Relationship Capital

The Barista Principle -Starbucks and the Rise of Relational Capital is an interesting article on the importance of relationships. Write Ranjay Gulati, Sarah Huffman, and Gary Neilson in Strategy+Business:

Winning companies define and deploy relationships in a consistent, specific, multifaceted manner. Although some companies will dub any concluded business deal a relationship, top-performing companies focus extraordinary, enterprise-wide energy on moving beyond a transactional mind-set as they develop trust-based, mutually beneficial, and long-term associations, specifically with four key constituencies: customers, suppliers, alliance partners, and their own employees. Starbucks, we believe, exemplifies this new model of the relationship-centric organization.

The relationships with these four constituencies are so valuable that they should be considered, collectively, a core asset of a firm. We call this asset “relational capital”, and define it as the value of a firm’s network of relationships with its customers, suppliers, alliance partners, and employees.

Outsourcing

Why Outsourcing Is In is an article by Anne Chung, Tim Jackson, and Tim Laseter in Strategy+Business:

In the past, outsourcing focused on tactical, nonessential activities such as payroll processing or manned security stations. But the focus is shifting. Strategic operations outsourcing encompasses core activities – such as manufacturing or logistics – that could substantially affect a business if not performed well. The best companies pursue it through a critical reevaluation of their positions along industry value chains, aiming to improve financials in mature businesses. When multiple companies in or around an industry come to the same strategic conclusion, a reinforcing cycle of strategic outsourcing can initiate a fundamental restructuring of entire industries.

I will be writing shortly about Outsourcing in my Tech Talk series on “Tech’s 10X Tsunamis”.

Think Regional, Act Local, Forget Global

Write Karl Moore and Alan Rugman in Strategy+Business:

Most business activity by large firms takes place in regional blocks, not in a single global market.

Most MNCs headquartered in North America earn the majority of their sales in their home region of North America, or by selling to members of the Triad, which encompasses North American Free Trade Agreement (NAFTA) and European Union (EU) nations, Japan, and the Asian tigers.

In only a few industries – consumer electronics, for example – is a global strategy superior. In fact, for most manufacturing and virtually all services, a national or regional approach is more sensible than a global one. And for a growing number of MNCs, a regional strategy works best. Sectors such as bulk chemicals, automobiles, and pharmaceuticals have shifted from a national to a regional focus in North America, with companies setting up regional headquarters responsible for NAFTA countries.

Statistics reveal the power of regional markets. For instance, more than 85 percent of automobiles sold in North America are built in North American factories; more than 90 percent of the cars produced in the EU are sold in that region; and more than 93 percent of all cars registered in Japan are manufactured domestically. In specialty chemicals, more than 90 percent of all paint is produced and sold regionally by MNCs in the Triad. The same is true for steel, heavy electrical equipment, and energy. Nearly all activity in New Economy services, which employ about 70 percent of the work force in North America, Western Europe, and Japan, is essentially local or regional.

Romancing the Seas

There is nothing more relaxing than sitting at the edge of the world’s waters, listening to just the sound of the waves and feeling the wind in one’s face. The Seas have that magical effect – a calm, soothing effect in our fast-paced lives. I like to sit along the ocean every once in a while, close my eyes and just hear the waves and feel the wind. Try it sometime.

Technology Marches On

Writes NYT – Technology Climate Is Gloomy, but Its Future Still Seems Bright:

Over the long haul, the technology sector will generate more than its share of business opportunity and economic growth – as it has since the 1960’s, when computers appeared in big companies, universities and government agencies. Sure, excess capacity and price-cutting make the current business environment brutal for the producers. But not for the consumers. The numbers for the technology in use worldwide %u2014 personal computers, cellphones, handhelds, digital cameras, DVD players, MP3 music players and households online – all continue to grow apace.

And the expansion of the technology goes beyond digital devices. Increasingly, computer science has spilled over into other fields. Computing has helped transform everything from the way scientists plumb the mysteries of biology, chemistry and physics to the way Detroit designs cars and Hollywood makes movies.

Dan Bricklin sums it up best: “The people who really have a love for this stuff the technology and what it can do never stop.”

