TECH TALK: Web Services: Wonder World

The Web Services revolution is just beginning. Companies are using software to integrate disparate systems. While this has in some ways been the Holy Grail of enterprise software, the difference this time around is that companies can expose their services through Application Programming Interfaces (APIs) enabling others to use them. This time around, there are also standards for data interchange between companies. Many companies have now started to deploy Web services internally and in the extended enterprise.

  • GM plans to cut in half its USD 25 billion investment in inventory and working capital by using Web services to better integrate its operations and move to a build-to-order manufacturing and distribution model. As a start, dealers can now locate specific car models in the inventories of other dealers. (HBR, Oct 2001)
  • Southwest Airlines offers customers the ability to make rental car reservations through Dollar by integrating their two systems. The relationship generates USD 2 million in incremental revenue for Dollar, and customers don’t leave the Southwest website. (Release 1.0, Sep 2001)
  • Merrill Lynch is integrating information through XML from within the company and from partner organizations to tie-together customer information, product information and real-time market data. This gives the brokers an integrated view needed to meet a customer’s needs. (HBR, Oct 2001)
  • Bekins, a US-based moving and storage company, does 80% of its residential moving business during summer. It built a self-hosted Web service that serves 2,000 agents, who bid on seasonal moving capacity. The web service allows agents to bid individually or in groups on these deliveries. The development time: five people for eight weeks. (Line 56)
  • Dell publishes a new manufacturing schedule for each of its plants every two hours and feeds it directly into the disparate inventory-management systems maintained by all the vendor-managed hubs, cutting inventory buffers at its plants to just 3-5 hours. Dell is creating an event management service which will send out queries on the status of orders to suppliers, whose own systems will automatically respond. The goal: to reduce hub inventories by 40% and better match demand and supply. (HBR, Oct 2001)

Today, when one buys a book from an online store like Amazon, one is sent an email with the tracking number after the items are shipped. If the shipping companies were to offer a web service to the online store, the online store could send the tracking info directly and thus retain greater control over the customer, who now has a one-stop contact point.

Imagine a web service which can connect inventory systems to accounting, warehousing, ordering, and shipping. This now gives an end-to-end management of the business while dealing with each transaction only once, instead of once for every system it affects. (Line 56)

TECH TALK: Web Services: Internet 1.0 (continued)

The first phase of the Internet has also resulted in the creation of billions of pages. These pages were made possible by the use of a common publishing standard in the form of HTML. Just about anyone could write HTML and put up information for others to see. Dynamic applications needed only the use of simple commands like GET and POST over the HTTP protocol. The result is that today we are able to get almost any kind of information through the Internet. The catch is that it is We, the People.

Therein lies the problem. The information is accessible only by humans. Because HTML was a simple language with few complexities, it also meant that while we could separate the valuable content from the noise (ads?!) on even poorly formatted pages, it is a different ball game for applications machines.

So, the first phase of the Internet made communications and publishing easy – by the people and for the people. What Web Services hope to do is to make the same possible for applications and machines.

Here is how Steve Jurvetson of Draper, Fisher, Jurvetson summarises the story so far and offers insights on what is to come:

Whether that’s a sales exercise, a supply chain planning exercise, or the way in which companies communicate internally, the Internet adds an incredible potency. These communication channels do not need to be one-on-one or conference calls. They can be semi-automated to a variety of electronic forms of communication, various forms and applications that run not only within a company but also between companies.

And what the Internet provided to that whole domain was a lingua franca, sort of common language between businesses and within businesses that we’re only beginning to tap into.

There was a land rush sort of mentality to grab the easy and obvious applications to automate business as usual. They would selectively layer on an application such as expense reporting or any sort of purchase request authorization process and try to add automation to that or add automation to the sales force process. Then some companies looked outward from the company into this whole area of CRM. Still others are building trading exchanges and other forms of supply chain automation in a real-time and distributed basis. That’s where we are today.

We believe the next wave touches upon the area of distributed computing, where you look outward from a company and you tie together organizations with large populations. Tapping into that collective intelligence that exists within a company as well as within trading partners. Tapping into that information stream is tapping into the collective.

(Excerpted from a Merrill Lynch conference call report of October 23, 2001)

TECH TALK: Web Services: Internet 1.0

Five years into the Internet revolution and 18 months after the start of the bursting of the biggest financial bubble in history, the real utility of the Internet is now beginning to dawn. It goes by the moniker of “Web Services”. It is about business applications communicating with each other automatically through the Internet. It is about information sharing across enterprises. The silos of data created are about to be bridged. Or are they?

As worldwide investment in technology slows and companies search for returns on the monies put in over the past few years, the computer companies are now saying they finally have the Holy Grail that businesses have been looking for. The promise: seamless communication across the extended enterprise, reduction in working capital and inventory costs with just-in-time information, and leverage of the legacy software that companies have installed.

Is the Web Services revolution for real? Is it Yet Another Paradigm Shift? Or is it just a background technology, just some more plumbing? Will it really provide businesses the efficiency increase that they have been searching for? These are some of the questions we will explore in the coming columns.

Before we get down to a discussion on Web Services, it is important to understand what the Internet has done.

In the first phase, as companies have linked computers, the cost of communications has plummeted. The killer app in this phase continues to be email. We are also just beginning to see the adoption of corporate Instant Messaging in companies. Completing the communications triad is wireless text messaging, or SMS (short message service).

