Thursday, 30 June 2011

The Curse of Low Interest Rates

The Bank of England's Monetary Committee was this week split but Interest Rates have again been held at record low levels of just 0.5%. Surely this is good news for us all and the economic recovery?

The reality is that there is a ticking bomb in the system as those people who either are already on standard variable rate (SVR) mortgages or are due to be on them soon, have a nasty shock in store. The fact is that interest rates will rise - it's just a matter of when not if. SVR today is from 3.5% to 4.95% and many people have budgeted the affordability of their mortgage and lifestyle based on this rate. If base interest rates should raise by just 1%, then it would constitute as much as a 29%% rise in SVR and, therefore, repayments which is a huge increase. And let's face it, given past SVR levels, a 1% rise is trivial.

The saviour for people in this predicament in the past was to grab a fixed rate mortgage around now and lock themselves down on repayments. But the problem is that new fixed rate offers are factoring in what banks think will happen to interest rates and in many instances these deals are unaffordable already for people on SVR. There is a ticking bomb in terms of potential repossessions in the future.

The indicators in the economy are not good. The retail sector is suffering as 4%+ inflation rates hit. Jane Norman, Thorntons, TJ Hughes, Carpet Right, Habitat amongst others have suffered terminally in a raft retail of bad news. And only part of this can blame the internet changing buying habits or out of town shopping growth. You can tell when it gets tough when affluent London commuter towns like St Albans have boarded up shops in the High Street and Poundworld is the most thriving shop. Consumers are already reining in their credit exposure and spending. The news gets worse as only yesterday British Gas spoke of yet another hike in gas prices of around 20% as a strong possibility and we already are seeing upward pressure on food costs.

The fact is that inflation figures are misleading. The real inflation rate amongst people with average or lower disposable incomes is actually much higher as those goods which are increasing in price faster represent a higher proportion of average spend to these people as it may do to richer people. The rising cost of energy hits average incomes much harder than higher incomes as these people may spend the same on energy but it is less of a proportion of their average spend than lower paid people.

And today, Public Sector workers are striking over austerity measures which threaten their pensions which are gold plated compared to the real world of the Private Sector. But here's another reality. The Government does not invest lump sums over the long term 'saving and investing' to pay for Public Sector pensions, they actually come out of the current account paid for by National Insurance. So Public Sector pensions are paid directly out of our taxes, there is no magic fund or annuity to pay this. You and I, everyone, pays for Public Sector pensions directly in our tax bills today - and this is only going to get higher. So while in the Private Sector we have a crisis looming in terms of retirement income, we are paying for the gold plated, premium Public Sector pensions in our tax.

And the Public Sector workers think we will support their strike? They must be joking.

So people stuck on SVR mortgages have it in all directions - higher interest repayments to come, more taxes to pay for Public Sector pensions and the like and higher inflation on staple goods. It's not a pretty place to be. Add in greater uncertainty on jobs, particularly in the banking and retail sectors and the picture is very gloomy.

In many respects, the damage caused by the economic disasters in the financial sector has yet to really bite. The next 24 months could see some very tough times and a band of people are right in the firing line. By keeping the interest rates low to kick start the housing market, many people who got new mortgages based their affordability assumptions based on lower interest rates continuing.

This is the curse of low interest rates.

Tuesday, 28 June 2011

'Under Recruitment' - The new Vogue or just Age Prejudice?

I am an older member of the UK workforce so I can comment with some experience on a thorny matter.

If I had a pound for every time I have heard the phrase, 'You are over qualified (or too experienced) for a job' I would not be having to apply for jobs again.

It isn't necessarily a money thing although I am sure that plays a part. What is very surprising in all this is that most companies in the UK now have Human Resources or Capital Departments or even Talent Management rather than good old Personnel Managers. These new names are to show just how seriously companies take the quest for the best people.

Then the oddest of things occur. The self same companies tell candidates that they are too experienced or over qualified for jobs. That seems to argue straight in the face of the quest for the best talent for specific roles. It often means that 'Headhunters' who comb LinkedIn each day contact skilled people only to see them turned away. It incentivises such recruiters to pick candidates who are not 'too experienced' or possibly not over a certain age.

Now it could be that recruiting managers fear hiring people who may be as skilled or more so than themselves. If so, then the company has a problem as such managers suppress the potential for new generations of equally or better skilled people coming into the company.

Or perhaps it is good old age prejudice coming into play in a fairly unsubtle way. Maybe 'Too experienced' or 'Over qualified' are the new euphemisms for wanting people between 25 and 35, the old-style 'golden age' for employees. I wonder what the average age of Google or Microsoft new starters is but that is not to suggest they are doing anything wrong - it's just an esoteric question. The internet age is very geared toward to young, tech-savvy who rate their reputations on the number of likes they get on their Facebook page.

