Monday, May 23, 2011

Toyota & Technology Transformation!

If you believe BFSI (Banking, Financial Services and Insurance industry) is the early adopter of emerging technologies, and Manufacturing industry is typically a laggard in those aspects, think again!. I have some very interesting and promising updates that could change this perception.

Toyota has recently signed up partnerships with two Technology companies. One with Microsoft and another with Salesforce. And that's not all - The partnership with Microsoft will leverage Microsoft Azure/Cloud Computing and SalesForce alliance will leverage its Chatter.

Along with Microsoft, Toyota is attempting to build Next Generation Telematics Platform for Cars using Windows Azure. Telematics is fusing of telecommunications and information technologies in vehicles. Telematics services helps to transmit critical vehicle information via GPS/GPRS/Communication technologies to a centralized data center where the information can be aggregated/analyzed and reported for optimization actions. Information that gets transmitted include car's health information, energy/fuel consumption data, on-call/emergency service requests. General Motors was the pioneer in this offering with its OnStar service in North America.

As automotive industry is moving towards alternate energy sources, role of Telematics is going to be critical in providing centralized energy management services.

The promising aspect is both Microsoft and Toyota are investing close to $12million in a new venture - Toyota Media Services - that would provide IT services to Toyota Automative Group of companies.

In the second update, Toyota has signed up with SalesForce to build a private Network called 'Toyota Friend'. This network will be built on SalesForce Chatter platform. Using this service, Toyota's customers will be able to connect with their own cars, the automative service company and Dealers. This private network will be integrated with the Telematics platform that Microsoft is building for Toyota. Interestingly, using Toyota friend, you car will be able to tweet to you on maintenance schedules, fuel updates, tips for driving, etc.

These two initiatives would certainly change the image of Toyota that it's no more a conservative player when it comes ot adopting emerging Technologies in their automative products/services. And from technologies perspective, Cloud Computing/Social Computing are making inroads to some of the conventional industries such a Manufacturing.

Making of Tech Bubble 2.0?

Are you ready for another Tech Bubble like the one that you experienced in late 90's and early 2000's?

Facebook valued at $76 billion [more than the value of Boeing and Ford]
LinkedIn valued at more than $3 billion [potential market valued at $30 billion, more than the value of entire beer industry in US. Remeber the biggest revenue streams for LinkedIn are thru recruitment services/advertisements]
Microsoft buys skype for $8 billion [10 times the value of skype's sales last year]
Groupon valued at $25 billion [Groupon's underlying technology is good old 'E-Mail']
Twitter valued at $7 billion

Some of the interesting questions these valuations rise:

1. Are these companies really worth the $value or Are we entering a fresh phase of a new Tech Bubble?
2. If so, Is this new bubble different from the one that we experienced during last decade?
3. What kind of impact this bubble could create globally, in case it pops?

And there are several industry observations across Economist, BusinessWeek and Wharton such as:

1. Most of these startups or start performers are consumer-centric, technology-based utility companies than creating something foundational / core technology advancing companies [e.g. Clean Tech/Life Sciences]. Simply because the VCs or Investors are not ready to fund those non-populist business proposals. So, in a way, Silicon Valley is morphing like a Hollywood business.
2. The number of startups have increased due to affordable access to computing infrastructure - Cloud Computing (Infrastructure, platform, apps) and Wannabe startups follow the easy route of social networking, recruiting and Advertising.
3. There is a tremendous uncertainty around the revenue stream of these companies. People are willing to place bets on their upside revenue potential in future.
4. These ludicrous valuations could set precedence for unrealistic valuations of startups elsewhere in the globe - be it china or India or Europe. [E.g. Finland's Rovio - Maker of angry birds game - aspires to be next Walt Disney :-) ]
5. These companies typically work around advertising / other services. Hence they dont create many jobs. Certainly, there is a loss of manufacturing or design knowhow in services, as they are built on existing platforms/technologies.
6. Investments on very few companies mean we are not diversifying our risks and we dont have options to fall back.

So, What is the Conclusion?

As Economist says - Wait and watch with caution and Have the Wisdom to sell the stocks before its gets too late! :-) - and start to Invest in companies that create 'Thick Value'. [Value that is meaningful, created authentically and sustainable]

Also for my fellow Enterprise IT colleagues, if you are investing in any of the new age solutions such as enterprise social computing/activity stream or unified communications, make sure you have identified the opportunity/need in your company. And you are not investing just because you are inspired by the stupendous success of these above mentioned web 2.0 companies.

If Techbubble 1.0 promised that dotcoms will replace brick-and-mortar enterprises, Techbubble 2.0 claims that there is goldmine behind people who lead virtual lives in online social habitats.

Monday, May 09, 2011

Mind-blowing Marketing Technologies!

When SaaS took center stage, one of the main concerns that was raised in many forums was - Is it the end of IT?. Some even argued that businesses would source line-of-business applications directly from SaaS vendors, thus making IT irrelevant. In practice, I agree this happens in pockets. In few companies, some of the complex business applications, not necessarily SaaS solutions, are directly sourced, impelemented and managed by business. But, In majority of other companies, IT still has a significant role to play.