While most communications piped through the Internet is primarily email (with IM being used mostly for chat), the ability to integrate Email, Instant Messaging and Text Messaging lays the platform for real-time communications. Messages can be delivered not just between people, but between machines and applications – at a very low cost. The enabler for this, besides the wired Internet that we are accustomed to using, is the mobile Internet – being built by the cellphone companies worldwide. This pervasive envelope of ubiquitous reachability is one of the key developments of recent times.

TECH TALK: Harnessing Information: Enabling Technologies

Today, there is a 1:1 co-relation between how we input information and how we access it. If we put a contact into Outlook, the access of that piece of information is also expected to be from Outlook only. If we store a person’s phone number into the cellphone’s memory, the only way for us to access it back is via the same cellphone. This is what will change as information access becomes independent of how it was created. Going ahead, the sources of information may be many, and so will the access points.

The building blocks for this are already falling into place. The key two developments which will facilitate the creation of this “information grid” are the mobile Internet and Web Services.

The mobile Internet is creating a pervasive envelope which allows for real-time sending and receiving of information. Sensors and GSM “cores” (the guts of a cellphone minus the keyboard and the display) attached to machines can now broadcast machine status on a continuous basis. Whether it is a cellphone or a wireless-enabled PDA, we will have a device which can be used to deliver information to us at the right time. (If we are on the desktop, the system will sense our “presence” and just send an alert through the Instant Messaging client).

Web Services are the next big battleground in software. The Internet helped commoditise connectivity between people and computers; Web Services will help commoditise application-to-application interactions. This is the vision on which most of the major computer companies now agree. Whether it is Microsoft’s .Net platform or Sun’s ONE platform, the future is about weaving applications together into a grand tapestry. Exchange of information and interoperability of applications is the next phase in the evolution of the Internet.

Information in the future will be available to us “just-in-time”, wherever we are. The system will have a sense of our location availability, and an understanding of our preferences – be it as individuals or as part of an enterprise ecosystem. The system will have an infinite memory, so we don’t forget. No longer will we have to worry about how and where we put the information. As long as it is entered into the grid, it will be available to us.

The march of technology is inexorable. What is needed is to envision how the coming pervasiveness of the Internet and aggregation of information can make a difference to individuals and enterprises. Just as the unbundling of the cord from the telephone created a new set of applications and changed the way we use the telephone (think of all the SMS messages that now flow between people everyday), this information grid will also make possible uses and applications that are difficult to imagine currently.

TECH TALK: Harnessing Information: The Pipeline

The problem with information today is not the lack of it, but its oversupply and lack of integration. Most information available today is in silos, and not processed enough to make us more productive. To look at what can we done to harness information better, let us take a look at the information pipeline.

Input / Collection: Information originates in multiple different ways. For many of us, email is the primary way we are creating new information daily. Then, there are the Personal Information Management (PIM) programs like Outlook in which we store a lot about our life. Information also is generates by websites and weblogs. In some cases, there are agents which filter some of it for us. Within enterprises, forms and databases work as additional generators. In the machine world, sensors create information.

Storage: The first step in harnessing information is storing it in a format which can be used by different applications. This is where XML comes in. XML provides a way to represent information such that it can be exchanged between applications and enterprises much more easily than in the past. The other aspect of storage is centralisation: storing it in databases on servers such that it can be processed and we can be alerted.

Processing: This is where the greatest efforts need to go today for information to become valuable to us. It is not just about integration, but also about assimilation. Information needs to be intelligently aggregated together to avoid duplication (so that we need to enter it only once) and cross-linked (so we can drill down deeper). Information also needs to be personalized. It will also need to learn from our usage to make us do things faster.

Output: The final challenge in the information pipeline is getting the right information to the right people at the right time. So, instead of us pulling it from databases, it should be pushed to us – on the device closest to us. In the coming years, as the functionalities of cellphones and PDAs merge, we will have a wireless personal device which ensures accessibility all the time. This means alerts and notifications based on triggers or exceptional events can be sent to us instantaneously. The delivery of information will need to be in real-time, and not when requested.

TECH TALK: Harnessing Information: Four Views (Part 2)

Writes Ajay Shah, in an editorial on Freshmeat:

We have accumulated three different tree systems for organizing different pieces of information:

  1. The filesystem
  2. Email folders
  3. Web browser bookmarks

This is a mess. There should be only one filesystem, one set of folders.

Email is a major culprit. Everyone I know uses a sparse set of email folders and an elaborate filesystem, so we innately cut corners in organizing email.

We really need to make up our minds about how we treat email. Is email a channel, containing material which is in transit from the outside world to the “real” filesystem? Or is email permanent (as it is for most people), in which case material on any subject is fragmented between the directory system and email folders? If so, can email folders automatically adopt the organization of the directory system? Can email files be placed alongside the rest of the filesystem?

Dhananjay Bal Sathe pointed out to me another source of escalation of the complexity of filesystems. It is Microsoft’s notion of “compound files”, which are objects which look like normal files to the Operating System (OS) but are actually full directory systems. Since the content is hidden inside the compound files, you cannot use all OS tools for navigating inside this little filesystem, only the application that made the compound file.