Whatever it is, I have had many debates with companies I work with about hiring talent versus warm bodies. In the strife to become the best in your particular market, it pays to over recruit not under recruit, in my book.

Recruiters, HC/HR/Talent Management and hiring managers have roles to play here but mostly it is a scene set by CEOs and Directors. If you want the best, don't kid yourself when you recruit.

US Debt Crisis is our Crisis too

On one side of our political divide there is an urge to spend in order to boost recovery.

The danger of this is that your spending gets out of control. In the US, they now have $14 trillion of debt. It isn't just that they are fighting two wars, it's about the average spend versus average revenue. The equations are not balanced and no one area of spending is going to solve it. The matter is more about politics and mentality than actual economics as there can only be one answer if you can add up. If the US don't control this, and soon, then they risk going into a debt spiral.

As I blogged yesterday, there will be only one benficiary of that and it would be China as they are the only country financially strong enough to keep lending money to the US. The danger of being hock (big time) to potentially your biggest threat is obvious.

Why doesn't the US deal with the debt? Mention tax rises and American citizens scream 'Tea Party' and that's not a stereotypical joke because it's what is happening. But as the elections approach we have exactly the same scenario as Gordon Brown had, put off the bad news until after the election. Until then, keep spending and pretend it's a strategy to boost the economy. Let the next Government sort the mess out.

And the mess becomes a political hot potato. This Thursday, teachers in the UK will be the first to strike over the proposed amendments to Public Sector pensions. Sitting in the Private Sector we stand aghast at the audicity to do so - and noble, learned people like teachers too. But that is the problem. Raise taxes, cut spending and you risk outrage by decent people. Continue to spend and everyone stands back and points out that disaster looms.

No one is prepared to take the accountability for the past 12 years of idiotic financial spending. In fact, we have set up the banking system with exactly the same scenario to allow it to happen all over again. And next time around it will be harder to get out of the mess, potentially impossible. Take a long look at Greece to see how that affects you and how your amenable friends who lent you the money smile and desert you when the proverbial hits the fan.

I have blogged extensively in the past over the concept of denial. We are all guilty.

Google Apps v. MS 365 - A Cloud of Difference

Google has upped the anti as the intended launch of Microsoft 365 approaches.

For those who read my recent blog, Google use my same argument. Just putting a current product into a hosted environment, amortising the price and calling it somethning different is not The Cloud. MS 365 takes all the features of its point Office products and just sticks somewhere else other than your PC. Like, NetSuite and others, Google designed Google Apps on the web and so it a completely different animal.

To start with, Google Apps is designed for teams not individuals. You do get SharePoint with MS 365 but multiple users cannot work on the same document as it is just a repository for files, with Google you can. In Microsoft world you cannot work with anyone outside your company who does not have MS applications, with Google you can. This is web philosophy versus on-premise, one licence, one user mentality.

Microsoft have always designed with the PC in mind and Windows operating system. The web is different and a hosted solution should be able to be used in exactly the same way with whatever device you work on with. Google has that philosphy. Interoperability between PC, Mac, tablet and phone on the same product with Google. Try that on Microsoft. The web is the platform, not the machine.

I looked at Microsoft 365 pricing. If you are an SME you think it's simple but it isn't. There are around 11 different pricing options with tiers. Google has a single price per month with no commitment of time, you can stop using and paying any time. I am not sure that is exactly right but for simplicity's sake as an SME, it's a peach. And it's remained static for 4 years.

The thing is that MS 365 is still all about using your desktop whereas Google and others use the web as the platform. There is still a cloudy issue on upgrades with MS whereas Google and web based applications deliver refreshed product all the time - Google Apps added 125 new features in the last year alone. And reliability is key. Much has been made of Google's outtages but I sat on a corporate network only yesterday and for the thrid time in two weeks we had a lengthy email outtage. As it wasn't on the web, everyone just accepts it. In Google's case there has no place to hide and that's how they like it. Google deliver 99.99% uptime on the web whereas MS cannot even deliver that on a private network.

Google has the advantage of experience. It was a company born in The Cloud and has grown up in there. I am not the best of fans of the Google ethos at times but when it comes to delivery, they are spot on. In the battle for users in The Cloud, Google has the right philosophy, mentality, products and pricing.

38,000 companies across the globe signed up to Google Apps in the last week. I didn't even trial MS 365 as I couldn't see the benefit of just hosting my Office off my PC and being charged more over the 3 years since I bought it. Office hasn't changed an iota in that time and that's my issue.

Sunday, 26 June 2011

The Role of the Channel in The Cloud

The role of the Channel in playing in software vendors' strategy in The Cloud is very unclear.

