac for what it does best, and Linux for what it does best, and Windows... well really only because other people do, and my business requires it for that reason. In other words, the corporate world moves slower than I do, but they'll catch up eventually. And that is where I've been headed for the last ten years, ever since I set up my first dual-boot Linux machine, when the first kernel was going around.
It is very funny that the Kanosis phenomenon should hit the market now, just when Apple has made itself furthermore technologically irrelevant by switching to Intel. I have a publishing business, for which I was planning to switch to Apple, and Kanosis provides me with the last missing link to make such a mixed environment feasible for a small business without huge integration costs and diseconomies of scale. I may end up still acquiring one of the last PowerMacs G5 with the last dual-core Power processors, but meanwhile DTP on Linux is far enough along, that in two years I'll probably be running my publishing work on a PPC- or AMD64-based Linux box, or on a Sun workstation, and most likely not on a Mac. In other words, whatever else Kanosis may be, to me just now it has removed the last remaining inefficiencies and worries of integration of Mac, Linux, and MSWin in a small business setting. And therein lies the rub.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Monday, April 24, 2006
Labels, Stereotypes and Prejudice Cover for Bad Decisions
This post is yet another in a series of analyses of some issues around the new SAAS (Software as a Service) venture Kanosis (we used to call these ASPs...), which I've committed myself to. I feel it is a brilliant, minimialistic, elegant and functional solution to some of the "digital divide" issues which this blog is meant to address.
However, I'm realizing that some of the issues here connect to other matters in relation to IT, namely the fact that business decisions in general are hard, and the responsibility for them is preferably to be shirked by corporate politicos, and IT decisions are even harder and even more likely to be the subject of games playing. In another post I have already addressed the issue of the popularity of SAP with Wall Street Analysts. Other examples are the popularity of Windows, or the time when CIOs (then mostly called IS Managers), "could not be fired" for choosing IBM. Thus labels often got in the way of sound decision making and outsiders labeled as progress many dysfunctional IT decisions.
It gets worse when, as my friend Michael Hugos related recently, a CIO is appointed for his presumed ability to "implement SAP" similar to choosing a secretary (excuse me: Personal Assistant) because he or she "knows" Microsoft Word. And then if SAP fails to deliver the CIO is fired, because obviously Wall Street aproves of SAP. Such companies don't seem to get that they should choose CIO for his ability to analyze and decide if SAP is an effective solution for their company, and possibly should fire him if he chose SAP for the wrong reasons. They should not saddle a CIO with responsibility for dysfunctional IT decisions over which they have no control, or otherwise limit them to being implementers of someone else's strategy. And so on.
The same goes on with people's lack of analysis of marketing plans in the Network Marketing/Direct Selling industry, and as a result we're encountering this in spades around the launch of Kanosis. Some examples:
The "P" Word.
------------- "Pyramid scam" is a bad word, and it denotes a business concept that fallaciously assumes an ever expanding base, and therefore is unsustainable in the long run. This is quite contrary to the positive meaning of the word, denoting certain architectural phenomena in Egypt, which is where the term comes from, and which are based on a solid foundation, and have now lasted in excess of 6,000 years. Similarly some quite functional business hierarchies look like pyramids, as do some very dysfunctional ones. In other words the negative connotation of the word refers purely to the false assumption of an ever expanding base. According to some credible analysis by Bill Parish & Company, which has been published among other place in Barron's, Microsoft is just such a phenomenon, and the findings are hard to refute:
http://www.billparish.com/msftfraudfacts.html
Thus when I Googled "financial fraud" today, the above URL comes up at the top of the page. That speaks volumes. Conversely when people see a multi-level pay structure like Kanosis has, they say: "Oh a pyramid scheme," as if they knew what that meant, when clearly their very statement shows that they don't, since in this specific case the model evidently means that this company in particular enjoys a predictable distribution margin of 70% paid from REVENUE, and which therefore does not require an additional up-front capital infusion, and also ensures that there is a high degree of commitment for the early birds who help build the company. Evidently only people who really believe in the product or service would commit their time and resources to the vision. The level of commitment of your $200K VP of Sales and Marketing might not be as certain.
Therefore the humorous way in which Kanosis deals with the "P-word" on their site, is in fact the only way that you can counter this non-serious label (for it isn't even an argument), see:
http://www.kanosis.com/index.cfm/id/support/lang/english
There it says: "Is Kanosis Pyramid selling? No we do not sell pyramids. They are too heavy and expensive to ship!" And that is all you could say to this kind of non-serious "objection." And still some people will say: "Oh, it's a pyramid," and that will be the end of their "business decision." I guess it's just one more example of how labels are used to mask an inability to make proper decisions.
The "M-word."
------------- "Matrix" compensation plans have featured in so many Internet scams that there is a site devoted to steer the gullible out of trouble:
www.matrixwatch.org
The intentions are evidently good, however the discussion around Kanosis on this site suffers from a knee-jerk response that if it looks like a matrix at all, the specifics are ignored, and it is assumed that the venture in question is automatically a scam. Jim Southworth, the Chief Technology Evangelist (he's the CTO with an emphasis on explaining the technology to the outside world) for Kanosis has had quite a time of it on that site to try and keep the dialog meaningful while wading through piles of invective and prejudice.
Again the same applies here as did on the discussion of the "P-word," and that is that if you analyze the specifics, you are likely to find a gem of efficient and effective marketing in the form of the Kanosis marketing plan. Based on my analysis, I continue to bet that Kanosis has struck just the right balance. As of this week the jury's still out on the feature set they are about to deliver May 1st, but provided that lives up to its billing, there can be no question where this company is headed.
There are other "M-" and "P-" words, such as MLM, for Multi-Level Marketing, and Ponzi-scheme for a venture where the early investors are given phoney returns based on paying them from the investments of subsequent investors. All of them are evidently nefarious schemes, and any student of financial fraud will recognize them. Many a time the studies of the actual schemes people came up with are quite hilarious and instructive as to how people defer decisions and hurt themselves by reliance on irrelevant externals. The best resources to sort right from wrong are (among others)
www.quatloos.com (provided by a non-profit corporation)
www.mlmwatchdog.com (provided by the best network marketing consultant in the country)
www.ic3.gov (collaboration of FBI and National White Collar Crime Center).
So resources abound, and anyone should do their own due diligence on any venture they decide to get involved with by standards that makes sense to them.
It is very clear to me already that one reason network marketing scares off people is because they have to make their own decisions, because in this business model you hire the company instead of the company hiring you. Unfortunately it is the same mentality which causes people to later be herded into many of the same business opportunities, since by then they consider them credible because the neighbors are doing it. This behavior is no different from a company throwing out a perfectly good Unix architecture in favor of Microsoft Windows, which breaks down far more often and requires 5-10 times the number of administrators to users of Unix, not to mention every seat has 10 times higher power consumption than e.g. a SunRay terminal 250 Watt for a PC, vs 25 Watt for a SunRay). They are making the choise because the neighbors are doing it, or because the boss's kids have a Microsoft PC at home, or whatever. It has nothing to do with analysis.
One of the best scam artists I ever met, David Eastes, who was a big succes in Best Line (that was the "other" soap company besides Amway) at one time, and was barred from the direct selling industry because of some dubious practices, had a saying that demonstrates the issues clearly: "Logic and reason are the horse the emotions ride in on." I met him in my early days in the phone card industry, when he was trying to do it again in Amerivox, one of the first phone card companies, and one which definitely helped create that industry, even though they collapsed because of a defective strategy as well as sloppy execution.