Digital Cockpits – NYT

Writes NYT: “A growing number of companies are now able to use the Internet to monitor many or all of their key performance indicators daily, or even minute-by-minute. This is done through what have come to be called digital dashboards, or digital cockpits.”

Microsoft Software Assurance

Microsoft upgrade plan gets cold, writes News.com:

The majority of Microsoft’s customers won’t be signing up for a controversial licensing plan set to go into effect on Thursday, according to analysts’ estimates.

Signing onto the plan, which would commit business customers to a two- or three-year annually paid contract guaranteeing the right to upgrade, will be the only way to continue buying Microsoft software at deep discounts.

The holdouts have until the end of their business day on Wednesday to sign up for the plan or risk paying full price the next time they buy software from Microsoft. They won’t get a reprieve, either. Microsoft has twice extended the deadline for the new program, but a representative said Monday that there would be no more extensions.

The reason for stiff customer resistance is simple: cost. The plan, called Licensing 6, effectively raises volume-licensing fees from 33 percent to 107 percent, according to market researcher Gartner. Microsoft also eliminated the most popular means of buying upgrades, which allowed companies to pay when they wanted new software, rather than spend money in advance for software upgrades.

Linux and OpenOffice are definitely serious alternatives which should be considered. The problem of cost becomes even more serious for companies in developing economies. The Linux-OO alternative is in fact the only sensible option. My experience with OO suggests that it is now past the “good enough” stage and merits adoption.

TECH TALK: Tech’s 10X Tsunamis: Open Source: Opening Futures

A little over 10 years ago, a Finnish programmer sparked off an unlikely revolution with this post:

Hello everybody out there using minix – I’m doing a (free) operating system (just a hobby, won’t be big and professional like gnu) for 386(486) AT clones. This has been brewing since april, and is starting to get ready. I’d like any feedback on things people like/dislike in minix, as my OS resembles it somewhat (same physical layout of the file-system (due to practical reasons) among other things).

I’ve currently ported bash(1.08) and gcc(1.40), and things seem to work. This implies that I’ll get something practical within a few months, and I’d like to know what features most people would want. Any suggestions are welcome, but I won’t promise I’ll implement them 🙂 Linus (

PS. Yes – it’s free of any minix code, and it has a multi-threaded fs. It is NOT protable (uses 386 task switching etc), and it probably never will support anything other than AT-harddisks, as that’s all I have :-(.”

In September 1991, Linus Torvalds released version 0.01 of Linux.

Cut to July 2002, and Microsofts Fusion 2002 conference for developers and partners. This is what Steve Ballmer, Microsofts CEO, said:

We have prided ourselves on always being the cheapest guy on the block–we were going to be higher volume and lower priced than anybody else out there, whether it was Novell, Lotus or anybody else. One issue we have now, a unique competitor, is Linux. We haven’t figured out how to be lower priced than Linux. For us as a company, we’re going through a whole new world of thinking.

(Not that the re-thinking is impacting Microsofts bottom-line. Later in the same week, Microsoft announced yet another blockbuster quarter, even as other software companies are hurting!)

In the same week, Forbes carried a series entitled The Cult of Linux. An excerpt from one of the articles:

Look at the numbers: The first commercially packaged versions of Linux came to market only in 1994. According to IDC, Linux now accounts for an “amazing” 27% of the market for server operating systems, up from less than half of 1% in 1995. More than half of all Web servers sold today run Linux. Sales of entry-level servers (characterized as costing less than $100,000) running Linux grew in 2001, to 486,000 units worldwide, while sales of Windows NT and Unix servers declined in the same time period.

Industry leaders IBM, Oracle, Intel and others have committed resources–in IBM’s case billions of dollars–to Linux marketing, support and development. Roughly 10% of Dell Computer’s servers are sold with Linux pre-installed, according to the company.

The endorsement of such established companies helped make Linux a credible option for large customers. A mandate to cut IT costs amid the downturn also attracted customers to the free OS.

That Linux penetrated corporate America the way it has is surprising when one considers the competition: Microsoft’s Windows and Sun’s Solaris. Despite its promise and its momentum, Linux will not wipe out Unix, Windows or any other well-established technology. But like others before it–minicomputers, PCs, the Internet–Linux will likely marginalize older technologies because the value proposition is too great to ignore.

