Daily Archives: November 12, 2003

Presence on Cellphones

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[via Smart Mobs] CNETAsia writes about presence technology coming to cellphones:

Nokia calls it “Presence”. Sony Ericsson calls it “My Friends”. The official name is IMPS. So what is it really?

IMPS stands for “Instant Messaging Presence Services”. Building on the popularity of SMS, this nascent technology introduces one exciting new component to messaging: Presence.

A presence user will be able to update his current status on his cell phone, and by doing so, allow his authorized friends to check whether he’s available, busy, or free for a chat.

IMPS may work by encouraging greater exchanges of messages. For example, if you’re feeling bored, you can text a friend who’s listed as “Free for chat” to start a conversation. You may even arrange to meet up for some Java.

IMPS is thus likely to be pitched as a social tool. It may appeal most to teenagers who are already sold on the merits of instant messaging.

Small Steps towards the Semantic Web

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Kevin Werbach: “I’ve spoken with several venture capitalists recently about Technorati and Feedster, two aggregation services for RSS feeds. The VCs see the buzz around blogs, syndication, and social networking. Yet they can’t figure out function the aggregation services provide. The best argument I’ve been able to come up with is the following: Technorati and Feedster are on the path to the Semantic Web that actually works. They are attacking a very big problem — the machine-readable Web — by addressing small problems that are real and immediate.”

Like so many other things, we may think big and envision the perfect future, but it will happen in small steps unknown to most. One fine day, we will wake up to find that it is here!

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Economics of Jobs

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Dana Blankenhorn writes:

The growth and vitality of the American economy really comes from a handful of people.

Foremost among them, of course, are the folks who make and design semiconductors. Software and Internet experts also provide real value. Manufacturing, whether of cars or carrot sticks, is production of real value.

Everything else we do is redistributive. Bankers and brokers and insurance agents merely facillitate transactions based on value that exists. If you’re selling, or buying, or serving the public, you’re spending the value that others created. All the money we tax started as value someone created. All the value of our real estate — the land and the buildings — depends on the amount of capital sloshing around our system.

Moore’s Law has dramatically improved our ability to create by increasing productivity. This first happened in factories, but now extends to offices, which can exist anywhere the Internet goes. Even India. Unless wages rise to compensate for Moore’s productivity you have a deflationary spiral.

Dana goes on to write about the McJob:

McDonald’s can McScream all they McWant, their McMarketing matches the McReality. It takes no skill to work at McDonald’s, and the vast majority of workers there don’t make what we used to call a “living wage.” When the company advertises for workers, it even acknowledges this, specifically going after teens, lonely old people, and bored housewives who just want a little extra, rather than what anyone might call talent.

But the point is McDonald’s is not alone in this. All the big restaurant chains, all the amusement parks, all the retailers, they all rely on low-cost, low-value labor. Rather than using technology to free people, they turn their stores into the equivalent of early 20th century factories.

And so we have a race to the bottom, within American society, as well as throughout the world. We create jobs that anyone can do, so we’ll take anyone to do them.

Atanu wrote a few days ago on outsourcing and comparative advantage:

A couple of UC Berkeley economists, Ashok Bardhan and Cynthia Kroll, estimate that 14 million white-collar jobs are at risk of being outsourced, or about 11 percent of the total, by 2015.

I find nothing surprising about that. Consider the structural transformation of any economy. First, you have 100% of the labor in agriculture and you have a subsistence economy. Somehow agricultural productivity increases. Labor gets released from agriculture and moves to manufacturing. With time, the share of labor in agriculture declines, and share of labor in manufacturing increases. With manufacturing producitivity increase, that sector also releases labor so that the services sector grows in the labor share. Finally, agriculture and manufacturing share of labor reach very low numbers and the rest of the labor force is in the services sector.

The US had 40% of its labor in agriculture in 1900. A hundred years later, that number is only 2%. With time manufacturing will also shrink to about 5% of labor. Then the US economy will have 90% of its labor in services.

In a world where trade is possible, the old story of comparative advantage continues to hold. So tradeable services — such as BPO, programming, research, etc — will migrate to countries which have a comparative advantage in providing them.

The US does not have a comparative advantage in those services which are tradeable; India has. The good news is that India has a comparative advantage in those BPO and programming services; the bad news is that India does not have an absolute advantage in those services. We have a comparative advantage only because the average productivity of India is so abyssmally low. Low average productivity translates into low average wages. So programming wages and other wages are low in India. Therefore, if on average the productivity of Indian programmers is somewhat comparable to the productivity of US programmers, then India can potentially enjoy a comparative advantage in programming (and it does.)