One solution comes from David Gelernter’s Scopeware which uses time as a basis of organising information. Writes Elinor Abreu in “The Industry Standard” (April 23, 2001):

Putting order into the desktop is the mission of David Gelernter’s new company, Mirror Worlds Technologies. The problem, he notes, is that most PC-related advances of the past decade have focused on the Internet; the 25-year-old desktop, meanwhile, has been ignored. Inboxes are overstuffed, desktops are cluttered with icons, and files vanish. The typical PC is a study in disarray.

“Hierarchies are fundamental to life,” says Andy Hertzfeld. “They are using the most effective way of managing complexity that nature has found.” But they also reflect the time when a megabyte was big. Today’s gigabyte storage capacities require a new organizational metaphor: the index card. Gelernter’s new software, dubbed Scopeware, abandons the file folder in favor of a line of index cards streaming into the distance; a search window parses the information. Browser-based Scopeware creates a searchable index of all textual information on an individual computer; corporate networks can be similarly indexed.

Users can browse through the stream of information (thumbnails pop up as index cards are scrolled over) or search by keyword, topic or file type. Clicking on the card opens the file, eliminating the bugbear of opening different applications for different files.

Scopeware doesn’t replace Windows or other applications; they still run in the background. Scopeware simply combines all the data into one location and eliminates the need to name files, organize them and remember where they are or what they’re called. It meets two basic goals: it uses computer power intelligently and it saves

TECH TALK: Harnessing Information: Four Views

The challenge of managing information is intense. There is something wrong when one has to look at 200-odd emails a day, and the only thing that seems to work well is “the less you send, the less you will receive.” Our own information sits somewhere in the hierarchy of the “My Documents” folder and the evergrowing collection of emails. Google covers a lot of the Web, but that is still not good enough for us to find quickly what we need. Within the enterprise, knowledge is dispersed in databases and the experiences of people. As we examine the various issues related to harnessing information, it is interesting to consider different views on this issue.

An extract from a IDC White Paper highlights the problems of data access:

Data access involves getting a complete, understandable, and relevant answer every time you ask a question. Think of the difference between asking an expert versus asking a librarian for information. Current data-access systems are good librarians. Effective data-access systems need to be more like experts. Why is effective data access challenging? We see four major factors:

Data volume. Today, Google can index and search about 1.5 billion Web pages – impressive but less than half of the Web. The Web is still growing at nearly an exponential rate, and most corporate data is not on the Web but is sequestered in diverse and private data stores.

Data diversity. Rich digital data – video, photo-graphs, images, unstructured text, audio, data from satellites and many other sensors – can help form a complete picture that approximates the real world. But most information systems are best suited to handle structured text, not rich and diverse data types.

Data context. Every business process consists of events. Every event occurs within a context – time, location, people involved, and so on. Information systems treat events as one-dimensional transactions, stripping contextual information.

Ever-changing users and processes. Increasingly, business processes involve not only employees but also a dynamic set of suppliers and customers. So, as processes and users change, information systems must change with them while still providing complete and pertinent data quickly.

Writes Kevin Werbach (Release 1.0) on Knowledge Management:

Knowledge management has traditionally suffered from the hubris of modernism: the belief that we can discover ultimate truths and organize the world according to rational principles using clever code. The idea was that we should capture and organize bits of “knowledge” in central databases. The people involved were relevant only as donors to the common ontology or as empty vessels into which knowledge could be poured.

Life – and business – doesn’t work that way. It’s messy, complex and subjective. Real workers have the disturbing habit of being human, so they refuse to change their behavior or to contribute metadata into a shared pool. And universal taxonomies are worthless if divorced from the subjective experience of those who use or generate that information.

Enter postmodern knowledge management. Postmodernism holds that our concept of reality is always warped by the lenses of individual subjectivity and group power dynamics. Therefore, postmodern KM can’t be about management at all, because management implies external control of some definable resource. Its goal is simpler yet deeper: leveraging people. Postmodern KM operates within and on the basis of existing behavior patterns, mining conversation streams and relationships automatically to incorporate structure and context into the information human users already manipulate. It fosters human intelligence and interaction rather than trying to replace them.

TECH TALK: Harnessing Information: Harnessing Information

Yesterday, I double-scheduled myself. I forgot I had a meeting on Wednesday morning, and agreed to meet someone else at the same time somewhere else. Tomorrow, I will have to re-schedule one of them. I guess a Palm or an equivalent electronic organiser would have saved me this embarrassment, but as we will see later, there is much more to information than just putting it into a Digital Diary.

We are all social animals. We have a wide network of people we know. And as we meet and interact them, a lot of information is exchanged. Information which can help deepen a relationship but which we are ill-equipped to handle. Like birthdays, anniversaries, names of spouses and children, likes and dislikes. We hear, but we don’t absorb and store for timely future recollection. Wouldn’t it be nice that the next time we meet someone at the mall or the airport, instead of asking, “So, how is your daughter doing?” we could say, “So, Meera must now be 10 months old. She must be growing up real fast?”

Medical representatives visit doctors and chemists daily and then fill up detailed reports and then send them by post to their respective head offices.

Is there a better solution which not only transmits personal instantaneously and electronically, but also can alert decision makers on exceptional rise in sales of a particular drug so more quantities can be rushed to those specific areas?

