Changing Telecom Model

Kevin Werbach points to James Seng who captures the shift in the telecom industry:

A traditional telco designed their infrastructure using one technology to deliver one service (voice) for their customer. And they do it extremely well, due to their smart network design. Other services, like data is an afterthought and not taken very seriously for a long time. “Customers are dumb so the network must be smart” mentalities are very common.

But in the last 20 years, the “stupid network” Internet design is getting popular. With the smart devices, users finds they are able to do much more and they love it. Suddenly, consumers aren’t as dumb as the telco thinks.

In other words, vertical integration is out of favour and horizontal layering is in. Vertical integration is where you build your network for one services whereas horizontal layering is one where you build a (dumb) network but able to deliver multiple services over it and you separate them via layers.

What are the layers? The first layer is the infrastructure, the pipes to move the bits. The second layer is the Internet, the service provider who route your IP packets. The third layer is the rich variety of content and service (including voice). (Joi’s comment is that there is a layer zero, ie. “power” but lets leave that out for now).

Intel’s Chip Speed Breakthrough

From the NYTimes:

Intel scientists say that they have made silicon chips that can switch light like electricity, blurring the line between computing and communications and presenting a vision of the digital future that will allow computers themselves to span cities or even the entire globe.

The invention demonstrates for the first time, Intel researchers said, that ultrahigh-speed fiberoptic equipment can be produced at personal computer industry prices. As the costs of communicating between computers and chips falls, the barrier to building fundamentally new kinds of computers not limited by physical distance should become a reality, experts said.

The advance…will free computer designers to think about the systems they create in new ways, making it possible to conceive of machines that are not located in a single physical place, according to scientists and industry executives. It will also make possible a new class of computing applications based on the possibility of transmitting high-definition video and images hundreds or even thousands of times faster than possible on today’s Internet.

“Before, there were two worlds computing and communications,” said Alan Huang, a former Bell Labs physicist, who has founded the Terabit Corporation, an optical networking company in Menlo Park, Calif. “Now they will be the same and we will have powerful computers everywhere.”

One potential application, he said, would be an interactive digital television system allowing viewers to watch a sporting event from multiple angles, moving the point of view at will while the game is being played. With only a limited number of digital cameras, it might be possible to synthesize a virtual moveable seat any place in the stadium. Such a feature exists currently in video games, but it is far beyond the capacity of today’s digital television transmission systems.

IBM and PWCC

Business Week analyses IBM’s acquisition of PriceWaterhouseCoopers Consulting about 16 months after the deal, suggesting that even though there are challenges at present, it will pay off in the long-term:

Big Blue’s big push into strategic consulting is proving to be one of the thorniest challenges in the young tenure of Chief Executive Samuel J. Palmisano. While Palmisano and his top lieutenants have managed much of the PWCC acquisition smoothly, they’ve been confronted with a consulting industry that’s more troubled than most anyone anticipated it would be two years after the U.S. recession officially ended. A glut of capacity and the rise of offshore competitors have led to brutal competition. The result is that many IBM consultants are sitting on the bench, dragging down revenues and profit margins. “They’re probably a little bit behind where they were hoping to be,” says analyst John B. Jones Jr. of Soundview Technology Group.

Even as tech demand recovers, Palmisano will need to move IBM up the food chain faster than rivals nibble away at the bottom. Competitors from India and elsewhere are aggressively moving into services like call centers and maintenance that IBM has long offered. At the same time, players such as Hewlett-Packard Co. and Accenture Ltd. are stepping up their capabilities in traditional IBM strongholds like outsourcing. Rivals openly question whether the PWCC deal will offer IBM any competitive advantage. “Time will tell with that acquisition. So far, they’ve had virtually no growth,” says Carleton S. Fiorina, CEO of Hewlett-Packard, which considered acquiring PWCC before IBM did. “Relationships are nice, but in the end, do they bring business in the door?”

So will the PWCC deal pay off? The evidence suggests that it will, over the long term, though 2004 will be challenging. Already, the collaboration between PWCC’s consultants and IBM’s techies is resulting in a range of high-end services that rivals will be hard-pressed to match. More than ever, the company’s consultants are helping top execs plot strategy and plan business initiatives — and then offering the services and gear to make it happen. “Having started from nowhere, we’ve made a lot of progress,” says Virginia M. Rometty, head of the BCS group.

Whether Rometty’s group thrives will depend in large part on how it performs in the market for what’s called “business process outsourcing.” In these deals, companies hand over management of an entire corporate function, like finance, to an outsider. IBM’s strategy is to develop expertise in four processes — human resources, customer care, procurement, and finance and accounting. It has attracted an anchor customer in each segment, and now it’s marketing its skills to other corporations.

Bus. Std: Emerging Technology for Emerging Enterprises

My latest article in Business Standard:

One of the last frontiers at the intersection of business and technology are small and medium-sized enterprises (SMEs), especially those in emerging markets like India. SMEs are the largest employers in every country. Yet they are today the weak links in business value chains as their processes are still not digitised and information flows are still largely manual and paper driven.

SMEs have been slower to adopt technology than their bigger brethren. SMEs typically have low penetration of computers, limited use of business software, information that lags behind reality and websites that are not updated. In other words, there is a disconnect between business and technology usage in SMEs, leading to operational inefficiencies, lower profitability and slower growth.