To come back to the underlying issue here of deciding by appearances rather than by facts, another important example is the whole business of website design and the availability of reasonable and adequate disclosure on the website of any company. I have seen many criticisms of Kanosis in this regard, meanwhile they have improved the site on an ongoing basis, and I guess the critical point will come now that the company is launching their service as of May 1st, if the site will provide enough hard information. I am currently dealing with the same issues for another start-up company I'm tangentially involved with, where an interim website has garnered negative responses because of lack of information, and so it becomes a hindrance not a help in discussing the venture with others. So here is an area where companies can help themselves a lot by creating the right impression and providing sufficient answers to any potential issues. However in the spirit of caveat emptor, it does remain incumbent upon any buyer to do their own assessment, and by facts, not appearances.
The bottom line is first and foremost we should guard against being intellectually lazy, and doing our own due diligence by analysis, and not by proxy, either negatively by applying the label of "scam," based on appearance not facts, or positively, because the neighbors are doing it, so it must be alright. Any attempt to decide by proxy is ultimately only a way of avoiding responsibility for your own decisions, and making sure that you have somebody to blame if things go wrong.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
However, I'm realizing that some of the issues here connect to other matters in relation to IT, namely the fact that business decisions in general are hard, and the responsibility for them is preferably to be shirked by corporate politicos, and IT decisions are even harder and even more likely to be the subject of games playing. In another post I have already addressed the issue of the popularity of SAP with Wall Street Analysts. Other examples are the popularity of Windows, or the time when CIOs (then mostly called IS Managers), "could not be fired" for choosing IBM. Thus labels often got in the way of sound decision making and outsiders labeled as progress many dysfunctional IT decisions.
It gets worse when, as my friend Michael Hugos related recently, a CIO is appointed for his presumed ability to "implement SAP" similar to choosing a secretary (excuse me: Personal Assistant) because he or she "knows" Microsoft Word. And then if SAP fails to deliver the CIO is fired, because obviously Wall Street aproves of SAP. Such companies don't seem to get that they should choose CIO for his ability to analyze and decide if SAP is an effective solution for their company, and possibly should fire him if he chose SAP for the wrong reasons. They should not saddle a CIO with responsibility for dysfunctional IT decisions over which they have no control, or otherwise limit them to being implementers of someone else's strategy. And so on.
The same goes on with people's lack of analysis of marketing plans in the Network Marketing/Direct Selling industry, and as a result we're encountering this in spades around the launch of Kanosis. Some examples:
The "P" Word.
------------- "Pyramid scam" is a bad word, and it denotes a business concept that fallaciously assumes an ever expanding base, and therefore is unsustainable in the long run. This is quite contrary to the positive meaning of the word, denoting certain architectural phenomena in Egypt, which is where the term comes from, and which are based on a solid foundation, and have now lasted in excess of 6,000 years. Similarly some quite functional business hierarchies look like pyramids, as do some very dysfunctional ones. In other words the negative connotation of the word refers purely to the false assumption of an ever expanding base. According to some credible analysis by Bill Parish & Company, which has been published among other place in Barron's, Microsoft is just such a phenomenon, and the findings are hard to refute:
http://www.billparish.com/msftfraudfacts.html
Thus when I Googled "financial fraud" today, the above URL comes up at the top of the page. That speaks volumes. Conversely when people see a multi-level pay structure like Kanosis has, they say: "Oh a pyramid scheme," as if they knew what that meant, when clearly their very statement shows that they don't, since in this specific case the model evidently means that this company in particular enjoys a predictable distribution margin of 70% paid from REVENUE, and which therefore does not require an additional up-front capital infusion, and also ensures that there is a high degree of commitment for the early birds who help build the company. Evidently only people who really believe in the product or service would commit their time and resources to the vision. The level of commitment of your $200K VP of Sales and Marketing might not be as certain.
Therefore the humorous way in which Kanosis deals with the "P-word" on their site, is in fact the only way that you can counter this non-serious label (for it isn't even an argument), see:
http://www.kanosis.com/index.cfm/id/support/lang/english
There it says: "Is Kanosis Pyramid selling? No we do not sell pyramids. They are too heavy and expensive to ship!" And that is all you could say to this kind of non-serious "objection." And still some people will say: "Oh, it's a pyramid," and that will be the end of their "business decision." I guess it's just one more example of how labels are used to mask an inability to make proper decisions.
The "M-word."
------------- "Matrix" compensation plans have featured in so many Internet scams that there is a site devoted to steer the gullible out of trouble:
www.matrixwatch.org
The intentions are evidently good, however the discussion around Kanosis on this site suffers from a knee-jerk response that if it looks like a matrix at all, the specifics are ignored, and it is assumed that the venture in question is automatically a scam. Jim Southworth, the Chief Technology Evangelist (he's the CTO with an emphasis on explaining the technology to the outside world) for Kanosis has had quite a time of it on that site to try and keep the dialog meaningful while wading through piles of invective and prejudice.
Again the same applies here as did on the discussion of the "P-word," and that is that if you analyze the specifics, you are likely to find a gem of efficient and effective marketing in the form of the Kanosis marketing plan. Based on my analysis, I continue to bet that Kanosis has struck just the right balance. As of this week the jury's still out on the feature set they are about to deliver May 1st, but provided that lives up to its billing, there can be no question where this company is headed.
There are other "M-" and "P-" words, such as MLM, for Multi-Level Marketing, and Ponzi-scheme for a venture where the early investors are given phoney returns based on paying them from the investments of subsequent investors. All of them are evidently nefarious schemes, and any student of financial fraud will recognize them. Many a time the studies of the actual schemes people came up with are quite hilarious and instructive as to how people defer decisions and hurt themselves by reliance on irrelevant externals. The best resources to sort right from wrong are (among others)
www.quatloos.com (provided by a non-profit corporation)
www.mlmwatchdog.com (provided by the best network marketing consultant in the country)
www.ic3.gov (collaboration of FBI and National White Collar Crime Center).
So resources abound, and anyone should do their own due diligence on any venture they decide to get involved with by standards that makes sense to them.
It is very clear to me already that one reason network marketing scares off people is because they have to make their own decisions, because in this business model you hire the company instead of the company hiring you. Unfortunately it is the same mentality which causes people to later be herded into many of the same business opportunities, since by then they consider them credible because the neighbors are doing it. This behavior is no different from a company throwing out a perfectly good Unix architecture in favor of Microsoft Windows, which breaks down far more often and requires 5-10 times the number of administrators to users of Unix, not to mention every seat has 10 times higher power consumption than e.g. a SunRay terminal 250 Watt for a PC, vs 25 Watt for a SunRay). They are making the choise because the neighbors are doing it, or because the boss's kids have a Microsoft PC at home, or whatever. It has nothing to do with analysis.
One of the best scam artists I ever met, David Eastes, who was a big succes in Best Line (that was the "other" soap company besides Amway) at one time, and was barred from the direct selling industry because of some dubious practices, had a saying that demonstrates the issues clearly: "Logic and reason are the horse the emotions ride in on." I met him in my early days in the phone card industry, when he was trying to do it again in Amerivox, one of the first phone card companies, and one which definitely helped create that industry, even though they collapsed because of a defective strategy as well as sloppy execution.