Today, thanks to the Internet, Google and the great publishing revolution of the past 5 years wherein everyone has put everything of even the minutest interest on the Web, one has to access to more information than ever before. Newspapers, webloggers and diarists worldwide put out new information in massive quantities daily. Yet, to find what it is that we need, it is becoming increasingly harder.

Information naturally resides in silos. In memories, in notebooks, in writing pads, in diaries, in computer files, in email folders, in the RAM of cellphones. Information, like dust particles, naturally scatters. And just like it is impossible to aggregate the dust particles again, so too it is with information. We may be in the Information Economy, but it is still the Dark Ages. In both our personal and corporate lives, the amount of information around us has increased exponentially. What can be done to manage and harness information better?

TECH TALK: Life as an Entrepreneur: The Choice

We all have a choice: we can either accept the status quo or think like entrepreneurs. Whether we are working or running our own businesses, this is what can set us apart from the rest. In an entrepreneur’s world, there is no room for mediocrity or petty politics. There is no acceptance of underperformance or tolerance of egoists. There is no room for losers. Entrepreneurs work to change the rules of the game, and play to win.

Entrepreneurial thinking is not only about the short-term or the long-term. It is about both. Therein lies the challenge. Anyone can do one or the other. To do both is what entrepreneurship is about. We not only need to build the strong foundation for the future, but also make sure that the salaries and bills for this month are taken care of it.

In India, it is especially easy to be just a little above the rest. We see too much of mediocrity all around us. Just being a bit better than the others is easy. What is harder is setting one’s own standards of excellence. We are all Good at heart. To win, one needs much more than just goodness. When one is good, one is not great. In the words of Jim Collins, “Good is the enemy of Great.”

Thinking like an entrepreneur is what our companies of today and the India of tomorrow needs. This is an opportunity for us all. To rise above the ordinary. To make a difference. To live a life. To bring out the entrepreneur within. The choice is for each us to make.

This wonderful quote from Dan Bricklin sums up that entrepreneurial feeling:

Being a successful entrepreneur is tricky. You have to live with having control and not having control at the same time. It’s like this: In big business, when you need to cross a river, you simply design a bridge, build it, and march right across.

But in a small venture, you must climb the rocks. You don’t know where each step will take you, but you do know the general direction you are moving in. If you make a mistake, you get wet. If your calculations are wrong, you have to inch your way back to safety and find a different route.

And, as you jump from rock to slippery rock, you have to like the feeling.

TECH TALK: Life as an Entrepreneur: Innovation

An entrepreneur’s brain needs to be constantly active. Good ideas do not come between 9 am and 5 pm, Monday to Friday. I was driving home from work the other night when I found my car behind a horse- carriage. Instead of the normal seating for four people which the few remaining horse- carriages in Mumbai have, this one was different. It did have the seating for four, but in a circular moving merry-go-around. It was the first time I had seen something like this. It had all the makings of an entrepreneur at work.

For entrepreneurs, the conventional approaches don’t exactly work. At the early stages when one in trying to build a business, few ideas from how large businesses go about doing things work. Talking to friends who work to the top-notch MNCs won’t give a clue on how to fight the battle in the trenches. Putting up ads in newspapers are out of the question because they are way too expensive. This is where entrepreneurs need to think differently. Like the “owner-manager” of that horse-carriage.

When IndiaWorld was launched in March 1995, there was no press conference in a five-star hotel. Emails were sent out to friends, postings were done on newsgroups, a press release was sent out.

Externalities can help get a person once to the website, but only its quality will get repeat visitors and loyalty. A lot of attention was paid to the product and customer feedback. We had a potpourri of content which was updated daily – something fresh to ensure that people come back again tomorrow. Every email that came in was replied to. There was a realisation that if people liked it they would naturally tell their friends. This is exactly what happened. Many-a-time, we think about everything else except what we should be concentrating on! Not having a blank cheque makes one thing harder about the real business at hand, rather than the hype.

Innovation also means trying out many different things. Some will work, others will fail. But unless one tries out things, one will not know. More importantly, new doors only open when takes steps in different directions, and closes some others. In IndiaWorld, we launched 13 sites. Only 4 of them worked well. But if we had hesitated from launching the new sites, we would not have know got those 4 winners. As an entrepreneur, one has to put away the fear of failure and think: what would you do if you were not afraid?

TECH TALK: Life as an Entrepreneur: Passion

An entrepreneur is fighting a war, a guerilla war. The enemies have more of everything: money, people and resources. They are the defenders. To stand a chance of winning, an entrepreneur needs the “Mother” of Business: Passion.

Passion is what comes from within, it is that fire and energy which can help the entrepreneur surmount even the most difficult of obstacles. Passion is perhaps the single biggest differentiator for an entrepreneur. In the words of Jack Welch, “If there’s one characteristic all winners share, it’s that they care more than anyone else. No detail is too small to sweat or too large to dream. It doesn’t mean loud or flamboyant. It’s something that comes from deep within.”

During the early days of IndiaWorld as I went and met various content providers, it was this passion which perhaps helped me convince them of their participation. In the first few minutes of the meetings, I had to make them see the future of the Internet and see me as someone who was just the perfect partner. For those brief moments, size mattered little as I sat across the table from them. It was one person to another person. It was one entrepreneur to another entrepreneur. Making people feel that they can make a bet on the person across the table, however audacious the idea, is what passion can do. It was about making them, for a fleeting moment, make them see in the person across the table, their own past, their own struggle, and make them want to say Yes.