Just as emerging markets can leapfrog to a higher stage with the use of the newest technologies (like India has done in telecom), so can SMEs. The dramatic and continued improvements in information technology over the past decade have resulted in commoditisation at the hardware and software level, making it affordable for emerging enterprises.

New technologies appropriately leveraged can help SMEs in modernising their operations and creating new opportunities for sustainable growth. Technology to improve operational efficiency needs to work at three levels:

IT Infrastructure: Affordable computing solutions like thin clients, server-centric computing, open-source software, remote management and mobility integration can help build the right base for 1:1 computing (one employee, one computer; one office, one server) within SMEs. Cellphones can provide real-time access to business information from anywhere and at anytime. Multiple office locations can be connected together via a virtual private network (VPN).

Collaboration and Communication: A computer for every employee can make individuals more productive. For the enterprise as a whole to be more productive requires software that makes teams work together better. Collaboration software in the form of weblogs and wikis can help in making groups work together in distilling tacit knowledge. E-mail, enterprise instant messaging (IM) and voice-over-IP (VoIP) can assist in facilitating low-cost real-time interaction among employees, partners and customers.

Business Process Automation: With a computer for every employee, SMEs can think of their business processes very differently. Information flows across the organisation can now happen in near real-time, layered on web services and service-oriented architectures. Business process standards like ebXML and RosettaNet can help in information sharing beyond enterprise boundaries.

Taken together, this provides the right technology platform for SMEs to build their business:

  • A scalable backend infrastructure which provides instant, personalised and cost-effective communications, secures the enterprise and provides simplified administration of the technology resources.
  • A computer for every employee provides the foundation for personal productivity enhancement and creates the base for electronic capture and flow of information.
  • A suite of applications that powers an information refinery and ensures an intelligent, event-driven, real-time enterprise.

    Technology can also help in opening up new opportunities in two ways:

    Information Dissemination: One of the biggest challenges that SMEs face is getting prospective customers to know about their existence. While websites that are updated regularly are the starting point, CEO weblogs can amplify the message. A CEO weblog helps build direct communication channels to prospective partners and helps the SME to distinguish itself from others, based on its knowledge of the industry in which it is operating.

    Information Access: SMEs need to use the resources available on the web more effectively. This can provide market intelligence, track the competition and identify possible business partners outside the local area. What the web and search engines have done is reduce the friction in finding information. For example, when going for a meeting, it is now possible to Google the person and company so one is much better prepared.

    The right use of new technologies can help SMEs bridge the gap with their larger competitors and help make them into intelligent, real-time enterprises. Ciscos CEO John Chambers called productivity the new engine of wealth. Productive SMEs powered by new technologies can be the growth engines for their economies.

    What is missing? The big enterprises have consulting organisations, IT services companies to complement their in-house IT staff to identify and deploy solutions. SMEs are handicapped by their small size and limited budgets, besides being much harder to reach. As a result, they have little help in their technology deployment. There is a need for full-service IT organisations focused on SMEs that can understand business requirements, suggest solutions, help in the implementation (based on standardised technology components) and provide outsourced management of the technology infrastructure.

    This is an excellent opportunity for mid-tier Indian IT companies. If they can create the right solutions for the bottom of the enterprise pyramid, a market of three million SMEs in India and another 50 million outside India is waiting for them.

  • TECH TALK: Technology and the Indian Elections: Governance

    Following the declaration of the results will come the task of government formation. The days immediately following the counting will be filled with suspense in the event that no single party gets a majority. (From the way it looks right now, India is in for a continuing era of coalition politics.) Once the new government in installed, technology can continue to play an active role in maintaining the link between those in power and those who elected them. So far, in India, the tendency has been that after voting, we rarely hear from the elected representative until the next election. There is little we know of the work done (or not done) by the victors. This is where the Internet can play a positive role. Think of it as continuous assessment, rather than a board exam every five years!

    Every elected representative should be mandated to keep an updated website which provides continued coverage of the activities being done. It should be possible to map promises and action. A discussion area in every constituency website should provide a forum for the local citizens to air their comments and problems. The Internet can thus work as a two-way information bridge between the government and the citizens. This will create for more meaningful and responsible governance.

    At a bigger level, citizens should also be invited to air their comments on policy. Occasionally, different government departments do put up discussion papers for comments. In most cases, it is hard to find out about these unless one closely tracks the websites. This is where wikis, weblogs and RSS can make a big difference: wikis can provide a forum for discussion, weblogs can provide information on the updates for each of the government departments, and RSS can ensure that these updates are available for syndication to interested citizens. By standardizing how each government department disseminates information, it will become easier for citizens to find out what is happening and then be able to contribute back in their fields of expertise. If India needs to leap forward, it needs to harness the collective intelligence of its people a publish-subscribe framework ensures just that.

    Every government department should also be asked to publish its statement of accounts online, with a capability to drill down into the numbers. Supporting vouchers should be scanned and available electronically for examination. Let our accountants then go through these and point out discrepancies if any. This is one way to ensure that funds get used for what they are supposed to be. No single entity may be able to go through all of the details, but as a community few errors will escape the group. This idea borrows from open-source software: by publishing the source and using the eyes of the developers community, there are few bugs which are left unattended to in the software.

    Tomorrow: Beyond 2004

    Continue reading