To come back to the underlying issue here of deciding by appearances rather than by facts, another important example is the whole business of website design and the availability of reasonable and adequate disclosure on the website of any company. I have seen many criticisms of Kanosis in this regard, meanwhile they have improved the site on an ongoing basis, and I guess the critical point will come now that the company is launching their service as of May 1st, if the site will provide enough hard information. I am currently dealing with the same issues for another start-up company I'm tangentially involved with, where an interim website has garnered negative responses because of lack of information, and so it becomes a hindrance not a help in discussing the venture with others. So here is an area where companies can help themselves a lot by creating the right impression and providing sufficient answers to any potential issues. However in the spirit of caveat emptor, it does remain incumbent upon any buyer to do their own assessment, and by facts, not appearances.
The bottom line is first and foremost we should guard against being intellectually lazy, and doing our own due diligence by analysis, and not by proxy, either negatively by applying the label of "scam," based on appearance not facts, or positively, because the neighbors are doing it, so it must be alright. Any attempt to decide by proxy is ultimately only a way of avoiding responsibility for your own decisions, and making sure that you have somebody to blame if things go wrong.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Saturday, April 22, 2006
Internet Marketing dos and don'ts: Network Marketing, really?
The link under the title of this article you will find a link to Eric Scheibeler's Merchants of Deception site. He provides very interesting material about the business methods of Amway and Quixtar, and the fact that those businesses are not at all what they seem. Whatever they are - and I've always thought that any money made in Amway was made on motivational and promotional seminars and tapes, not products - they are, I think, one example of a business who simply exported their existing business methods to the net, realizing some advantages, and in this case, among other things, brilliantly avoiding the estate tax by having the heirs to the Amway fortune launch Quixtar and cannibalize the Amway business. However they are not examples of Internet marketing in pure form, in which business concepts are not exported from the brick and mortar world, but conceived from the outset with the Internet reality in mind. The tenets of Eric Scheibeler's book coincide with my exposure to the phenomena of Amway and Quixtar, which have always seemed very cult-like to me, and not even good examples of what MLM could be or should be. There are plenty of good examples however, which may include Avon, Mary Kay, Tupperware, Creative Memories, Prepaid Legal, Primerica, and many other companies with legitimate products, services and marketing plans. In saying that, I am not concerned with legalities. Amway has always managed to stay clear of the law, and validate its business methods against legal challenge. That is different from saying they represent a sensible business opportunity. But I'm not going to attempt a history of MLM here.
On the Internet, things are different. Many companies have moved their presence to the Internet, including most MLM companies of old, and they naturally have realized some benefits and efficiencies in doing so. But few true Internet plays have proven viable. Personally, I would consider even Amazon a questionable case nowadays. To say the least, the jury is still out on them. It is proving more and more dubious if their wild expansion into everything including kitchen sinks, is going to provide the payoff for their technology investments, with which they have justified their infrastructure spending.
However if we look at successful marketing launches, we notice that the "network effect," is alive and well on the Internet, and has been the driving force that made many companies what they are today. Paypal offered referral fees for opening accounts with them, and they became an overnight success. INGDirect did the same, though less successfully so. AllAdvantage, Google, Skype, MySpace, and most portals somehow or other leveraged the network effect, and a few reinforced the network effect through incentives, referral fees, and sometimes multi-level compensation. The results are visible in inflated stockmarket evaluations of some companies which are temporarily deemed successful, but the question remains how well they serve all stakeholders, not just shareholders. MySpace and Google are examples where the "value creation" accrues entirely to the founders and shareholders, and not to the users except through the functionality of their services, which are paid for with advertising, and to some degree the sacrifice of privacy, not hard cash. I liken this part to the early days of television, and network TV, which became all paid for by advertising.
In TV, the development is perhaps further along than on the Internet in that some clear winners of pay TV seem to have emerged, while commercial TV is losing the battle on all fronts both against pay channels on cable, and against the Tivo on the hardware front. Consumers are sending a clear message: they want the content, but preferably without the ads. To assume that the Internet will be any different is naive. Users want the functionality, not the ads. Therefore superior functionality in some form or other will warrant payment. Salesforce.com seems to be an example, and there are others. In spite of the apparent successes of Google, the ad-supported model therefore may peak at some point if people switch to ad-free pay-services in massive numbers. Right now Johnny-come-latelies like Microsoft are getting more and more into the ad-supported model, which again is going to do nothing but depress advertising rates, and undermine the value of on-line advertising, which, as it becomes ubiquitous, becomes as boring and annoying as TV commercials. So right now the ad-supported model is most likely in a "bubble" mode, and overdue for a correction.
On the software front meanwhile, the revolution that is going on is that of "Open Source" vs. the proprietary software model. Here one of the most central themes is control, but there is another stakeholder issue, which is sometimes overlooked. If I submit an improvement to Microsoft, they own my improvement, and I get charged for the privilege with their next upgrade. The only benefit these stakeholders get is the functionality of the software which they pay for. User frustration therefore sets in if "upgrades" do not match their perceptions of what they need, and merely force them to acquire more powerful computers, to little actual benefit in the long run.
To get back to the MLM discussion, MLM is annoying when the economic incentive gets people to push products or services I don't want, just as much as advertising is annoying when it pushes products or services I don't want. But if I found a superior product due to a good ad, then I accept the ad, since it did me a service. Successful advertising therefore needs to be entertaining, engaging, and helpful.
What sets aside the Internet as a medium is among other things the ease with which the network effect can manifest, AND the ease with which economic drivers can be tracked and rewarded, which can in turn reinforce that network effect. Therefore the Internet and a network model of payments is potentially an optimal combination, since it offers the potential of engaging more of the stakeholders more fully, in particular extending the benefits of growth from the network effects to the users who create it. Doing so will not prevent a bad product or service from tanking eventually however. And that, among other things is the reason why scams ultimately flame out, quite aside from legal and regulatory challenge, which merely serve to hasten the crash of the deserving. Therefore in general it will also be helpful to speak of network marketing as a category, in lieu of the particular pay structures, such as mlm-, matrix-, or pyramid- which have become labels that confuse more than they explain, and in the realization that the economic effect of the network is the natural ally of would-be "network marketing" programs, and that conversely if the economic potential of a product, application or service are not well aligned, they are always doomed.
Further, once we properly understand the tremendous power of the network effect, in conjunction with efficient and effective economic incentives, it becomes very easy to see why a private company like Kanosis could easily outcompete a traditional business that is publicly financed. More start-ups bit the dust who were done in both by a combinaition of the high cost of capital, and the tremendous cost of sales and marketing, which might constitute as much as 80% of the runrate in the early years. To pay for (word-of-mouth) marketing from revenues, at a predictable 70% as is the case in this particular example, is positively a bargain by comparison, and a model of economic efficiency.
As a cautionary note meanwhile, it should also be noted that while this type of a company launch is by and large easier because of lower startup costs, it is also harder because the execution is much more demanding. Namely if the reputation of your product or service is directly linked with your user constituency as it is in this case, if relations between the company and its user base break down, that breakdown will happen that much more quickly, and it takes truly extraordinary management talent to maintain the social compact between the company and all of its stakeholders, because feedback is very fast. Better have a LeMans driver at the helm then...
A lot of confusion stems from the fact that many people have lost money in non-viable MLM companies, or in various Internet scams, or they have loved ones who have done so, and then they come to the erroneous conclusion that all MLM is bad, in an obvious confusion of ends and means. I'm seeing this phenomenon in respect of my involvement with Kanosis. Many people have a priori notions which prevent them from examining the actual business model, due to a prejudice against MLM, pyramid schemes, or matrix pay-outs, when they don't even understand the actual definitions of those concepts, or much less are able to distinguish right from wrong in any meaningful way from either a business or a legal standpoint.
