Archive for the ‘innovation’ Category

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Reaggregating SaaS/PaaS results for a competitive advantage

Monday, August 11th, 2008

In a previous post, I discussed how cloud computing and the Grameenphone microfinance endeavor fit into a McKinsey article about the benefits of unbundling production from distribution. This weekend I decided to revisit the article again just to see if I would see anything differently this time around.

The world is indeed getting flatter. The article’s section on “Tapping into a world of talent” talks about how technology today fosters interactive online collaboration which in turn enables companies to outsource increasingly specialized aspects of their work and still maintain organizational coherence.

[...] technology permits them to decentralize innovation through networks or customers, it also allows them to parcel out more work to specialists, free agents, and talent networks.

Top talent for a range of activities-from finance to marketing and IT to operations-can be found anywhere. The best person for a task may be a free agent in India or an employee of a small company in Italy rather than someone who works for a global business service provider. Software and Internet technologies are making it easier and less costly for companies to integrate and manage the work of an expanding number of outsiders [...]

This trend should gather steam in sectors such as software, health care delivery, professional services, and real estate, where companies can easily segment work into discrete tasks for independent contractors and then reaggregate it. [...] Competitive advantage will shift to companies that can master the art of breaking down and recomposing tasks.

Globalization is inevitable, and increased competition means keeping businesses on their toes, which in turn translates to increased benefits to the consumer. In short, it’s healthy for both consumers and producers (unless you’re just lazy).

In a way, this also parallels SaaS/PaaS. Look at the SaaSCon sponsors list for a glimpse of some of players out there. There’s no shortage of on-demand providers filling gaps in the cloud-computing/SaaS value chain and gaps left open for disruption by on-premise incumbents.

Each cloud computing/SaaS vendor mostly specialize in one verticle and strive to dominate that niche-delivering a continuous stream of value (innovate or die) for less (save customers money or be undercut by your competitor). Jeff Bezos has explicitly said it before that with Amazon AWS, he wants to innovate there by reducing operating expenses, increasing efficiencies infrastructure through economies of scale, so that (here’s the important part) “.. the cost savings can be then in turn be returned to the consumer.” Ok, so I paraphrased, but he said it in a video clip somewhere online and I can’t seem to find it right now.

The point here is that he’s trying to save the consumer money (and that’s a great brand promise!) The jury is still out on that one, given that AWS is still relatively young, but if anything else – it’s a makes a good sell (who doesn’t like to hear that their vendor is actively trying to save them more money?), but ok .. I’ve digressed too much on Bezos. I just can’t help liking people (and companies) who genuinely want to help others (the customers) be successful, so that they themselves can be successful too. Pay-for-performance? Pay-per-drink? Cloud computing? ;)

Just to name a few vendors:

  • Google Docs -> on-demand “MS Office”
  • Amazon AWS -> on-demand computing power, storage.
  • Salesforce -> on-demand CRM
  • CODA -> on-demand finance application (built on Force.com!)
  • NetSuite -> on-demand ERP
  • WorkDay -> on-demand HR, payroll, procurement, business intel, ERP

Odds are that your company is already using some kind of on-demand solution for one of its functions, even if you do not realize it.

The way I see it, if you think of each of these functions as discrete tasks with each farmed out to a particular SaaS vendor, then the need for the reaggregation for each of the function’s results is obvious. I agree with the article that companies that succeed in recomposing these tasks would hold a competitive advantage.

It would allow executives to conduct business at the speed of thought (asking questions like “how can I reduce operating expenses here today, can I realistically turn the ship around fast enough in anticipation of this tectonic shift/change in competitive landscape”) – as opposed to the speed of “how fast can I line up all the columns in this Excel spreadsheet from that tabular data in the PDF spreadsheet and .. hmm, it would be really nice if I could overlay on this the results from some SQL queries.. oh wait I have to get those from John in IT first ..”

The $200-300Bil business solutions market is open for disruption by Platform-as-a-Service.

Web 2.0 – all grown up and ready to change the way we do business.

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Posted in cloud computing, innovation, paas, problem-opportunity, regular reads, saas, technology, web 2.0 | No Comments »

Not withholding innovation by decoupling from low(er)-level constraints

Tuesday, August 5th, 2008

Marc Benioff, chairman and CEO of Salesforce kicked off this month in cloud computing and SaaS news with a guest post on TechCrunch.

Some key highlights:

Web 1.0 was about the emergence of the “killer app” from companies like eBay, Amazon.com, and Google. Although we thought of them as Web sites at the time, they were really amazing applications with a level of functionality, ease of use, and scale that had rarely been seen before by the average consumer. Transactions, not just of goods but of knowledge, became ubiquitous and instant. The efficiency and transparency that was once the domain of global financial markets was now at the command of individual consumers and businesses.