Is it disruptive to the status quo? Absolutely.

Tomorrow: Open Source (continued)

Cellphones and WiFi

Writes News.com:

Cell phone heavyweight Qualcomm plans to put Wi-Fi capabilities into tens of millions of phone chips.

The wireless industry considers Wi-Fi a way to augment cell phone networks. Because Wi-Fi networks can also ferry voice calls, these networks could be used in the future to improve cell phone reception in buildings, where cellular coverage is traditionally poor.

Wi-Fi could also be used as a way for carriers, for now, to meet the hype of so-called 3G networks.

Downloading anything of any size to a cell phone or PDA (personal digital assistant) is a real task. That’s where Wi-Fi comes in. It could be used to do the “heavy lifting,” Cahners In-Stat analyst Allen Nogee said. For instance, a cell phone able to access a Wi-Fi network could use Wi-Fi to download a huge document to a personal computer, which has more computing power than a cell phone, for example.

“There is some very real potential to offloading some of the voice calls onto Wi-Fi,” said Keith Waryas, a wireless analyst with IDC.

Using the existing cellphone networks with WiFi for the last hundred metres can help create a truly high-speed and ubiqtuitous network infrastructure.

TECH TALK: Tech’s 10X Tsunamis: Web Services (Part 2)

Tim OReilly connects the dots to describe how web services will evolve into an Internet operating system:

So much of the industry emphasis in web services has turned to EAI and B2B type applications that a lot of people miss the real transformation that is happening. Once they have SOAP or XML-RPC (or even REST-style) APIs, web-facing databases become program components. [Amazon Web Services article]

To me, these programmable components are all the various large Web-facing databases, and the equivalent of the build-your-own-driver school of programming are the Web spiders that access those services programmatically. Web spiders, including unauthorized interfaces built by screen scraping, are one trail of breadcrumbs we need to follow when looking at the functionality that an Internet operating system will need to provide. [Interview in The Rational Edge]

Bit by bit, we’ll watch the transformation of the Web services wilderness. The first stage, the pioneer stage, is marked by screen scraping and “unauthorized” special purpose interfaces to database-backed Web sites. In the second stage, the Web sites themselves will offer more efficient, XML-based APIs. (This is starting to happen now.) In the third stage, the hodgepodge of individual services will be integrated into a true operating system layer, in which a single vendor (or a few competing vendors) will provide a comprehensive set of APIs that turns the Internet into a huge collection of program-callable components, and integrates those components into applications that are used every day by non-technical people. [Inventing the Future]

Anil Gadre of Sun takes this one-level further (News.com column):

Developers shouldn’t need to think about the OS; they should be able to aim higher, at a new software category I call the “service-delivery platform.”

The aim of the service-delivery platform is to make it just as easy for developers to create a large-scale service as it was to create a single shrink-wrapped program for a standalone PC. Developers need to know that certain components are always going to be there–a directory, a network file service, an application server. Those are the components of the service-delivery platform.

Although part of the base platform, these components may also come from a variety of companies offering open-standards-based technology, so long as they present a set of core services that developers can count on–and no proprietary extensions or libraries to cause porting problems.

Information Week (May 27, 2002) gives an example of how it is making a difference to Dollar Rent A Car Systems Inc., which initially saw Web services as just a simpler way to connect partners to the company’s reservation system. Writes Rick Whiting:

Before Dollar started using Web services, tour operators had to rely on an EDI connection to book a car reservation electronically with the Tulsa, Okla., company. That was expensive and inflexible. Building an interface took as long as two months, and it had to be rewritten if the system on either side changed. Now, tour operators book reservations by sending a text message using HTTP protocols. The company’s Microsoft BizTalk server parses that message using Soap and WSDL Web-services protocols unique to each operator to book the reservation.

A major benefit for both Dollar and its partners is that Web services provide a direct way to make reservations without using a global distribution system such as Sabre Holdings Corp. or Galileo International, which charge a transaction fee. However, Web services have also made Dollar’s relationship with Sabre more data-rich. Dollar built its rate engine, which calculates rates by class of car, on Web-services protocols, so Sabre can integrate that information directly into its systems. That means when a travel agent booking a flight on the Sabre system wants to add a car rental, the rate data is fed directly from the Dollar rate engine to Sabre.