On the level of functionality I tend to think that Kanosis represents a value which can be easily justified, and compares favorably with some other pay services, since it offers a level of integration and convenience that is not otherwise available. I have obviously arrived at the conclusion that Kanosis is a winner, and decided to market it. Only time will tell if my analysis was correct. However, if it is, many otherwise intelligent people who opted against it only because of an irrational prejudice against MLM, will regret their short-sightedness, and at some point it should become evident that prejudice is not a good substitute for business analysis.
Leaving aside therefore for a moment the consideration if Kanosis itself will succeed, there can be no question that in consumer marketing in particular, and of products and services with a strong network effect (like the collaboration features in Kanosis), network-type compensation plans will be increasingly popular in order to engage the users as the best qualified sales people. That logic is impeccable. After all what does any buyer do? Ask for references! I routinely ask drivers of a car I want to buy how they like it, etc.
It should be noted also that Kanosis is developing an interesting hybrid model, and will set a precedent by developing a professional, certified salesforce for their corporate services, which will be released starting three months after the consumer service, and they will have a profit sharing mechanism for their regular consumer users, on the strength of the theory that it is the popular use of the service which will help promote corporate adoption. This will be the vindication of word-of-mouth advertising and the network effect. This innovation alone is likely to be a brilliant marketing vision.
While all of this analysis remains to be proven for the historians, I'm not waiting for the history to be written, and in the interim I've put my money where my mouth is. Further, by publishing this analysis here, I'm on the record, and I will be duly curious myself what the outcome will be, even while I'm obviously banking on being right about it.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
On the Internet, things are different. Many companies have moved their presence to the Internet, including most MLM companies of old, and they naturally have realized some benefits and efficiencies in doing so. But few true Internet plays have proven viable. Personally, I would consider even Amazon a questionable case nowadays. To say the least, the jury is still out on them. It is proving more and more dubious if their wild expansion into everything including kitchen sinks, is going to provide the payoff for their technology investments, with which they have justified their infrastructure spending.
However if we look at successful marketing launches, we notice that the "network effect," is alive and well on the Internet, and has been the driving force that made many companies what they are today. Paypal offered referral fees for opening accounts with them, and they became an overnight success. INGDirect did the same, though less successfully so. AllAdvantage, Google, Skype, MySpace, and most portals somehow or other leveraged the network effect, and a few reinforced the network effect through incentives, referral fees, and sometimes multi-level compensation. The results are visible in inflated stockmarket evaluations of some companies which are temporarily deemed successful, but the question remains how well they serve all stakeholders, not just shareholders. MySpace and Google are examples where the "value creation" accrues entirely to the founders and shareholders, and not to the users except through the functionality of their services, which are paid for with advertising, and to some degree the sacrifice of privacy, not hard cash. I liken this part to the early days of television, and network TV, which became all paid for by advertising.
In TV, the development is perhaps further along than on the Internet in that some clear winners of pay TV seem to have emerged, while commercial TV is losing the battle on all fronts both against pay channels on cable, and against the Tivo on the hardware front. Consumers are sending a clear message: they want the content, but preferably without the ads. To assume that the Internet will be any different is naive. Users want the functionality, not the ads. Therefore superior functionality in some form or other will warrant payment. Salesforce.com seems to be an example, and there are others. In spite of the apparent successes of Google, the ad-supported model therefore may peak at some point if people switch to ad-free pay-services in massive numbers. Right now Johnny-come-latelies like Microsoft are getting more and more into the ad-supported model, which again is going to do nothing but depress advertising rates, and undermine the value of on-line advertising, which, as it becomes ubiquitous, becomes as boring and annoying as TV commercials. So right now the ad-supported model is most likely in a "bubble" mode, and overdue for a correction.
On the software front meanwhile, the revolution that is going on is that of "Open Source" vs. the proprietary software model. Here one of the most central themes is control, but there is another stakeholder issue, which is sometimes overlooked. If I submit an improvement to Microsoft, they own my improvement, and I get charged for the privilege with their next upgrade. The only benefit these stakeholders get is the functionality of the software which they pay for. User frustration therefore sets in if "upgrades" do not match their perceptions of what they need, and merely force them to acquire more powerful computers, to little actual benefit in the long run.
To get back to the MLM discussion, MLM is annoying when the economic incentive gets people to push products or services I don't want, just as much as advertising is annoying when it pushes products or services I don't want. But if I found a superior product due to a good ad, then I accept the ad, since it did me a service. Successful advertising therefore needs to be entertaining, engaging, and helpful.
What sets aside the Internet as a medium is among other things the ease with which the network effect can manifest, AND the ease with which economic drivers can be tracked and rewarded, which can in turn reinforce that network effect. Therefore the Internet and a network model of payments is potentially an optimal combination, since it offers the potential of engaging more of the stakeholders more fully, in particular extending the benefits of growth from the network effects to the users who create it. Doing so will not prevent a bad product or service from tanking eventually however. And that, among other things is the reason why scams ultimately flame out, quite aside from legal and regulatory challenge, which merely serve to hasten the crash of the deserving. Therefore in general it will also be helpful to speak of network marketing as a category, in lieu of the particular pay structures, such as mlm-, matrix-, or pyramid- which have become labels that confuse more than they explain, and in the realization that the economic effect of the network is the natural ally of would-be "network marketing" programs, and that conversely if the economic potential of a product, application or service are not well aligned, they are always doomed.
Further, once we properly understand the tremendous power of the network effect, in conjunction with efficient and effective economic incentives, it becomes very easy to see why a private company like Kanosis could easily outcompete a traditional business that is publicly financed. More start-ups bit the dust who were done in both by a combinaition of the high cost of capital, and the tremendous cost of sales and marketing, which might constitute as much as 80% of the runrate in the early years. To pay for (word-of-mouth) marketing from revenues, at a predictable 70% as is the case in this particular example, is positively a bargain by comparison, and a model of economic efficiency.
As a cautionary note meanwhile, it should also be noted that while this type of a company launch is by and large easier because of lower startup costs, it is also harder because the execution is much more demanding. Namely if the reputation of your product or service is directly linked with your user constituency as it is in this case, if relations between the company and its user base break down, that breakdown will happen that much more quickly, and it takes truly extraordinary management talent to maintain the social compact between the company and all of its stakeholders, because feedback is very fast. Better have a LeMans driver at the helm then...
A lot of confusion stems from the fact that many people have lost money in non-viable MLM companies, or in various Internet scams, or they have loved ones who have done so, and then they come to the erroneous conclusion that all MLM is bad, in an obvious confusion of ends and means. I'm seeing this phenomenon in respect of my involvement with Kanosis. Many people have a priori notions which prevent them from examining the actual business model, due to a prejudice against MLM, pyramid schemes, or matrix pay-outs, when they don't even understand the actual definitions of those concepts, or much less are able to distinguish right from wrong in any meaningful way from either a business or a legal standpoint.
On the level of functionality I tend to think that Kanosis represents a value which can be easily justified, and compares favorably with some other pay services, since it offers a level of integration and convenience that is not otherwise available. I have obviously arrived at the conclusion that Kanosis is a winner, and decided to market it. Only time will tell if my analysis was correct. However, if it is, many otherwise intelligent people who opted against it only because of an irrational prejudice against MLM, will regret their short-sightedness, and at some point it should become evident that prejudice is not a good substitute for business analysis.
