Microsoft’s SME Focus

Business Week writes on the next big frontier for software: the 45 million small and medium enterprises worldwide.

The opportunity is huge. Even though researcher Gartner Inc. predicts that small and midsize companies worldwide will spend $420 billion on technology this year, less than 25% are using the kind of sophisticated applications Microsoft is now selling. The rest rely on basic accounting or tax packages or on programs such as Microsoft’s own Excel spreadsheet — which requires a lot of customizing.

Microsoft’s pitch to smaller companies is simple. It’s promising them the same sort of productivity and efficiency gains that big corporations realized in the mid-1990s as they automated everything from manufacturing to human resources.

The key to Microsoft’s long-term success will be its base layer of small-business technology, which it calls the Microsoft Business Framework. Every company that makes business applications duplicates each other’s work, creating such functions as sales-order processes or accounts-payable technology. Microsoft figures that if it creates that base technology, other software makers can focus on applications that cater to specific customer segments.

IBM’s Software Business

Business 2.0 writes about Steve Mills, who heads IBM’s software business and is set to take on Microsoft “in a battle that will shape enterprise computing.”

Instead of thousands of software products, Mills now mainly oversees four complementary lines of Java-based middleware: DB2, which stores and retrieves data; WebSphere, which helps applications work together over the Internet; Lotus, which handles Web-based collaboration and e-mail; and Tivoli, which manages networks. Mills now has a small army of salespeople: The software group has 10,000 of its own, plus those who work at its 9,000 strategic partners. There are also the sales teams from IBM’s other divisions — the legions in hardware and the 150,000 consultants from IBM’s services group — whose products often come bundled with IBM middleware.

“I’ve never met a customer who wants to buy software,” he contends. “They want to deploy software, and they want to know who’s going to be there after they deploy it.” Still, he knows that his products’ complexity is a problem. The fastest-growing market for enterprise software is in small and midsize businesses. Few such customers need industrial-strength middleware. Fewer still can afford to hire a platoon of consultants to make it work.

An Entrepreneur’s Struggle

Even though I have been through this phase many times in the past, each time is different – and tough to go through. We are at a time when (a) our revenues are less than expenses, which means we are losing money each month (b) none of our new ideas has generated significant revenue in the past year, and (c) the future looks brighter than ever before. (Of course, the last point may be an outcome of my perennial optimism!)

So, the challenge before us is quite simple, actually. We have to make ends meet. We have to become profitable. I have invested in the business for the past year, and we’ve made some good progress with our ideas. But now is when the rubber has to hit to the road. We have to start generating revenues from our new ideas. This is Priority No. 1.

It is a challenge. Envisioning things and building out on new ideas has been my personal strength. This has meant that I have not focussed as much as productisation and marketing. This is what is needed. We have an excellent collection of projects that we’ve been done in the past year. The time has now come to take them to market. That is the true test of our vision. Sometimes, I tend to think that just imagining the future is enough to make it happen!

It is a struggle and challenge, but each time I have gone through it, I have learnt a lot. It is not an overnight change that will happen – we have to battle it out. The game is for us to win – or lose. It is what every entrepreneur has to go through. It is that critical point in a business which can either create a great success story or leave it as “living dead.” Let’s hope this brings out the best in all of us. As I’ve said before, entrepreneurs have to manage both the long-term and the short-term.

TECH TALK: Transforming Rural India: Village InfoGrid

TeleInfoCentres in every village are the starting point. As weve discussed, these centres are not critically dependent on connectivity. They should be able to function well independently and offline. But as the options for connectivity grow, networking them together into a grid call it the Village InfoGrid is the next step. What the Village InfoGrid does is create a peer-to-peer network of the TeleInfoCentres, allowing for near real-time communications between them. This opens up a range of activities and applications that have previously not been there.

The TeleInfoCentre enables communications between the village and the district (and beyond). The Village InfoGrid becomes the platform for inter-village communications. This is interesting because so far in India, there has not been much interaction between villages because of the limited options involved. Typically, villagers have interacted with either only nearby villages or with the district, which is one-level up the hierarchy. The network connecting up the TeleInfoCentres now makes each village a peer, and equidistant in the electronic world. Geography is no longer a barrier for interaction.

What will be the impact of connecting up hitherto isolated people? Clay Shirky discusses this from the angle of social software and the politics of groups:

Prior to the Web, we had hundreds of years of experience with broadcast media, from printing presses to radio and TV. Prior to email, we had hundreds of years experience with personal media — the telegraph, the telephone. But outside the internet, we had almost nothing that supported conversation among many people at once. Conference calling was the best it got — cumbersome, expensive, real-time only, and useless for large groups. The social tools of the internet, lightweight though most of them are, have a kind of fluidity and ease of use that the conference call never attained: compare the effortlessness of CC:ing half a dozen friend to decide on a movie, versus trying to set up a conference call to accomplish the same task.

The radical change was de-coupling groups in space and time. To get a conversation going around a conference table or campfire, you need to gather everyone in the same place at the same moment. By undoing those restrictions, the interent has ushered in a host of new social patterns, from the mailing list to the chat room to the weblog.

The thing that makes social software behave differently other communications tools is that groups are entities in their own right. A group of people interacting with one another will exhibit be behaviors that cannot be predicted by examining the individuals in isolation, peculiarly social effects like flaming and trolling or concerns about trust and reputation.

Consider the possible impact of interconnecting the villages into an InfoGrid: villagers can now share best practices with others across the state or the country, they can benchmark themselves on a wide range of metrics and discuss ways by which they can improve, they can find out about opportunities elsewhere, they can create vertical communities of practice to share knowledge and innovations, and they can voice their opinions via community weblogs. This is just the starting point. As people in the villages start using the network, they will come up on their own with the ideas on how to make it more effective and useful.

Tomorrow: Village InfoGrid (continued)

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