My personal experience at last week's Cloud Computing Forum in Olympia was one of confusion when it came to Microsoft. I got information on both Microsoft 365, the Cloud version of Office, and Microsoft Dynamics for The Cloud. I have even downloaded the Dynamics program and I have been called since installing the trial by both Microsoft and ConsultCRM. Admittedly, Microsoft did back off when I mentioned ConsultCRM but there was no doubt that both vendor and channel were watching who was downloading. It was also obvious that the hosted version of Dynamics and 365 are hosted by Microsoft.

So you have to ask yourself if Microsoft is investing all this money in hosting and marketing to end users what's the point of having channel players in the way of the sale? What value do they add?

In the case of my Dynamics trial I think there is a role for someone to play in advising me how a confusing program works. But given I took a trial with and within minutes I was working, integrated into Office and had my near 10,000 list of contacts uploaded without a single interaction with anyone, you can see why Microsoft needs to get to a point where the end user performs the sale and the rest is auto-provisioned. There is little room in the world of SME for slicing up the sale to give some margin for just handling the enquiry.

I am told that in the case of MS 365 that Microsoft has had to do a great deal of the running as well as provisioning of the service. Partners have been slow to embrace the product during its beta phase and Go Live is due at the end of June and I know that one distributor has had virtually no sales.

What is going on? How is Microsoft going to solve this and is there a role for channel to play in The Cloud for Microsoft and arguably other software vendors?

For Microsoft, it appears they will be paying a finder's fee to channel members who deliver sales on MS 365. This is mighty precarious as it strongly appears that the contract of sale will between user and Microsoft meaning that in future the channel can be easily hacked out or given nothing for renewals. As one channel player puts it, "We lose control of the client."

So you have to ask yourself, why would a reseller sell MS 365 and risk losing control of the client when they could sell the on-premise solution and get full ownership of the sale?

Again it's an example of a software vendors' lack of strategy and execution in The Cloud. Or it is a warning bell for channel that their future is limited as Cloud adoption takes off?

So the scramble at the show was to interest channel in hosting solutions themselves but there is a problem here. The beauty of Cloud is economy of scale for SMEs and the way it is delivered is for vendors to host the solution with as many users on as possible so that each incremental user uses just a portion of the resources required and forgoes expensive investment in servers and virtualisation at the SME. It's a win-win.

The problem is that if everyone is hosting the same things then the economy of scale gets diluted and pricing will never really get much better. The end user loses out the more companies try to host themselves is my argument. Also, for resellers it would be unclear as to whether they could generate enough sales to make this worth their while. Multiple channels doing the hosting doesn't help the SME and it could be a mug's game for channel at worst, at best speculative for returns.

In all this, where does the distributor sit? There is no stock involved, credit is a new story and Microsoft is generating a dialogue with the end user that argues that resellers should get out of the way. If I were a broadliner, I would be starting to get uneasy about how this all pans out.
Microsoft has argued that one way resellers could keep control of sales is to do Enterprise agreements with large customers. Erm, the big opportunity is in SMEs, guys. The whole point is that SMEs is where the major opportunity lies for The Cloud.

All this points to a cloudy strategy for Microsoft and other vendors. At least Microsoft is doing something is one argument. But the channel must be starting to get worried. It certainly argues that the role of distribution in the future of plain old software sales is limited if this approach goes ahead.

Next up, I will try and tackle the thorny issue of what distributors should be doing.

Friday, 24 June 2011

Comparisons in The Cloud

Hot foot from The Cloud Computing Forum with my free trial of Microsoft Dynamics, I thought I would give the whole thing a go.

So I got my MS Dynamics trial going with a little bit of sweat and some clunky processes of verifications. Finally the beast arrived. Neatly, you can sign in with your MS Live ID.
From there I went about importing my contacts from ACT, my old and tired CRM package. There is a process to follow and I adhered to it religiously. When I viewed my contacts I got loads of blank entries that corresponded to null contacts found in companies. Then you notice that it has picked up first names only for the Full Name. I follow the procedure to wipe out the data and start again. The same thing happened although this time I had carefully followed the mapping of the data columns as per the instructions. I did it again. Same thing.

Annoyed, I turned to I signed up for the trial of the Group version although it is arguable that as a small, small company I only needed the entry level Contact Manager. The sign up took seconds and I was provisioned immediately. I pressed the button for Outlook synchronisation and a small program was downloaded and then I followed the steps. Outlook was synchronised with some errors which I manually checked and corrected - that took about 30 minutes in total.