Leaving aside therefore for a moment the consideration if Kanosis itself will succeed, there can be no question that in consumer marketing in particular, and of products and services with a strong network effect (like the collaboration features in Kanosis), network-type compensation plans will be increasingly popular in order to engage the users as the best qualified sales people. That logic is impeccable. After all what does any buyer do? Ask for references! I routinely ask drivers of a car I want to buy how they like it, etc.
It should be noted also that Kanosis is developing an interesting hybrid model, and will set a precedent by developing a professional, certified salesforce for their corporate services, which will be released starting three months after the consumer service, and they will have a profit sharing mechanism for their regular consumer users, on the strength of the theory that it is the popular use of the service which will help promote corporate adoption. This will be the vindication of word-of-mouth advertising and the network effect. This innovation alone is likely to be a brilliant marketing vision.
While all of this analysis remains to be proven for the historians, I'm not waiting for the history to be written, and in the interim I've put my money where my mouth is. Further, by publishing this analysis here, I'm on the record, and I will be duly curious myself what the outcome will be, even while I'm obviously banking on being right about it.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Tuesday, April 11, 2006
A Dream Come True?
In 2002, after leaving NTT/Verio, amid the ashes of 9/11 and the dot com bust, I continued in the business selling security solutions, and at some time, as part of the effort we developed a business concept with a working title of My Virtual Computer, aiming to provide a hosted personal working environment with superior security features. One of the driving concepts was that managing PC hardware and software is a constant challenge for more than 99% of the population, and too often data is lost, due to hard disk crashes, system changes, and God knows what all. Also, the reality is that people often times share hardware, and existing technologies are hopelessly inadequate to do that effectively. People also want PRIVATE access to their personal data from the office, or anywhere for that matter. Therefore a professionally managed service, accessed over the web would be the answer.
We conceptualized this in two flavors, for broadband and for dial-up, and we worked for a while with a development company which provided secure email, which was also developing a sort of personal desktop which embodied the key ideas we had for the service. When I explained the initial concept to my partner Roger, he exclaimed: "Rogier, I KNEW you had it in you!" Still, for various reasons, both technological and business, the plan did not come to fruition, but my conclusion was that the idea was too logical, so that inevitably someone, some day would figure it out and make it a reality. This blog was actually started once I gave up on ever realizing this idea myself, and decided instead to just share some of my thinking on appropriate IT with the world. The central notion was about Personal Computing, as opposed to Personal Computers.
Unbeknownst to me in Cyprus a developer by the name of Stephen van Zutphen was working on the very idea we had been talking about here in New York, and actually he was able to implement it. Apparently he first thought of lawyers, appointment calendars, and time billing, and he should be forgiven for that, since he is a lawyer himself, so he can't help it. Fortunately however events took a different turn and the product is now being launched as a consumer service under the name of Kanosis, and later will be re-released for the corporate market.
As of this writing we are still working with a pre-release version of the Kanosis service, but I will sum up some of the basic functionality here, however I will also preface this by saying that I think the solution is BRILLIANT because of its simplicity. Stephen van Zutphen's vision was that of a "Personal Operating System," as opposed to a computer operating system. I see that as another way of expressing the ideas of Personal Computing vs. Personal Computers. Most PC software suffers from featuritis, and complexity, which tends to grow out of control until a competitive software arrives and takes the old champ down.
Kanosis is a paradigm shift centered around the idea of Personal Information Manager, (PIM), but delivered over the net as an ASP, or Software As A Service (SAAS). The brilliance of the design is in the integration of features, combined with the effectiveness of facilitating collaboration among users of the service. In effect it provides on a membership basis a collaboration platform to beat many of the best corporate platforms, which are available only to employees or business partners of said corporations. From a marketing standpoint he adoption will strongly benefit from the network effect, and supporting that with an appropriate multi-level compensation plan was another brilliant move.
An example of this was during my visit to the Cingular store this morning to upgrade my phone. The salesman pushed me towards a PDA, and I rebuffed him, describing how I used this new on-line service which I use for managing my contacts, and scheduling, etc. and that I found it kind of pathetic how people around me are constantly synching their Blackberry. To me it seemed like more hassle than it is worth. He listened up, and he already wants to join Kanosis. And that's just one aspect of the service.
What Kanosis is in full is:
- a live, on-line, and cross platform (java-based) Personal Information Manager (PIM): contacts, schedules, task management, including organizing files by contacts.
- a communications center: email, chat, internet telephony, video conferencing/video mail
- a secure on-line storage facility with 5Gb of personal space
- low-cost international financial transactions, including an on-line account in up to twelve currencies, along with a company debit card.
- a store for video and audio downloads, which will reportedly have the largest on line movie inventory yet starting from the launch date of May 1st.
- a business opportunity which allows consumers sales ONLY by members, and on a personal level those are the best sales people, because as users of the service they are eminently qualified to sell it to others.
In short, if simplicity sells, this service will be hugely successful, and it will cut a wide swath through the territory of Salesforce.com, the Outlook/Exchange franchise, Google, and others. I think the KISS principle is likely to win out, and win big. One of the fascinating aspects of the service is also that it provides better security, in creating a VPN like environment between the IPV6 compatible clients and the central server, so that users enjoy above average security and privacy by collaborating through this platform. For the moment access security remains limited to username and password, but hopefully better alternatives for that will be provided in due course as well.
Last but not least I can only say that on the whole that if Kanosis is an implementation of the idea for My Virtual Computer, they did a far better job than I was envisaging, and I salute Stephen van Zutphen for his vision, and all the other people involved for ultimately realizing this idea and bringing it to market in the form of Kanosis.
Besides the competitive issues discussed here, I also think that this service will make it easier for people to switch to a Linux desktop. In fact, I would suggest a small business could get by with a Linux PC, Open Office, GnuCash, and Kanosis. In short, this service is going to change the landscape, and help close the digital divide just a little bit, by providing appropriate technology, device independence, and ease of use.
By clicking on the title to this article you will find a link to the Kanosis website, which will show that you were referred by me. Have at it, have fun, join the revolution... I'm sure I will write about this again, for I enjoy seeing an old dream realized in this fashion, and I enjoy technological revolutions and paradigm shifts, and this surely is one of those!
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
We conceptualized this in two flavors, for broadband and for dial-up, and we worked for a while with a development company which provided secure email, which was also developing a sort of personal desktop which embodied the key ideas we had for the service. When I explained the initial concept to my partner Roger, he exclaimed: "Rogier, I KNEW you had it in you!" Still, for various reasons, both technological and business, the plan did not come to fruition, but my conclusion was that the idea was too logical, so that inevitably someone, some day would figure it out and make it a reality. This blog was actually started once I gave up on ever realizing this idea myself, and decided instead to just share some of my thinking on appropriate IT with the world. The central notion was about Personal Computing, as opposed to Personal Computers.
Unbeknownst to me in Cyprus a developer by the name of Stephen van Zutphen was working on the very idea we had been talking about here in New York, and actually he was able to implement it. Apparently he first thought of lawyers, appointment calendars, and time billing, and he should be forgiven for that, since he is a lawyer himself, so he can't help it. Fortunately however events took a different turn and the product is now being launched as a consumer service under the name of Kanosis, and later will be re-released for the corporate market.
As of this writing we are still working with a pre-release version of the Kanosis service, but I will sum up some of the basic functionality here, however I will also preface this by saying that I think the solution is BRILLIANT because of its simplicity. Stephen van Zutphen's vision was that of a "Personal Operating System," as opposed to a computer operating system. I see that as another way of expressing the ideas of Personal Computing vs. Personal Computers. Most PC software suffers from featuritis, and complexity, which tends to grow out of control until a competitive software arrives and takes the old champ down.