Dollar also uses Web services to make it easier for customers to connect to its Web site from Internet-enabled mobile devices.

Web Services is the 10X force which is redefining the present and future of Software.

Additional Reading:

Tomorrow: Open Source

China Profiles

In a story entitled China Juggles Conflicting Pressures of Society in Transition, the New York Times gives a glimpse of Chinese society by profiling six people: “The six people most forthcoming and the most representative of a large segment of Chinese society were selected for profiles. Each of them stands at the high end of his or her respective group. Li Yongrong, a farmer, has a home telephone and owns a small truck, making him a rich man among his peers. Chen Qun, a migrant worker in southern China’s Shenzhen special economic zone, earns far more by working far less than many of the factory workers that fill the workshops of China’s coastal export belt.” [via Frank Yu’s Brand Recon]

Grid Computing

Wired reports on the fifth Global Grid Forum, held recently in Edinburgh:

Most of the excitement centers on the integration of grid computing and Web services: The Web provides the service, and the grid offers the processing punch to deliver it. The GGF is finalizing the Open Grid Services Architecture (OGSA) to deliver that integration.

“OGSA is very like TCP/IP. It won’t create any applications in itself but it will create a binding set of standards for services across the grid. It’s almost like the operating system for the grid,” says Tom Hawk, general manager, grid computing with IBM.

It is an advance that will be signaled by major improvements in services, speed and security of the Internet, but it will remain otherwise invisible to the users themselves.

Take single sign-on, for example, where a user signs-on once per session, and a separate site takes care of all the authentication and verification, delivering an OK signal to any sites the user visits.

Grid computing will allow a much higher degree of security for more speed, with the security processing handled by the wider grid rather than the already stressed-out home PC.

Gaming is another area where grid and Web services integration will create a new Internet on steroids. Right now, Sony and Microsoft are looking at distributed gaming, while Butterfly.net is another project developing massive multiplayer games using grid computing. A grid game developer’s kit is available at its website.

I’ll be writing later in my Tech Talk series about Grid Computing as one of the Tech’s 10X Tsunamis.

Enterprise Enabling Technologies

Line56.com: Line56.com lists the enabling technologies, as identified by AMR:
– application servers
– business-to-business (B2B) exchange platforms
– business intelligence (BI)/analytics
– enterprise security
– integration, business process management (BPM)
– systems management
– wireless application platforms

Had read in a separate article in BCR about the four building blocks for corporate networks: VPNs, VoIP, Wireless and Web Services.

Hisaab for MicroFinance

iNomy has an interesting story on the efforts to create accouting software for MicroFinance. Writes Frederick Noronha:

Micro-finance, one attempt to get the poor to help themselves by collecting small sums of money and loaning it between themselves, is to get a leg-up from IT if Parikh and his team have their way.

Their new software is getting finalized to make it easy for simple villagers to undertake more complex financial transactions. It’s called Hisaab (meaning, ‘accounts’).

Recycling Cellphones

Writes Business Week:

Seth Heine started a company called CollectiveGood, which gathered used and discarded cell phones, either for sale abroad or for parts. Over the past 18 months, CollectiveGood has sold the majority of the 15,000 phones collected through his program to carriers Latin America and the Caribbean.

The margins on such sales are small. After spending from $1 to $2 on sorting, refurbishing, and shipping, CollectiveGood typically sells to foreign service providers for about $20 per unit, — making a $2-per-unit profit. The carriers then resell the phones to their customers for $25 to $30, Heine explains. That represents a 70% to 90% discount on the typical cost of a new cell phone.

The recycling concept is what I’ve been talking about in the Thin Client-Thick Server idea. Get used PCs from the developed world and resell them in the emerging markets to bring down the cost of the PC to USD 100.

Emergic Update

The big development of last week was thinking through the Information Refinery (IR) concept, which will now serve as the framework on which much of the software will be built. The TC-TS can be thought of as the underlying infrastructure on which the IR will be built. The two are like the equivalent of an enterprise Windows and Office. We still need to detail out the architecture in much more detail, but for the first time, we now have a vision which integrates the world of blogs, RSS syndication, events and enterprise software.