It’s about empowering the everyday worker (especially the small business guys) with powerful tools previously only available to mega-corps with deep pockets. Web 2.0, cloud computing, SaaS leaves a taste of benevolence on my tongue, and I like it.

That’s “benevolence”, the way Paul Graham says it:

Surely Microsoft isn’t benevolent? But when I think back to the beginning, they were. Compared to IBM they were like Robin Hood. When IBM introduced the PC, they thought they were going to make money selling hardware at high prices. But by gaining control of the PC standard, Microsoft opened up the market to any manufacturer. Hardware prices plummeted, and lots of people got to have computers who couldn’t otherwise have afforded them. [...] Microsoft isn’t so benevolent now.

I guess I like rooting for the underdog and taking on the incumbents ;) Any big problem is a big opportunity, right?

More from Marc’s post:

Web 3.0 changes all of this by completely disrupting the technology and economics of the traditional software industry. The new rallying cry of Web 3.0 is that anyone can innovate, anywhere. Code is written, collaborated on, debugged, tested, deployed, and run in the cloud. When innovation is untethered from the time and capital constraints of infrastructure, it can truly flourish.

Emphasis is mine on that last sentence, since I think it’s worth noting. It’s why I absolutely <3 SaaS/cloud computing and believe in it. Too many times, as a software engineer .. you cut back on truly innovative ideas because of the voice of fear that speaks softly to you from the back of your mind, “but dude, you’re opening a can of worms; you need to do this, that, and it’s mostly all prickly infrastructure stuff that you’re not an expert in and would take you days/weeks/months to get up to speed! gahh .. can’t we find another less innovative solution that is easier to implement?”

And sad to say, most would take the easy way out — innovate lesser, in smaller incremental chunks (to keep the pain points low). And that’s infrastructure holding back otherwise creative problem solving.

According to Daryl Plummer, managing VP of Gartner (IT), about $8 of every $10 spent on technology in corporations is for maintaining systems, as opposed to innovating. Talk about a serious baggage.
“It’s hard to turn a big ship very quickly [...] You have technologies that are like cement in these businesses—they’re hard to change and get rid of.”

I believe that with cloud computing and SaaS, we’ll see more bottom-up (of the org chart) punching of holes in the “corporate policy” firewall, because business units needs stuff done, and IT departments can’t keep up. This is especially true in huge bureaucratic companies.
(more…)

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Mobile data adoption on the rise

Saturday, July 26th, 2008

Some mobile data trends (numbers + commentary):

  • Total mobile data revenues for 2007: US$157 Bil
  • Total mobile data revenues for Q1 2008: >US$49 Bil, 42.7% y-o-y increase. Of this, non-SMS data made up approx US$17.46 Bil (35.6% of total data revenues)
  • Mobile data revenues is now almost 20% of mobile operator total revenues
  • 40% of world’s data revenues come from APAC (>US$20 Bil in Q1 2008)
  • Fastest growing is EMEA, which despite only representing 2% of world’s data revenues, is growing at 91.7% y-o-y to US$927 Mil. This acceleration is aided by the 321% y-o-y increase of HSPA subscribers
  • Operator that generated highest non-voice revenues this quarter is Japan’s NTT DoCoMo (US$3.6 Bil), overtaking China Mobile (US$3.5 Bil)
  • As a % of overall revenue, Filipino mobile operator Smart Communication is the world’s market leader, and the only carrier to depend on non-voice revenues for > 50% of its income *I wonder how much of this is attributed to microfinance and mobile payments i n that region, hmm ..

And as always, I’d like to extrapolate some meaning from raw numbers, so let’s go.

Obviously, the trend clearly indicates that your cell phone is becoming more of a general purpose computing device (like your desktop PC, as opposed to a single-purpose device that makes phone calls only), with more rich features that PCs don’t have (e.g. GPS and accelerometer), and it’s all hooked up to the wonderful internet.

Action items: First, we have to get out of the habit of thinking of cell phones as desktops, because the use-cases are completely different; treating them as such is the clearest way to die. Second, with mobile devices becoming more powerful (computationally, Moore’s law), having more storage (cost of storage trending down, Moore’s law), internet connectivity improving (coverage, speed, cost, again, Moore’s law), and throw on top of that added new hardware features (GPS, accelerometer, etc) .. this sounds to me like having richer and more powerful tools in a technologist’s problem solving warchest — so bring on the problems, bring on the opportunity.