Kanosis is a paradigm shift centered around the idea of Personal Information Manager, (PIM), but delivered over the net as an ASP, or Software As A Service (SAAS). The brilliance of the design is in the integration of features, combined with the effectiveness of facilitating collaboration among users of the service. In effect it provides on a membership basis a collaboration platform to beat many of the best corporate platforms, which are available only to employees or business partners of said corporations. From a marketing standpoint he adoption will strongly benefit from the network effect, and supporting that with an appropriate multi-level compensation plan was another brilliant move.
An example of this was during my visit to the Cingular store this morning to upgrade my phone. The salesman pushed me towards a PDA, and I rebuffed him, describing how I used this new on-line service which I use for managing my contacts, and scheduling, etc. and that I found it kind of pathetic how people around me are constantly synching their Blackberry. To me it seemed like more hassle than it is worth. He listened up, and he already wants to join Kanosis. And that's just one aspect of the service.
What Kanosis is in full is:
- a live, on-line, and cross platform (java-based) Personal Information Manager (PIM): contacts, schedules, task management, including organizing files by contacts.
- a communications center: email, chat, internet telephony, video conferencing/video mail
- a secure on-line storage facility with 5Gb of personal space
- low-cost international financial transactions, including an on-line account in up to twelve currencies, along with a company debit card.
- a store for video and audio downloads, which will reportedly have the largest on line movie inventory yet starting from the launch date of May 1st.
- a business opportunity which allows consumers sales ONLY by members, and on a personal level those are the best sales people, because as users of the service they are eminently qualified to sell it to others.
In short, if simplicity sells, this service will be hugely successful, and it will cut a wide swath through the territory of Salesforce.com, the Outlook/Exchange franchise, Google, and others. I think the KISS principle is likely to win out, and win big. One of the fascinating aspects of the service is also that it provides better security, in creating a VPN like environment between the IPV6 compatible clients and the central server, so that users enjoy above average security and privacy by collaborating through this platform. For the moment access security remains limited to username and password, but hopefully better alternatives for that will be provided in due course as well.
Last but not least I can only say that on the whole that if Kanosis is an implementation of the idea for My Virtual Computer, they did a far better job than I was envisaging, and I salute Stephen van Zutphen for his vision, and all the other people involved for ultimately realizing this idea and bringing it to market in the form of Kanosis.
Besides the competitive issues discussed here, I also think that this service will make it easier for people to switch to a Linux desktop. In fact, I would suggest a small business could get by with a Linux PC, Open Office, GnuCash, and Kanosis. In short, this service is going to change the landscape, and help close the digital divide just a little bit, by providing appropriate technology, device independence, and ease of use.
By clicking on the title to this article you will find a link to the Kanosis website, which will show that you were referred by me. Have at it, have fun, join the revolution... I'm sure I will write about this again, for I enjoy seeing an old dream realized in this fashion, and I enjoy technological revolutions and paradigm shifts, and this surely is one of those!
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Saturday, March 25, 2006
Overdoing IT - Language, Layout, and Typography
Recently I had the opportunity to do a small translation job for an agency. I guess I've been living an isolated life, doing only some specialized translation jobs here or there, mostly of the literary variety, though a few were in the legal and commercial space. But this professional translation world is something else yet again. I had my suspicions, for some time ago I translated the 2nd volume of a series of books, the first one of which unfortunately also had been translated by such a "licensed" professional, whose last job apparently was to translate the text on a box of Corn Flakes...
Well, my recent experience was rather bizarre. A rush job. What else? The project was a translation of a quote for a residential electrical installation in Holland for an American principal. The Dutch original had been revised, and now it was upon me to translate and integrate the revisions. Unfortunately the document had been printed as a text file and on a large chain fed computer printer with 12*14" paper, so in printing it out, the format was all screwed up, with headers and footers and page breaks falling in the middle of the page.
The agency insisted that I come in to their office, since I did not possess the latest version of that wonder of technology, Microsoft Word. Side by side comparison was where it's at, I was told. I might have preferred to work from home because of a larger screen, among other benefits. After I reformatted the document to format the pages conform the original, at least the text became clear. However the agency person disagreed, and fought me on my efforts to reformat the page to match the original output. It only took an hour or two to convince the person of using common sense about this part.
Then came the matter of taking out the headers and footers, so one could separate the body of the text from the printed output. Another fight. I was told this was how the client wanted it (i.e. formatted for A4 and printed on large sheets, so all the pages were off), and I was not to change the document. The concept that headers and footers are not part of the document in the first place was apparently foreign to this person, so I gave up on that issue. I became the object of several other attempts to show me how to do the job faster, by someone who clearly had barely ever worked with Word or any other word processor. Altogether that wasted 6-8 hours of the job, including a helpful interim reformatting job, designed to save even more time, undoing the unintended side-effects of which took at least an hour.
In between all the struggles about how to use a word processor, I also received an explanation on how to become a translator, and learn to use appropriate translation software, etc. My predecessor on the job apparently knew all these things, and it was soon to be revealed how effective they were, as I was ready to proceed to the content once the formatting was more or less under control. The instructions were to reuse as much as possible the translations of the earlier translator, and to try not to duplicate the effort.
After my first day of work on the project I came to the conclusion that the prior translator was probably of Turkish origin, and had perhaps completed correspondence courses in Dutch and English. In my view this party could not possibly be a native speaker of either language, and had probably looked up words in a dictionary. Here were some of the pitiful problems I ran into:
- nouns were translated as verbs and vice-versa;
- technical terms were uniformly wrong;
- idiomatic expressions were mangled beyond recognition.
Some examples were the Dutch word "aarde," literally "earth," however in the context of an electrical installation should clearly be translated as "ground," even more so because there was no evidence of installing any garden lighting, or even roof gardens on the house. A "ground fault interrupt circuit breaker" thus had been translated as an "earth leakage interrupt circuit breaker." And a temporary electrical panel (for use during construction), "zwerfkast" in Dutch idiom, became a "drift box," just as much as a "patch panel" had been rendered as a "patch box." On and on and on, one hilarious mistake after another. Electrical conduit had been rendered as "tubing," as though it were for gas or water, and even there pipes may be more common usage than tubes. A very formal expression for an electrical receptacle (Dutch: "wal contact doos," which is truly formal contractorese, just as english "receptacle") was rendered as "outlet," and in some cases these were "rim-grounded" (why not "rim-earthed" - be consistent at least?), which no American would understand, for it's simply a grounded outlet, though in the European code the ground is not a 3rd prong, but is in a spring contact in the rim of the receptacle.
In short, between the reformatting problems and the word processor fights, the entire previous translation needed to be overhauled for it could have caused enough problems for the architects or builders to have serious difficulty with the material, and misunderstandings with the electrical contractors. And the entire job, which should have been eight hours work, ended up taking nearly twenty. After I finished it, I simply commented to the agency person that since I had thirty years of experience with word processors, and had learned to use probably that many different ones, that perhaps it was not necessary to explain Word to me, since she quite apparently was not sure how to use it herself. That brought some let up in the instructions.
The second document thankfully was two-thirds the same as the first, and with the formatting job already done, was easy to work on, and took five hours including corrections, even though the second document was one fifth longer than the first one. But then there were no more helpful hints about how to use wordprocessors, or time saving reformatting jobs. I have no idea though how much the client appreciated having headers and footers in the middle of the page...