Passion is what is most visible in the entrepreneur, who as a General also has to motivate the troops. The team an entrepreneur may not always have the best people – in fact, at the early stages of a business, it is not easy to attract the most outstanding of talent. An entrepreneur’s challenge is to infect those around with that same passion to excel, and make ordinary people do extraordinary things.

Passion is not the only thing. What is necessary for an entrepreneur’s passion to be well channelised is a strong belief, based on rationality and realism, that the war being fought can be won.

Realistic Entrepreneurs? A euphemism? No. Entrepreneurs are not trying to do impossibilities. They have a dream of tomorrow, but one that is within the realms of possibility. Entrepreneurs see the same things that every one else sees, but based on their unique experiences and thinking, are able to put these together differently. Entrepreneurship is not about taking the greatest risk known to humanity, but about reducing risk in the endeavour to create what is within the bounds of mankind.

TECH TALK: Life as an Entrepreneur: Envisioning Tomorrow

Recently, I was on a flight to Bangalore.13 meetings lay ahead in the next days. As I sat thinking about them, a sense of dij` vu came over me. I had made similar concept-selling journeys at least twice in the previous decade. The first was a multi-city visit in 1993 to talk to various hospitals and research institutions to talk about our new image processing software. The second was a visit to Delhi to January 1995 trying to meet various newspapers and magazines to get content for the proposed India website. This time around, it was to seek alliances for our enterprise messaging solution.

As I sat thinking on the flight about the meetings in the next two days, I thought about life of an entrepreneur. There is a joy, a delight in the struggle of a start-up. Maybe it is about the challenge of the unknown, maybe it is the dream of doing something different, maybe it is the silent awareness of the odds of failure and the determination to prove them wrong. Whatever it is, there is an inner thrill which inevitably brings out the best, taking individual performances to levels one had previously thought were not possible.

What I like most is the envisioning of tomorrow and then working to make that happen. It means creating a mental map of the future and seeing new developments as they happen not in isolation but as part of a whole. It also means articulating it in simple enough terms to make it seem achievable in a reasonable time-frame to one’s team.

This vision of tomorrow does not come overnight: it is painstakingly incremental. I live for those moments of epiphany when thinking leaps to a new level. Suddenly, ideas take flight, previously unrelated pieces fit together to move the jigsaw puzzle one step closer to completion and a new simplicity and obviousness emerges.

This is the vision which consumes the entrepreneur, and takes over body and mind. What seems so obvious that it can also blindside. Yet, it is this what fires up that inner passion, that infectious enthusiasm which is the entrepreneur’s greatest asset. It is the belief that one has to just go ahead and build out the future. It is almost like this is what one was born to do.

Yet, an entrepreneur is not necessarily a risk taker, but a risk reducer. Each day at work, the entrepreneur seeks to make decisions to increase the longevity of the business and diminish the risk. And yet, herein lies a paradox. For an entrepreneur, lack of growth (and uncertainty) is like death. When things start becoming too predictable, the challenge ebbs away. It is then time for a new dream, a new vision.

TECH TALK: Life as an Entrepreneur: Life as an Entrepreneur

It was around this time 10 years ago that I decided to quit my job as a Member of Technical Staff at NYNEX in White Plains in the US and take the plunge into being an entrepreneur. I informed my then boss a few weeks later and quit in early Dec 1991. In May 1992, I returned to India – for good.

In the past decade, I have tried my hands at various things: outsourced software development in India (1992), developing an imaging product for doctors and metallurgists (1993-1994), creating a multimedia database platform (1993), doing software projects for Indian companies (1994), launching India’s first portal and web services company (1994 onwards) and developing an enterprise messaging solution for corporates (1998 onwards). Each business has been like one of those fractal images: look within and more sub-businesses can be seen.

There have been successes and failures in each of these businesses, perhaps more downs than ups. As I look back over the last 10 years, one realization strikes me: that as an entrepreneur, the journey is what one has to like more than reaching the destination. An entrepreneur may not have a final point in mind, only a general direction. It is this uncertainty which one has to live with and enjoy.

Each day is so unlike the other and yet so similar. In what has become almost a ritual, one makes a list of “Things To Do” daily. And then one reaches office. There are fires to be fought, unexpected eventualities to be managed, things to be salvaged. As the day nears its end, one looks back to the nearly untouched list of To-Dos and tries to attend to as many of those as possible. This is what an entrepreneur must like and thrive on.

Every new business has a failure rate of something like 99.99%. This means that 1 in 10,000 new businesses actually succeeds. Yet, ask entrepreneur about their odds of success, and you will hear figures ranging from 50-70%. If there is one quality all entrepreneurs have in plenty, it is optimism!

Running a new business is like a game of chess: one small mistake could be the last. Almost like a body’s immune system, it is this realisation that death is but an instant away which brings out the best in the entrepreneur.

TECH TALK: Alt.Software: The Approach (Part 2)

Latest Technologies: Just because the target market is at the bottom of the pyramid does not mean than the technologies used are outdated. Technologies for Web Services like XML, SOAP, WSDL and UDDI need to be used to ensure compatibility with other components and larger enterprises. The coming mobile Internet also must be kept in mind: SMS, for example, offers an inexpensive form of “always-on” connectivity.