I chuckle as I write this because this reminds me of what Stanford University’s president John Hennessy once mentioned in an interview, about his prediction of what would happen in mobile technology down the road:

  1. Information at any where, at any time, on any device
  2. A user experience that works well, independent of what that information is: Be it a Google map, stock listing, web site, email, etc. Making that convenient and natural, and seamless
  3. Imagine walking in a brick and mortar store and wanting to buy a product. I want to look up my phone and do a price comparison on the product and know what people are saying about it. I want to do that in 5 seconds. Today, I have to open a browser, visit a review site, search, etc. (too much work)

The iPhone is clearly one of the pioneers in making that happen, especially with the iPhone app store. I have previously commented on why I think the iPhone app store is very much Apple’s competitive advantage, and as much as I root for Google’s Android, it remains to be seen how the Android incarnations would address the iPhone platform threat.

With mobile carriers having trouble increasing revenues from voice, you betcha they are thinking of every single way to make money from mobile data. I have also previously written a rant about iPhone/AT&T’s data pricing strategy (there’s nothing wrong with the strategy per se, I’m just a price-sensitive geek at heart).

Now’s a good time to be a mobile app developer .. there’s money already being pledged for the BlackBerry platform (US$150 Mil) , Google Android platform (US$10 Mil), and the iPhone platform (US$100 Mil). I can see mobile carriers snapping up these mobile app startups to further bolster their mobile data revenues. Technology IPOs are almost non-existent today, much to a Silicon Valley VC’s annoyance, so exits via acquisition to a mobile operator would make sense for mobile app startups.

I’m passionate about innovation and problem solving with tech, and I can’t wait to see more new applications in mobile given these trends. The question I try to ask myself given these stats above are, “what else is possible today that wasn’t yesterday?” Think it about it.

If I were to wish for anything, I should not wish for wealth and power, but for the passionate sense of the potential, for the eye which, ever young and ardent, sees the possible. Pleasure disappoints, possibility never. And what wine is so sparkling, what so fragrant, what so intoxicating, as possibility!
–Søren Kierkegaard

To go off on a slight tangent, it’s interesting to note that a Filipino mobile operator is the world’s market leader in depending on non-voice revenues. I wonder how much mobile payments contribute to their revenue stream, and how much of that is related to microfinance. If anything, I think that could be a classic BoP example because it would illustrate another example to bust the myth that corporations cannot make a significant and sustainable profit in selling to the poor.

If I was all the other mobile carriers looking to make more $ from mobile data, I’d be watching this Filipino carrier, Smart Communications closely to glean some lessons.

Click here for the full story of the stats above from cellular-news, and regional breakdown of revenues.

And I’ll end this blog post with vivid taste of possibilities for mobile — a very cool Android project in the making called Enkin. Do check it out!

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Posted in geeky, ideas, innovation, microfinance, mobile, problem-opportunity, regular reads, stanford, technology | No Comments »

Incremental improvements .. meh

Monday, May 26th, 2008

As far as innovation goes, I prefer major disruptive innovations over incremental improvements (not to say the latter does not have it place, it does). As a keen observer of human behavior, I’m interested in understanding in general why people do they things they do, with a focus on human interaction with technology–such as factors that affect the adoption rates of new technology.

I long discovered (the painful way) during my time as an academic in computer science that just because one builds something super well, that by no means guarantee that “they will come”. In fact, my favourite quote then became, “So what if it doesn’t do anything? It was made with our new Triple Shielded Core Blowfish Encrypted Reduced Internal Resistance 26 Level On-Die Cache 512 1024bit Registers Supercharged Iso Bifurcated Krypton Gate Metal Oxide Semiconductor process …” (souped up version from something similar I read from a UNIX fortune cookie, but I digress).

Thus, I found this blog post by Andrew McAfee, a HBS faculty to be quite interesting. I’m going to summarize the key takeaways, although I highly recommend you read the original post.

Changing the status quo is extremely difficult and often leaders get “carried out on their shields” (from an awesome and inspiring Carly Fiorina talk about change and leadership at Stanford, that I’ve quoted her before here). Let’s examine one of the traits of the status quo:

We are loss averse. A $50 loss looms larger than a $50 gain. Loss aversion is virtually universal across people and contexts, and is not much affected by how much wealth one already has. Ample research has demonstrated that people find that a prospective loss of $x is about two to three times as painful as a prospective gain of $x is pleasurable.

A bird in hand is worth two in the bush. Makes sense, it takes a non-status quo person with a vision or be hungry enough to be prepared to lose $50 for the upshot of potentially gaining another $50. The willingness to feel fear and keep going forward distinguishes the living from the merely breathing :)

.. behavioral economist Richard Thaler has called the “endowment effect:” We value items in our possession more than prospective items that could be in our possession, especially if the prospective item is a proposed substitute.

If you’re introducing a mere replacement of an equal product, it’d better be .. uhh, just realize that you’re fighting an uphill against change. Make sure you have incentives for people to change.