The icing on the cake, after all of this, was the discovery that the prior translator was reportedly a college professor, and originally a Dutch speaker, teaching an arcane topic called "translation," and apparently an expert at all the software tools that can assist translators in their trade, a skill yours truly sorely lacked, making me not a professional translator, but a mere weekend-warrior.
Once again these experiences are routine daily examples of the misuse of technology, where the absence of skill is compensated with technology, and so the problems are compounded even while the appearance of competent work is created. Doing a layout job with a sophisticated word processor or desk top publishing program will result in disaster if one does not understand the elements of page layout to begin with. In this case the idiotic treatment of headers and footers as part of the text serves as an example. I should say that I speak from experience in particular in the area of typography, where in previous book projects I have been only just barely saved by professional typographers restraining my efforts at ridiculous extravagances in this area.
The latter brings me to my frequent discussions with Franklin Cooper, who with his twin brother Francis will surely be doing the typograhpy for my books in the future. Both were trained as typographers, and learned in "the old days" how to typeset. Frankling found himself displaced by technology and the presumption that software could REPLACE expertise. Francis stayed in the trade, learning to control the technology and create good results in spite of the best software technology on offer. Their stories could fill a book, and perhaps some day they will. For now the world seems full of opportunities to design books the old fashioned way, but using modern software as an extension of profound design skills, not in lieu of design skills. More about that another day.
To top it off, when coming home I found my twelve year old stepdaughter working on her Spanish homework, using an online translation service. Yet another example of the sad failures of providing basic training in the educational system, and replacing it with misused technology to raise a generation of cripples who can't understand their own language, let alone anybody else's. Computer "literate" illiteracy. For idiomatic English go to India, perhaps.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Well, my recent experience was rather bizarre. A rush job. What else? The project was a translation of a quote for a residential electrical installation in Holland for an American principal. The Dutch original had been revised, and now it was upon me to translate and integrate the revisions. Unfortunately the document had been printed as a text file and on a large chain fed computer printer with 12*14" paper, so in printing it out, the format was all screwed up, with headers and footers and page breaks falling in the middle of the page.
The agency insisted that I come in to their office, since I did not possess the latest version of that wonder of technology, Microsoft Word. Side by side comparison was where it's at, I was told. I might have preferred to work from home because of a larger screen, among other benefits. After I reformatted the document to format the pages conform the original, at least the text became clear. However the agency person disagreed, and fought me on my efforts to reformat the page to match the original output. It only took an hour or two to convince the person of using common sense about this part.
Then came the matter of taking out the headers and footers, so one could separate the body of the text from the printed output. Another fight. I was told this was how the client wanted it (i.e. formatted for A4 and printed on large sheets, so all the pages were off), and I was not to change the document. The concept that headers and footers are not part of the document in the first place was apparently foreign to this person, so I gave up on that issue. I became the object of several other attempts to show me how to do the job faster, by someone who clearly had barely ever worked with Word or any other word processor. Altogether that wasted 6-8 hours of the job, including a helpful interim reformatting job, designed to save even more time, undoing the unintended side-effects of which took at least an hour.
In between all the struggles about how to use a word processor, I also received an explanation on how to become a translator, and learn to use appropriate translation software, etc. My predecessor on the job apparently knew all these things, and it was soon to be revealed how effective they were, as I was ready to proceed to the content once the formatting was more or less under control. The instructions were to reuse as much as possible the translations of the earlier translator, and to try not to duplicate the effort.
After my first day of work on the project I came to the conclusion that the prior translator was probably of Turkish origin, and had perhaps completed correspondence courses in Dutch and English. In my view this party could not possibly be a native speaker of either language, and had probably looked up words in a dictionary. Here were some of the pitiful problems I ran into:
- nouns were translated as verbs and vice-versa;
- technical terms were uniformly wrong;
- idiomatic expressions were mangled beyond recognition.
Some examples were the Dutch word "aarde," literally "earth," however in the context of an electrical installation should clearly be translated as "ground," even more so because there was no evidence of installing any garden lighting, or even roof gardens on the house. A "ground fault interrupt circuit breaker" thus had been translated as an "earth leakage interrupt circuit breaker." And a temporary electrical panel (for use during construction), "zwerfkast" in Dutch idiom, became a "drift box," just as much as a "patch panel" had been rendered as a "patch box." On and on and on, one hilarious mistake after another. Electrical conduit had been rendered as "tubing," as though it were for gas or water, and even there pipes may be more common usage than tubes. A very formal expression for an electrical receptacle (Dutch: "wal contact doos," which is truly formal contractorese, just as english "receptacle") was rendered as "outlet," and in some cases these were "rim-grounded" (why not "rim-earthed" - be consistent at least?), which no American would understand, for it's simply a grounded outlet, though in the European code the ground is not a 3rd prong, but is in a spring contact in the rim of the receptacle.
In short, between the reformatting problems and the word processor fights, the entire previous translation needed to be overhauled for it could have caused enough problems for the architects or builders to have serious difficulty with the material, and misunderstandings with the electrical contractors. And the entire job, which should have been eight hours work, ended up taking nearly twenty. After I finished it, I simply commented to the agency person that since I had thirty years of experience with word processors, and had learned to use probably that many different ones, that perhaps it was not necessary to explain Word to me, since she quite apparently was not sure how to use it herself. That brought some let up in the instructions.
The second document thankfully was two-thirds the same as the first, and with the formatting job already done, was easy to work on, and took five hours including corrections, even though the second document was one fifth longer than the first one. But then there were no more helpful hints about how to use wordprocessors, or time saving reformatting jobs. I have no idea though how much the client appreciated having headers and footers in the middle of the page...
The icing on the cake, after all of this, was the discovery that the prior translator was reportedly a college professor, and originally a Dutch speaker, teaching an arcane topic called "translation," and apparently an expert at all the software tools that can assist translators in their trade, a skill yours truly sorely lacked, making me not a professional translator, but a mere weekend-warrior.
Once again these experiences are routine daily examples of the misuse of technology, where the absence of skill is compensated with technology, and so the problems are compounded even while the appearance of competent work is created. Doing a layout job with a sophisticated word processor or desk top publishing program will result in disaster if one does not understand the elements of page layout to begin with. In this case the idiotic treatment of headers and footers as part of the text serves as an example. I should say that I speak from experience in particular in the area of typography, where in previous book projects I have been only just barely saved by professional typographers restraining my efforts at ridiculous extravagances in this area.
The latter brings me to my frequent discussions with Franklin Cooper, who with his twin brother Francis will surely be doing the typograhpy for my books in the future. Both were trained as typographers, and learned in "the old days" how to typeset. Frankling found himself displaced by technology and the presumption that software could REPLACE expertise. Francis stayed in the trade, learning to control the technology and create good results in spite of the best software technology on offer. Their stories could fill a book, and perhaps some day they will. For now the world seems full of opportunities to design books the old fashioned way, but using modern software as an extension of profound design skills, not in lieu of design skills. More about that another day.
To top it off, when coming home I found my twelve year old stepdaughter working on her Spanish homework, using an online translation service. Yet another example of the sad failures of providing basic training in the educational system, and replacing it with misused technology to raise a generation of cripples who can't understand their own language, let alone anybody else's. Computer "literate" illiteracy. For idiomatic English go to India, perhaps.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
Tuesday, March 21, 2006
Overdoing IT - again
There are too many ways that people go overboard on IT, and it becomes dysfuncitional. Some of the more pedestrian examples are people who don't know a language (even if it's their native language) and are overreliant on spelling checkers. They will proudly deliver documents that are full of "there" when it should be "their" and vice versa. We all know the symptoms. Recently I was confronted by a translation job where I saw the same at a higher level, and on the corporate level, executives who are suffering from Math and IT phobia pay through the nose to shod their companies with "respectable" software like SAP at a price that would sink most businesses. It makes good conversation on the golfcourse, for everyone thinks they know what they're talking about, and the approving slaps on the shoulder follow, but many businesses suffer from a strategic misalignment of IT.