Business Process Fusion

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Supply & Demand Chain Executive writes:

businesses must now embrace emerging opportunities and make strategic decisions about technology that will transform their business processes and give them competitive advantage, the technology consultancy Gartner argued at its recent ITxpo show.

Gartner warned that a focus on short-term local automation initiatives is leaving IT with diminishing returns to the business. The challenge for IT is to provide the means to extend business capabilities, the consultancy argued, suggesting that a return in focus on business processes, enabled by the emergence of new software platforms and architectures, can achieve this. Gartner termed this “business process fusion” and said that the transformation of business processes is a major step towards building a so-called “real-time enterprise.”

Gartner believes that business process fusion builds on the maturing capabilities of systems integration and systems access technology to support the creation of new processes that increase the speed and flow of corporate information. It enables planning, optimization, simulation and other performance management activities to take place on a broader scale than previously, according to the consultancy.

According to Gartner, the technology drivers and enablers for business process fusion now ready to use are:

  • Explicit process representation in integration brokers and portal frameworks
  • Service-oriented architecture and composite application technology that are delivered by integrated service environments and integration brokers for “wrapping” legacy systems
  • Metadata management and application-independent XML data definitions that are incorporated in integrated service environments and data synchronization tools
  • The development of common definitions for the main data items that are used in various industry sectors
  • Advanced portal-based integration that supports roles and personalization
  • Unified information stores and access methods

    • TECH TALK: SMEs and Technology: IT Wal-mart

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    Sam Waltons Made in America is a must-reading for entrepreneurs and managers. It is an extraordinary story about how Walton went from owing a single dime store in rural America to creating the worlds largest retailer. As I was reading the book recently and thinking about the problem of SME distribution, the answer came to me: we needed to have the physical equivalent of a Wal-mart-like store to showcase IT for SMEs, reachable in perhaps no more than 20 minutes (a distance of about 10 kms). But before we look at the solution, let us take a ride back in time and consider what we can learn from the remarkable organisation Sam Walton built:

    In the fifties and sixties, everything about America was changing rapidly.

    All the kids who had grown up on farms and in small towns had come home from World War II or Korea and moved on to the cities where all the jobs were. Except that they werent really moving to the cities;they were moving to the suburbs and community into the cities to workThe downtowns of big cities started to lose population and business to the suburbs, and the big department stores had to follow their customers and build brand stores out in the suburban malls.

    In the small towns [where we were], you didnt see much of the mall construction and fast food neon that you saw everywhere else. You saw the small-town commercial centres start to shrivel up. A lot of our customer base had moved on, and the ones that remained werent stupid customers. If they had something to buy,they wouldnt hesitate to drive fifty miles o get it if they thought they could say $100. Not only that, but with the introduction of TV and the new postwar car models, being modern had become a big thing. Everybody wanted to feel up-to- date.

    [It was the] strong customer demand in the small towns that made it possible for Wal-mart to get started in the first place, that enabled our stores to thrive immediately, and that eventually made it possible to spread the idea pretty much all over the country. For many years, we lived entirely off the principle that customers in the country and in small towns are just like their relatives who left the farm and moved to the city: they want a good deal as much as anybody. When we arrived in these little towns offering low prices every day, satisfaction guaranteed, and hours that were realistic for the way people wanted to stop, we passed right by that old variety store competition, with its 45 percent markups, limited selection, and limited hours.

    While the big guys were leapfrogging from large city to large city, they became so spread out and so involved in real estate and zoning laws and city politics that they left huge pockets of business out there for us. Our growth strategy was born out of necessity, but at least we recognized it as a strategy early on. We figured we had to build our stores so that our distribution centers, or warehouses, could take care of them, but also so those stores could be controlled. We wanted them within reach of our district managers, and of ourselves in Bentonville, so we could get out there and look after them. Each store had to be within a days drive of our distribution center. So we would go as far as we could from a warehouse and put a store. Then we would fill in the map of that territory, state by state, county seat by county seat, until we had saturated that market area.

    This saturation strategy had all sots of benefits beyond control and distribution. From the very beginning, we never believed in spending much money on advertising, and saturation helped us save a fortune in that department. When you move like we did from town to town in these mostly rural areas, word of mouth gets your message out to customers pretty quickly without much advertising.

    Instead of the distinction between cities and small towns, think of large enterprises and SMEs. Instead of the distribution centre, think of the Internet. Instead of the consumer products, think new technology. Now re-read what Walton has written, and you get the idea. SMEs too are aspirational, wanted state-of-the-art solutions. But there is no one selling to them. Sam Waltons thinking is needed when it comes to setting up the SME stores: take a second- or third-tier town or city (preferably, an industrial cluster) and consider setting up the IT equivalent Wal-mart, not just to sell products, but more importantly, to provide solutions and services.

    Tomorrow: Tech 7-11

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