Distribution via Internet: Software is becoming a service. This “disruption” of the software industry business model must be used to one’s advantage in distribution. By enabling access and distribution of software via the Internet, not only does the updation process becomes faster, but it also allows faster access to global markets.

Subscription Business Model: Today, the large upfront costs for software packages works either as an inhibitor of purchase or provides encouragement for piracy. Extending the software-as-service model to offer software-on-subscription allows companies to pay for it like a utility: monthly payments based on usage.

The 10-10-10 Message

The message to the Small and Medium Enterprises (SMEs) needs to be:

  • 10 times the software: All the software an SME needs is available, like a thali. Typically, most SMEs tend to use only a few software packages, and this leads to information being scattered and duplicated. By making software at the heart of the enterprise, SMEs will be able to make their businesses much more efficient and their owner-managers more productive.
  • 10 times the performance: Since most of the software is run from a server on the LAN, the connectivity issues that have hurt many ASPs do not come in. Reliability is also high, and so is the perceived comfort with all the data being within the office.
  • one-10th the cost: Consider Salesforce.com’s offering of its applications at a cost of USD 65 per user per month. To ensure adoption in emerging markets, SMEs need 10 times more applications at one-tenth the cost of what any single application would cost, thus offering a 100x improvement in value.

This, then, is the concept of the SME Tech Utility. Its business model is to become the world’s lowest cost Software Producer for the real-time enterprise, with a focus on SMEs worldwide, starting with emerging markets like India. This is a disruptive notion in the world of software, and one whose time has come.

The Internet is not going away. If anything, it is going to become more embedded as the DNA for businesses. This is a great time to take advantage of the coming future and disrupt the enterprise software market. This is also India’s opportunity to move up the value chain and to create a great global software products company.

TECH TALK: Alt.Software: The Approach

In putting together the Small and Medium Enterprise (SME) software stack, a number of factors need to be kept in mind:

Linux Base: Linux offers an alternative to the Microsoft platform. Besides being free, Linux offers the potential to engage the developer community worldwide in building or even customising portions of the software stack. For countries like India, the cost savings using Linux can be significant. But to make this happen, Linux needs to be adopted even at the schools and colleges level, thus creating engineers who are trained in its use.

Amazing Price: More than anything, the price is going to be the critical success factor. The price point for the entire suite of applications should be in the range of Rs 250-500 (USD 5-10) per user per month. Thus, a 20-person SME pays an aggregate cost of Rs 60,000-120,000 (USD 1,200-2,400) per annum for all its software needs.

Standardisation: The emphasis should be using a standardised code base, rather than customisation. It is all too easy to get caught up in creating many specialised versions for different customers, but that is not a scalable approach. For SMEs, it will be a trade-off between engaging a small software company to create applications that it needs and purchasing the eBusiness software suite which may take care of perhaps 50-70% of the needs of the SME. In many cases, it is not easy for SMEs to even specify what is needed. Using a standard product may entail some sacrifices in features and even changes in business process. This is more than offset by the advantage of not deploying additional IT staff to supervise the deployment process, the low price points and the instancy of use.

Whole Solution: What the SME needs is a whole solution. The SME software stack takes just that approach by offering a complete package of the applications needed, thus minimising the number of vendors that the SME needs to interact with.

Smart Integration: One of the critical success factors (besides price) is the ability to integrate data across the various silos, such that an SME needs to enter data only once. This is the integration that is offered (very expensively) by the enterprise software packages of companies like SAP and Oracle. Integration is the key building block for the “real-time enterprise”, which is what SMEs should aspire to be.

Intelligent Cloning: SMEs do not need the complete feature set that is available in the high-end enterprise applications that are available today. What is needed during development is the ability to intelligent pick and choose the subset of features that are going to be most important for SMEs. This not only speeds up the development process but also eliminates the “feature overkill” bane of many packages.

TECH TALK: Alt.Software: The Server Software

The Server Software can be thought of as comprising of three segments. What ties them all together is tight integration, such that data needs to be entered only once and is available to all other applications and the people who need to make the decision based on that information within the enterprise.

Communications Applications: Messaging is the critical application. Email must be available to everyone and at all times. By integrating an email server with instant messaging and an SMS server, information can be made available in real-time within the enterprise on the LAN or wherever the person is through a cellphone. This way, when an “alert” needs to be sent, the server can check if the recipient is online (through the Instant Messaging client presence). If so, then the message can be sent through the IM client. If not, then based on a list of pre-set filters, the message can be sent out via an SMS message to the user’s cellphone. The Communications Server also needs to add support for fax. In future, as IP phones become available, one can think of adding an IP-PABX capability. What all this does is to bring down the cost of communications. This is perhaps the single most important benefit of the Internet for enterprises, especially the SMEs.

Intranet Applications: The “Intranet” seems long forgotten – it was one of the original concepts talked about in the early days of the Internet. But, then as portals, b2b, b2c and eCommerce took hold, the Intranet has faded away somewhat in the background. Yet, for SMEs, it holds a lot of promise by allowing people to work together and share information within the enterprise.

Enterprise Applications: What SMEs need are a limited set of features from the various enterprise software verticals for finance, accounting, HR, sales, customer relationship management and supply chain management. Many of today’s applications create information silos, which require custom programming to make that information available to other applications. The key requirement is to have integration of the data model to ensure that information does not need to be entered multiple times.