As if all this weren’t enough, Gourville also highlights that the people developing new products are very dissimilar from the products’ prospective consumers. You don’t go work for TiVo (to use his example) if you don’t ‘get’ the potential of digital video recorders and think they’re a really good idea. And after working for the company for a while, having TiVo becomes part of your endowment; you think of things in comparison to TiVo, instead of in comparison to a VCR. Both of these factors make it harder for developers to see things as their target customers do.

Many techies suffer from this, falling in love with their own creation and failing to see that it could perhaps actually be fundamentally, how should I put this gently, a completely useless product. If it’s not solving a real person’s pain point that he/she is willing to pay for a solution, then monetization may be a challenge. Doesn’t matter how snappy the UI is, or the fact that you’ve just spent a month shaving off 10 CPU cycles on the algorithm that calculates the number of molecules in a can of soda, I highly doubt anyone would pay you to compute out the exact number of modules in a can of Mountain Dew just before they pop the can. I’m sure the algorithm is still very cool, though!

There are three classes of people: those who see, those who see when they are shown, those who do not see
–Leonardo da Vinci

As an innovator, train yourself to see the things that you cannot see. Ok, so that’s admittedly difficult, so at least try to see the things that other people see that you don’t see.

This last point is one of the reasons why I strongly believe that techies should actually get out there (at least occasionally) to go talk to real human beings, such as the paying customers. Be aware of your own inherent bias and need to protect your “baby” (the product), but don’t forget that you are also creating value for someone else.

The bottom line is: if you’re developing something new, you’ll have an easier time if the benefits of the product surpasses the existing solution by (at least) a factor of 10.

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Posted in entrepreneurship, innovation, product management, startup, things to remind myself | No Comments »

iPhone apps for healthcare technology — plus some robots

Sunday, May 11th, 2008

Cell phones, mobile phones, hand phones, whatever they are called, wherever they are in the world–can change the world! We already see it help drive economic development in microfinance, and now, we’re making strides with healthcare technology, another field I’m interested in because I love seeing technology change lives. The convergence of sophisticated UX-centric mobile devices, Internet/Web 2.0, Software as a Service, cloud computing — not to be missed!

From the article:

Despite all the advances in medical diagnostics, two-thirds of the world’s population has no access to imaging technologies. Worse, about half of the imaging equipment sent to developing countries goes unused because local technicians aren’t trained to operate it or lack spare parts, according to the World Health Organization. But thanks to the proliferation of cellular and other wireless networks, researchers are stepping up efforts to deliver crucial medical services from afar. “You go through India, anywhere, in the middle of the road, there’s someone with a cell phone. A friend calls me from the jungles of Costa Rica,” says Rubinsky. “I can see so many applications in which the cell phone becomes an integral part of a medical device. A cell phone can cut the cost of almost every [diagnostic] device.”

We have the $10Mil fbFund for Facebook apps, $100Mil iFund for iPhone apps, $10Mil for Google Android apps, and the to be announced $150Mil Blackberry apps fund — will we see a fund to drive healthcare technology apps?

With the iPhone spurring more handset makers to introduce similarly robust devices, the U.S. market for medical cell-phone software is expanding rapidly. Sales of phone applications for medical professionals are expected to rise from $111.8 million last year to $276 million in 2011, according to consultancy Ambient Insight.

On the “heavier” tech side, we’re definitely making huge strides in having robots that can now operate on people.

Consider this: Suppose there are only 10 surgeons in the world that specialize in this really complicated brain disease, affected by not that many people, but the number of victims dying from it is significant enough (say, 5,000 deaths a year worldwide). There’s only so many surgeons to go around, and with that many victims around the world, even if these surgeons worked themselves to death to save the world, they can’t possibly help everybody with just two hands and only 24 hours in a day. Seriously, it takes almost a day to just travel halfway across the world, and that’s just a one-way.

The solution: remote surgery. In terms of supply and demand, the supply is scarce (the Ph.Ds in this very narrow field) and the demand far exceeds the supply, and the number of victims is probably going to grow at a rate faster than the rate Ph.Ds in this field can be minted. Technology here serves to increase supply, that is, not by letting universities churn out more doctors (although that would work too), but rather by increasing the “utilization rate” of the existing doctors by allowing them to perform their work anywhere at anytime, by saving on travel time and expense. Even if we had an infinite amount of money to spend on the fastest jets, nobody can buy more than 24 hours in a day. 10 hours on a jet spent traveling is 10 hours that could be spent operating on a patient.

“If you are looking at the future, it’s hard to envision a hospital not offering robotics,” said Robert Glenning, chief financial officer at the Hackensack University Medical Center in New Jersey

Technology, changing lives and making the world a better place–I love it!

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Posted in changing the world, healthcare technology, innovation, mobile, regular reads, technology | No Comments »

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