I came across couple of interesting developments happening in Marketing Technologies space, which made me to believe that IT is nowhere near extinction.Let me elaborate what I read on Marketing Technologies space. One of the biggest trends happening in B2C companies these days is to understand their end customers like never before, listen to them for their needs and concerns, act on those feedbacks to improve the customer satisfaction. Why is it happening now?. For the simple reason being that Customers are empowered with more information. With access to relevant, timely and sometimes authentic information, Customers are empowered and they demand high-quality services from the companies. If companies need to service such demanding customers, they need to get empowered as well, in terms of access to market and customer intelligence and customer service technologies.

From customers perpsective, they have access to all public content, blogs, wikis, social networking sites/forums where they voice their opinions or read about product reviews, discuss and debate before making a purchasing decision. From companies' perspective, there are multiple dimensions in which market and customer intelligence need to be performed. There are a variety of solutions such as web analytics, click stream analysis, social media/collective intelligence based analysis, sentiment analysis/opinion mining, multi-channel analysis, Surveys, etc. Some of these solutions are available as SaaS offerings. Some of them are on-premise packages bundled with a company's existing ecommerce suites. Now, How does one apply a suitable technology solution based on the business problem at hand?. There are tons of vendors chasing this marketing technology space. How do we demistify the complexities and make some sense out of it?. Marketing is no more a calendarized activity that works on offline/past data. With customers having access to 24X7 channels like Twitter, marketing is becoming Real-Time and Companies need to deal with those emerging paradigms.

Traditionally, Marketing department has been spending their money on episodic deployments throughout the year based on the budget availability/business priorities. However, deployment of multiple/independent marketing technology solutions will not help in producing a cohesive view of customer/customer group needs. It would take good amount of integration to knit the pieces together to produce an actionable information on the company's unified brand experience. This requires IT skills such as technology planning and enterprise architecture, technology/solution architecture to knit the different silos together.

Similarly, in the SaaS space, there is a need to customize the out-of-the-box offering to suit the company's business requirements. Majority of the business requirements fall into this category and companies like also promote configurability/flexibility over standardization of business processes/business data. This trend will also re-inforce the requirement of IT skills such as System Integration, Configuration and Project Management.

While the availability of SaaS solutions certainly accelerates the adoption of business solutions, traditional IT skills are still required to deliver a complete solution!.

Wednesday, May 04, 2011

Enterprise IT lessons from Cisco's Earnings!

I have been following Cisco for couple of reasons - its business interests around architectures and IT services. Though the core competency of Cisco is around network equipments serving corporate/government customers, it recently ventured into direct-consumer-centric businesses such as IT services and home-networking/retail products.

In the last two years, Cisco's Leadership often talked about company's ambitions to make it big in the new businesses. Indeed it was promising and raised lots of expectations in the market!. Cisco was making audacious attempt to transform itself from being a product-in-a-box provider to end-to-end solution provider. The company launched quite a few campaigns such as smart+connected communities that would put network-centric platforms as the core to deliver new, innovative services for urban communities!. Clearly, Cisco was trying diversify beyond its core competencies!. And that was the challenge.

Have written about Cisco in my blog earlier here and here!

The challenge showed up in Cisco's earnings in the last couple of quarters and they were below market expectations!. Cisco was not delivering upto shareholder demands and its own benchmarks. Consequently, Cisco's Chairman John Chambers recently wrote an internal memo to all its employees explaining the challenges the company is facing and its future directions. The company has already initiated the organization restructuring process to bring back the focus to its core portfolios.

Couple of interesting observations - Cisco is selling its recently acquired retail video camera business (Flip) and plans to stay out of services business, especially in emerging markets. The second one was interesting. The company has said it doesn't want to compete head-on with other IT service companies like IBM/Wipro, etc. Instead it wants to partner with them to deliver the services to the market. With the new plan, it would tie up some strategic partnership with some of the system integrators/service providers and would help in delivering the core platform and together they would come up with goto-market strategies. That's a significant development!. Cisco is on back foot from directly selling to its customers especially in IT services/solutions business. There are couple of reasons behind this movement:

1. Cisco's margins in traditional network equipment businesses is challenged as it faces fierce competition from vendors like Juniper.
2. Cisco's recent interests in new services/retail products diverted its attention from focusing on its core competencies.
3. The services business / retail business is typically low margin compared to its traditional network instruments' business margins. If services has to make business sense, Cisco need to pump up the volume of those services. This could again change the portfolio mix of its core businesses.

Ok, Why are we discussing this issue in this blog?. How does it impact Enterprise IT shops?. How is this issue relevant to CIOs?

One of the emerging trends that we have been discussing in this blog as well as in the industry is that CIOs need to be business partners. They shouldn't just deliver value in contributing to the bottomline of the company but also to the topline of the company, by delivering IT-intensive services. Isn't this exactly the same Cisco tried to deliver?. Am not sure how much of Cisco's IT organization / CIO's office was involved in delivering its new consumer-direct, IT services/solutions business. But, IT has a role to play!.

There are good amount of lessons to be learnt in Cisco's journey. Cisco's Chairman himself agrees that there is nothing wrong in company's strategy or vision. Its just the execution that has failed. So, for companies that want to venture into transforming themselves from product businesses to services businesses, IT certainly can be a partner. But, delivering on the transformation doesn't look like an easy task!.

As an additional note, IBM has recently acquired a building management software company to accelerate its Smarter Planet initiative!. Would be interesting to watch the developments.