BlogStreet: We will be putting out the beta in the next few days. It will have a blog neighbourhood analyser and a listing of the top 500 blogs. We’ve also created a service wherein anyone can request the related blogs given a blog URL. Quite useful – made me aware of some more blogs which I should be reading regularly!

Digital Dashboard: We will be launching blogging internally within our company using MovableType. People will be able to set up private, group and public blogs. This will also have the RSS aggregator.

Going ahead, the two projects will be merged into what we will call the IRI (Information Refinery Infrastuture) – will see if I can come up with a better name!

One of the early tasks will be to create an RSS-ifier, which given a URL gives the RSS feed. This is important because when we need to get content for people to read and post into the RSS aggregator. There are many sites which do not produce an RSS feed. We will use some of the proglet ideas which we have used earlier to get blogrolls and related blogs for screen scraping to get the headlines from a page. Also this week, need to put together the roadmap for developing the IRI, especially the architecture.

Thin Client-Thick Server: We managed to get Tally to run on the Linux Thick Server. It is a round-about way, but at least we were able to do it. This came up because without Tally it would have been difficult to get people to use the Thin Clients in many companies. With this, we can now deploy the TC-TS at our first external location this week. We’ve also formed a Productisation group to bridge the TC-TS engineering efforts and the market needs.

Enterprise Software: We’ve decided to do an internal application which is on the lines of a client information system (outlined in the IR post). To begin with, we will integrate information from accouting, marketing and support on a single page per client. This will use the blog and digital dashboard base. We may also use one of the commercial application servers (probably Weblogic) initially for development, and then later switch to JBoss.

Going ahead, we will thus have 3 product development groups: the TC-TS as it exists now, IRI and the Enterprise Apps. Will fine-tune this in the coming week. Am also thinking of setting up a small RD team which looks at some new ideas like 802.11b.

Incremental Information

There’s a lot of information out there – we all know that. When managing a business, it is especially important to keep track of all that is going on. This means visiting many sites regularly, reading a lot, talking to people, subscribing to various newsletters, searching in Google, cutting and filing articles, etc. There is still no easy consolidated way to get all the information that we would be interested in.

Perhaps this can change. My weblog over the past two-and-half-months has now captured a lot of my interest areas. I have told my blog all that I like, including links, quotes and comments. So, can this be used as a mechanism to get me other related information – old and new?

For example, suppose with every post I give a phrase (which could be the title) which describes the post. I can use the Google API to do a search and show related posts – we do this now using the GoogleBox. But this is static in time – it does not change or alert me to changes in the search results.

What I’d like is that with every post, I want to create a search option which showsme the top 10-20 searches on Google and links to my own previous posts. The Google search should be run every so often and if a new item comes up in the search, I should be alerted. This way, at least I am able to continually track what I have written about, which would mirror my interest areas.

This also helps chain posts together. After adding all my previous Tech Talks, there are now over 800 posts in this weblog. Today, they stand alone – linked only through the Tech Talk category page, Search and the Prev-Next option. They need to get connected among each other.

What this will do is to create a “network” of my thoughts. There will be hubs and clusters of ideas. It would be good to see how this changes over time. This can now also be used to connect me to others with similar thinking. And through the blogs of these other people, it will perhaps open up new ideas for me. Which is what I really want to do when I am doing all the reading and thinking.

In essence, we are looking at a way to connect to the incremental information that is being produced, so I can stay in touch with recent developments. The danger otherwise is that the thinking will age since I am only able to track a few interest areas. Google and blogs with some additional monitoring software can help make this a reality.

Also see:
A Personal Knowledge Management System
Google + Blog = Personal KMS

TECH TALK: Tech’s 10X Tsunamis: Web Services: Lego Software

First Google, and now Amazon. Both have turned themselves into programmable modules. Google released its Google API in April and recently, Amazon came up with its Web Services API. These are the two most public manifestations of the change that is going on as websites turn themselves into programmable components, using XML and SOAP standards. This is the world of Lego-like software, where it becomes possible to build complex software applications from simpler building blocks which exist across the network.

Web Services (comprising the protocol quartet of XML, SOAP, WSDL and UDDI) have been the talk of the software industry for quite some time. All the leading software players have pinned their hope on Web Services, and it now seems justified.