Much of what has been discussed here may seem mundane and overly simplistic, but one needs to remember the target audience: SMEs in emerging markets. SMEs too have employees, customers and suppliers. They also need information. Most may not even be able to describe the applications they need, but will know them when they see them. The opportunity is to create an integrated suite of applications which takes care of most of the needs of the SMEs at a low price-point.

TECH TALK: Alt.Software: The Software Factory

The Software needed for the Small and Medium Enterprises (SMEs) can be thought of as comprising of four “chimneys” as below. The platform for all the software would be Linux, thus creating not just an open source base but also the ability for developers worldwide to be able to customize the offerings for the needs of companies in their region.

Desktop and Base Server Communications Server Intranet Server Enterprise Applications
Desktop CD: Email, PIM, Browser, IM, Office, Acrobat
Server: File, Print, Applications
Email
IM
SMS
Fax
I-PABX
Proxy Server
Calendaring
Collaboration
Workflow
Publishing
Personal Pages
Content Push
ERP
SFA/CRM
SCM
EIP

The Linux Desktop
The applications needed on the desktop are messaging, a Personal Information Management application (like Outlook, and what Ximian’s Evolution is now offering on Linux), a Web Browser, an Instant Messaging (IM) client, productivity applications and Adobe Acrobat to view PDF files. Messaging and the Browser is already available on Linux in the form of Netscape’s products. Jabber, an open-source XML-based Instant Messaging platform, can serve as the IM client. Star Office with its new version (6.0, in beta) offers the ability to read and write MS-Office compatible files.

All of these applications can run off a CD on the client machine, thus
eliminating the need for a hard disk (saving a further Rs
7-8,000). The CD can be updated once a quarter with the newest
releases of the various applications. Even if the Desktop environment
is sold for Rs 2-3,000, it compares very favourably with the cost of
Rs 20,000 for MS-Windows and MS-Office, and Rs 7-8,000 for the hard
disk.

Storage of mail, files, and user preferences would be on the
Server. What this architecture does is standardize the desktop,
allowing users to use any of the machines. There is no threat of
viruses on the desktop since all storage is on the server.

When one thinks of the Linux desktop and its place in an MS-Windows world, one always thinks of how people who are familiar with MS-Windows and MS-Office and the other applications will make a shift to Linux-based applications. One needs to keep a few points in mind about the target market. The effort is not in trying to necessarily replace the Microsoft desktop with the Linux desktop, but to complement. By reducing the cost of software by almost Rs 25,000 per desktop, it now becomes possible to provide computing to more people in the enterprise. Of course, if companies use pirated software, even Rs 2-3,000 will seem expensive. The thinking here is that if the cost of legal software is brought down to affordable levels, companies and entrepreneurs will pay – they are not naturally thieves.

For most people in the enterprise, the collection of the 6-7 applications discussed above will be good enough. In addition, today, Linux has available equivalent applications for almost all of the Windows world. They may not be as feature rich, but will do the job. For certain specialised applications, more often than not, there are Web-based front-ends for access.

What this approach does is to bring down the total cost of computing. Linux has always been thought of as a Server platform, but in the context of SMEs, it is also critical to leverage it on the desktop to ensure that not only is legal software available at a low cost, but also that computing is made available to a much larger number of people in the enterprise. That is one of the first steps in making software a utility within the enterprise.

TECH TALK: Alt.Software: The Market

From the vantage point of India, it is next to impossible to create state-of-the-art software products for the world’s leading enterprises. To do that, one needs to be based in the US, closer to where the market for these products is. But if one looks beyond the Big Companies, a new market emerges. This consists of the Small and Medium Enterprises (SMEs) of the world, especially in emerging markets.

Small enterprises typically employ less than 100 employees, while medium enterprises have 100-500 employees. They are the equivalent of the corporate poor of the world. To borrow a phrase from C K Prahalad, they are at the “bottom of the Enterprise Pyramid.”

Why do SMEs matter? Compared to the 10,000 or so Big Companies of the world, there are 25-50 million SMEs in the world. They provide the bulk of the employment, they are the growth engine for economies.

There are many reasons not to bother about SMEs. They are hard to reach. They are not a homogeneous market. They are resistant to change. They are very cost-sensitive. They don’t spent money easily. They may prefer spending on people over technology.

At the same time, significant value in an economy lies with SMEs. They comprise 80% of the supply chain of the larger companies. They need to be integrated into the global economies – supply chains are only as good as their weakest links (in this case, the SMEs). They lag big business technology adoption by 2-3 years, which means they are likely to begin spending on new Internet-centric technologies soon. They need “whole products” – not part or piecemeal solutions. They need something which will work quickly and without the need for additional external expertise. Most importantly, SMEs do not want to remain S or M (small or medium). They want to grow.

In India, SMEs are only beginning to look at using technology for improving their businesses. So far, for most of them, technology investment was limited to a few computers with pirated versions of MS-Windows and MS-Office , an accounting package like Tally, email and some custom software for their specific needs.

The challenge that lies ahead is to make SMEs more productive and competitive by automating their businesses. There is an opportunity to create software which will, in the words of Clay Christensen, “delight them”. The initial market for such software is at the bottom: the world’s emerging markets.