By the same token the current spate of outsourcing of IT all too often serves to hide incompetence, and dress it up in a halo of cost savings, and "contributions to the bottom line," when the real story is a strategic misalignment. For if companies truly understood the strategic value of IT, they would not put it too far out of their reach - which is not to say that certain parts of development cannot be productively outsourced, but the opportunity is far more limited and surgical in nature than current trends indicate.
Last year I had the opportunity to meet with Michael Hugos, formerly CIO at a distribution coop, who clearly has done a remarkable job there, and has at the same time become a best-selling author at John Wiley with his book on Supply Chain Management, modestly titled "Essentials of Supply Chain Management" (now in a second edition John Wiley & Sons, 2006).
In a recent conversation he expressed to me his eagerness at competing against any company that implements SAP. However, they are becoming harder to find, for the drive to conformity, in particular in public companies makes the pressure to conform to the norm almost too much to bear, and being a public company in the US in that sense is almost a recipe for disaster. Announce a deal with SAP and your stock will go up. What CEO could resist that, particularly if he is compensated with lots of options?
The whole experience brought to mind the fiasco at Pitney Bowes when they implemented SAP, at a time when there were still the big five accounting/IT consulting firms, and they went through four of the five, firing all of them but the last one, realizing they were running out of options to implement it successfully. I became instrumental in bringing in another consulting firm to try and save the day by actually managing the communication between PB management and the implementers, and keeping an eye on strategic alignment as far as possible.
As soon as we got involved - even at the proposal stage - interesting issues of strategic alignment began to surface, and it became apparent that one of the problems of the implementation was in the fact that Pitney Bowes' business model is based on leasing, and the SAP model did not accomodate that, so everything had to be customized. Hence the last proposal from #5 of the big five was for a $300 million implementation budget. A few years later the job was apparently completed successfully "below budget," as I heard. So they likely got away by reflecting only $299 million of the cost explicitly on the books, but the disastrous inefficiencies that no doubt resulted will be paid for over and over and over again for years.
The next brilliant management move then is to outsource the maintenance of the disaster, so that no-one actually ever has to have the intellectual honesty and courage to look at the disaster for what it is, and to do something that actually benefits the business. When in between you meet a business which really understands IT, and leverages it to the max, that is like a breath of fresh air. On the whole however, it seems as though the consumer trends of buying "boxed" software, has all but overwhelmed the capabilities of most managements for sound decision making in this area. As Mike Hugos observed in our conversation, at that point only too often a CIO ends up getting fired, and it's like a cab driver who gets stiffed on his tip for delivering the person to the wrong address, even if it was the passenger who gave the wrong information in the first place. Actual strategic alignment of IT with the business was the promise of the CIO position, but except for the exceptions that confirm the rule, it is yet to be realized. But we're spending a fortune on IT in the name of progress!!!
We also keep fooling ourselves that we're creating economic value with all the presumed productivity that results from this IT spending. Cheered on by Alan Greenspan and the backup chorus at Business Week (See a recent front page article on "Why the Economy Is A Lot Stronger Than You Think" BW Feb13, 2006), which is full of the type of delusional self-congratulatory nonsense about creating value in the "knowledge economy," which created the dot-com bubble and bust, and which now presumably is applied to the US economy as a whole. These are the kinds of musings of slightly deluded folk with pink-colored glasses, who really want us to believe that you can replace substance with arbitrary value that is created only courtesy of revising the standards after the fact. This is a process akin to social promotion in schools, that results in functional illiterates with highschool diplomas.
Oh well, enough for today. More about my translation fiasco in a later post.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
By the same token the current spate of outsourcing of IT all too often serves to hide incompetence, and dress it up in a halo of cost savings, and "contributions to the bottom line," when the real story is a strategic misalignment. For if companies truly understood the strategic value of IT, they would not put it too far out of their reach - which is not to say that certain parts of development cannot be productively outsourced, but the opportunity is far more limited and surgical in nature than current trends indicate.
Last year I had the opportunity to meet with Michael Hugos, formerly CIO at a distribution coop, who clearly has done a remarkable job there, and has at the same time become a best-selling author at John Wiley with his book on Supply Chain Management, modestly titled "Essentials of Supply Chain Management" (now in a second edition John Wiley & Sons, 2006).
In a recent conversation he expressed to me his eagerness at competing against any company that implements SAP. However, they are becoming harder to find, for the drive to conformity, in particular in public companies makes the pressure to conform to the norm almost too much to bear, and being a public company in the US in that sense is almost a recipe for disaster. Announce a deal with SAP and your stock will go up. What CEO could resist that, particularly if he is compensated with lots of options?
The whole experience brought to mind the fiasco at Pitney Bowes when they implemented SAP, at a time when there were still the big five accounting/IT consulting firms, and they went through four of the five, firing all of them but the last one, realizing they were running out of options to implement it successfully. I became instrumental in bringing in another consulting firm to try and save the day by actually managing the communication between PB management and the implementers, and keeping an eye on strategic alignment as far as possible.
As soon as we got involved - even at the proposal stage - interesting issues of strategic alignment began to surface, and it became apparent that one of the problems of the implementation was in the fact that Pitney Bowes' business model is based on leasing, and the SAP model did not accomodate that, so everything had to be customized. Hence the last proposal from #5 of the big five was for a $300 million implementation budget. A few years later the job was apparently completed successfully "below budget," as I heard. So they likely got away by reflecting only $299 million of the cost explicitly on the books, but the disastrous inefficiencies that no doubt resulted will be paid for over and over and over again for years.
The next brilliant management move then is to outsource the maintenance of the disaster, so that no-one actually ever has to have the intellectual honesty and courage to look at the disaster for what it is, and to do something that actually benefits the business. When in between you meet a business which really understands IT, and leverages it to the max, that is like a breath of fresh air. On the whole however, it seems as though the consumer trends of buying "boxed" software, has all but overwhelmed the capabilities of most managements for sound decision making in this area. As Mike Hugos observed in our conversation, at that point only too often a CIO ends up getting fired, and it's like a cab driver who gets stiffed on his tip for delivering the person to the wrong address, even if it was the passenger who gave the wrong information in the first place. Actual strategic alignment of IT with the business was the promise of the CIO position, but except for the exceptions that confirm the rule, it is yet to be realized. But we're spending a fortune on IT in the name of progress!!!
We also keep fooling ourselves that we're creating economic value with all the presumed productivity that results from this IT spending. Cheered on by Alan Greenspan and the backup chorus at Business Week (See a recent front page article on "Why the Economy Is A Lot Stronger Than You Think" BW Feb13, 2006), which is full of the type of delusional self-congratulatory nonsense about creating value in the "knowledge economy," which created the dot-com bubble and bust, and which now presumably is applied to the US economy as a whole. These are the kinds of musings of slightly deluded folk with pink-colored glasses, who really want us to believe that you can replace substance with arbitrary value that is created only courtesy of revising the standards after the fact. This is a process akin to social promotion in schools, that results in functional illiterates with highschool diplomas.
Oh well, enough for today. More about my translation fiasco in a later post.
Copyright © 2006 Rogier F. van Vlissingen. All rights reserved.
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