Web Services takes an old idea (re-usable software components) and gives it a new, contemporary touch (built around standards, and available dynamically over the Internet). Web Services offer a way to connect enterprise applications in real-time, providing a solution to the notoriously difficult twin challenges of Enterprise Application Integration (EAI) and B2BAI (Business-to-Business Application Integration).

A formal definition of Web Services (Patricia Seybold Group):

A Web Service is a URL-addressable software resource that performs functions and provides answers. A Web Service is made by taking a set of software functionality and wrapping it up so that the services it performs are visible and accessible to other software applications. Web Services can request services from other Web Services, and they can expect to receive the results or responses from those requests. Web Services may interoperate in a loosely-coupled manner; they can request services across the Net and wait for a response. A Web Service can be discovered and leveraged by other Web Services, applications, clients, or agents. Web Services may be combined to create new services. And they may be recombined, swapped or substituted, or replaced at runtime.

A recent report on Web Services by Patricia Seybold Group states that companies are putting web services at the heart of their business processes:

Weve discovered that many of the earliest production implementations of Web Services are being used to support business customers and trading partners. So, instead of focusing first on internal application integration, forward-thinking companies are starting from the outside inleading with customer-connectivity.

Take, for example, Cisco Systems product configuration application. Since the mid-90s, Cisco has offered a Web-based configurator on its public Web site. And, for its largest business customers like ATT, SBC, and others, Cisco had to install and maintain a custom-configured version of that application on a server located within each major customers firewall. In early 2001, Cisco re-developed that product configurator as a Web Service. Now Cisco maintains a single Web-based application, which presents itself as a Web Service poking through each major accounts firewall, integrated into that accounts own procurement application. Heres another example: General Motors uses Web Services to make many of its operational applications available to its dealers personnel by integrating key functions, like credit approval, into the dealerships own applications.

Tomorrow: Web Services (continued)

eBay Book Review

David Gelernter reviews “The Perfect Store”,a book on eBay, and gives his opinion on the company and online auctions:

EBay has no inventory, doesn’t actually sell anything itself, but collects a commission on every sale. Obviously, this company is important. Some 75,000 Americans now run businesses entirely on eBay’s sites. EBay strides through the world economy like a movie star, surrounded by its horde of dependent businesses, its buyers, sellers, critics and rapturous fans.

But the story leaves you pondering. The Web supposedly began a new information age, but eBay brings nothing of its own to the table; it simply connects people. It uses cyberspace not as a library but as a giant switchboard. And this era of the Great Switchboard in the Sky has barely begun. When I said in a 1991 book that global electronic auctions were inevitable (one prophetic claim plus 75 cents will get you today’s newspaper), I meant four related activities: buyers bidding to get goods or services from a seller; sellers bidding to supply goods or services to a buyer. So far, eBay concentrates only on buyers bidding for goods, but the rest will follow. And it won’t stop there. People will consult the great cyberswitchboard to get a job or a mate or a life. (It’s already happening.)

EBay makes money by brokering deals. But what happens when buyers and sellers cut out the middleman and deal direct? At eBay you search for the item you want. But you can also search the Web as a whole. In the long run, we won’t need two separate levels of search. Eventually we will use the fabric of cyberspace itself, not eBay, as our switchboard.

Earlier post on Adam Cohen’s review of the book.

Slate on Web Services

Writes Slates, in an introductory article:

A Web service is just a special type of Web page, but instead of being formatted prettily for the human eye, the page is formatted for a computer to read. The technology makes it easy for some Web site developers (like Amazon’s) to produce such a page and for other developers (like me) to retrieve the information therein. Suddenly any Web site (including yours) can display up-to-the-minute information from Amazon or Google, whether it be “people who bought my book also bought ….” or “the top 10 news stories on the Web.”

Web services are like LEGOs: They snap together in almost limitless combinations. As the big sites bring their Web services on board it’s easy to imagine your home page summarizing the items you have for sale on eBay, displaying whether you’re available to chat via AOL or Yahoo!, and mapping the current location of the airplane you’re on via Expedia.

For the Web consumer, it will quickly become unremarkable to see information and services from many providers combined in imaginative and useful ways. Suddenly no Web site is an island, and maybe no toaster either.