TECH TALK: Alt.Software: Alt.Software: Enterprise Software Today

Let us look at the enterprise software market as it exists today. The perspective here is as seen from India, so it may not be reflective of a universal viewpoint. But as I will explain in the coming columns, markets like India are where the significant future growth is going to come from.

High Cost: Software today is dollar-denominated, and expensive from the viewpoint of most smaller companies in markets like India. The result is that software piracy levels run at over 90%. The result is also there are few local software brands, since it is almost impossible to control piracy. In India, perhaps the only well-known home-grown software brand is the accounting package, Tally. Whether its database software or ERP software, the cost remains the single largest factor impeding adoption.

Anti-Piracy Measures: The new versions of Microsoft Windows XP and Office XP have anti-piracy measures built-in, especially through the need to go in for an “activation”, which takes a snapshot of the hardware on which the software is installed. These anti-piracy measures will mean that companies either pay up if they want the new legal versions or stay a generation behind. Not that it makes much of a difference for the kind of things that most companies are doing.

Feature Overkill: This has been a common problem with software. Just as processors have become faster, software has become more and more feature-rich. The problem is that for most users, both the processing power of machines and the feature-laden software is way over their expectations. Our usage of applications like MS-Word has basically remained the same over the past few years.

Need for Customisation: Businesses differ, their business processes differ. Since there are few reasonably priced packages which take care of all their needs, businesses chose to create customised software. This has its own challenges in terms of the time taken for development, meeting user expectations, cost, and later, with maintenance and support. In the words of Larry Ellison, software has become a “parts-and-labour” industry.

Lack of Integration: Information still exists in silos in different software databases. To get over this, one needs to put in adaptors or other glue software which can convert from one format to the other. What enterprises want is a single view of what exists. Most packages still do not provide this.

Upgrade Hassles and Costs: New versions of software and the concomitant need to upgrade almost invariably causes pain in businesses. More software companies are going to push for building in upgrade costs into the licence fees since the market for new software is getting saturated in many countries, especially the US.

Poor Connectivity to ASPs: Software-as-service is the new mantra. Single version, accessible through a Web browser from anywhere, and a pay-as-you-go model. Take for example Salesforce.com. Wrote Forbes in an article entitled Reinventing Software: “For $65 a month per user, customers get the benefits of browser-based software. It can be installed in a few weeks, not months as with traditional packaged wares. Upgrades are done six times a year instantaneously, online, at no added cost. Included in the fee are data storage and any tweaks to the software like adding new data categories or ways to sort sales reports. These can be done easily without programming help from sales jocks. `We’re seeing the end of software as we know it,’ says Marc Benioff, the founder of Salesforce.com”. Not so soon! The biggest problem with ASPs in countries like India is connectivity. It is difficult to imagine critical corporate data residing anywhere outside the LAN since Internet connectivity is, at best, intermittent.

If we think of these problems as opportunities, then one thing becomes clear.

This is a great time to disrupt the global Enterprise Software products market.

TECH TALK: Alt.Software: The Real Internet Revolution

A New Internet is being created through a convergence of developments in computing, communications and software. This Internet, termed by Forbes recently as the “Great Global Grid”, is defined by pervasive connectedness and a real-time infrastructure.

Computing Communications Software
Processing Power
Non-PC Devices
Embedded Computing
Bandwidth
Wireless
Data Centres
Web Services
Open Source
Zero-defect Software
Great Global Grid
Pervasive Connectedness
Real-Time Infrastructure

In Computing, processing power continues to increase (Moore’s Law). There is a rapid proliferation of non-PC devices like cellphones and PDAs. These devices are increasingly being connected to the Internet. Falling costs of chips are making them available in an increasing number of places (for example, sensors, which can collect and transmit specific information to a central server).

In Communications, bandwidth continues to grow rapidly (Gilder’s Law), notwithstanding the recent reports of overcapacity in markets like the US. The bandwidth increases are mainly powered by continuing improvements in fibre optics. Wireless networks are being built to create an envelope of connectivity. For example, NTT Docomo’s I-mode service launched its 3G network and cellphones in Japan earlier this week. 802.11b, and to a lesser extend Bluetooth, are helping bridge the last few feet without wires. Despite the bankruptcy filing by Exodus recently, Data centres (Web farms) are the new ‘powerhouses’, ready to serve up computing on demand. Technologies like Blade Servers are helping reduce power consumption and pack in more computing power in a much smaller space.

In Software, a new era of Web Services is dawning, with data and applications are moving into the network (the ‘cloud’). Technologies like XML, SOAP, UDDI and WSDL are making possible easier application-to-application interaction and integration, making possible the vision of software being built from Lego-like blocks from across the network. Open Source software like Linux and Apache is making an important impact and attracting a growing audience of developers. As Software is becoming increasingly mission-critical, it becomes important to have zero-defect software.

[A previous Tech Talk covered the New Internet in greater detail.]

What we saw in the last few years with the consumer Internet will seem like a trailor to what lies ahead. The New Internet will make a much deeper impact on businesses and connecting enterprises. Three points put this in perspective.

  1. Largest inefficiencies lie in interactions between enterprises.
  2. Communications and Information are critical to interactions.
  3. The Internet’s biggest influence is on business process innovation, and reducing communication and interaction costs within and between enterprises.

The New Internet will help enterprises use computing to streamline supply channels, tighten relationships with customers, cut costs and improve productivity. The Real Internet Revolution lies ahead.