Then I uploaded my ACT from the same file I used on MS Dynamics. It worked. Nothing more to say than this. All my contacts were there as required. I had a little tweaking to do on some accounts where contacts were not assigned but that took about 10 minutes in total which for 9,500 contacts in total isn't bad.

Salesforce allows you to send emails and it records them. But if I am honest that functionality is better in ACT where you use native Outlook and a copy is recorded in ACT. For Salesforce, you have to use its editor and it's not as nice. Plus it makes nothing ad hoc. Even scheduling meetings seems to not affect the Outlook calendar. What this forces you to do is to work entirely in Salesforce and I am a little uncomfortable with this and can see why salespeople rebel against the time taken to do things in Salesforce.

By this time MS Dynamics has been ditched. I can't see where it links with Outlook and although the tabs on the left are good, it is not as intuitive as Salesforce which has everything you need to work a contact or opportunity in front of you.

Then came the price. I could have started on a special offer on Salesforce Contact Manager at £1.20/user/month but I splashed out and did the next offer for Group at £10.20/user/month. The comparable offer on MS Dynamics is one flavour at £22.75/user/month for this month, £29.50 after the end of June.

No brainer - Salesforce wins it.

And here is the issue for Microsoft in The Cloud. Everything is about getting the same product down into The Cloud and amortised on price. There is no understanding of the different needs of an Enterprise of one man or 10,000. The price and product is the same. But the businesses are radically different.

One size does not fit all, sadly. Whereas Salesforce does escalate to a high price, that depends on the user status in a very hierarchical fashion and you go into the realms of unlimited customisation. But for me, Salesforce Group is perfect and I am working happily in it as we speak.

This is where Microsoft's strategy is critically flawed. Businesses of my size do not compare with the likes of BP International. My requirements are simple and limited. Salesforce Group gives me a raft of features perfect for my business. MS Dynamics is clunky and overloaded while making it difficult for a user to get started. I don't want to have to be trained to do something as simple as inputing data, thanks, or importing a .csv blinking file. If that isn't easy, then you are onto a losing battle with SMEs.

Salesforce has cracked it. It worked perfectly on my iPad and I don't have to worry about file management. It also has a custom app for iPhone which works on iPad. Then it has something called Chatter which is free and is an imbedded Twitter type application which allows you to create working teams on accounts or groups of accounts from people within your company or even outside. People then see updates and you can 'chatter' any news or success or share ideas as well. It's a neat function and this works on iPad and my Android too.

The Cloud isn't just about sticking an application in a hosted environment. It's about solutions. Microsoft is using old mentality to try to get into The Cloud. Microsoft should take a leaf out of the books of the likes of Salesforce. To make matters worse, salesforce seemless links into Google Apps which are free.

They are already there and doing it brilliantly. They are the benchmark.

Thursday, 23 June 2011

The Cloud is Cloudy with Outbreaks of Common Sense but Mainly Confusing

Olympia first thing, breakfast at El Mundo. West End prices and microwaved bacon like leather, tough on the teeth. It's a fortifying start to a day full of questions.

I am hoping to see vendors, hosting companies, resellers make sense of The Cloud. So far, it's a very confusing picture. First sense is that the Forum is small and not many players and punters alike. There is lots of talk about infrastructure to build your own hosting set up - which sounds expensive. Some are talking about co-hosting facilities to serve applications from. Again this seems expensive for resellers.

I make a beeline for Microsoft. They should know what they are talking about or at least that's what one of their senior directors tells me. Their stand is large in comparison to others and around the edge are several of their partners including the likes of Trustmarque, Dimension Data and more.

I first go to Core.GB and get a quick talk through MS 365 by a young Irish techie. You can get a 25 user beta trial which will probably last up until September. What MS 365 offers is a hosted solution for your email, calendar and, at minimum, web based Office Apps based on a SharePoint back end (I knew they would find a use for SharePoint in the end). So if you are a 10 person company you would pay a miserly £4/user/month and you can have your company domain hosted for email (even the website although that's really naff) and everyone gets a 'Lite' browser based version of Office which allows you to create and edit documents. Well you can edit documents so long as you have web access, of course, but documents are synchronised to the SharePoint back end. So you get a central document storage area which everyone has access to and sees - so no private document area.

The trouble is that Google do this for free.
This is the basic level and is very similar then to Google Apps in terms of capability. If you then pay £8/ user/ month extra, you can have the full versions of the MS Office Suite. I assume that you can then have your usual private document stash and the SharePoint back end for everyone to use. For the mathematics gurus this all then works out at £144/user/year. I didn't get to know how much storage space this gives you. Also, you can add, at further cost, an automated back up and data management facility.

So for a 10 person company this equates to £1440/annum for a full solution of MS Office, hosted in The Cloud. Don't tell anyone, but Core's young Irish demo person could not access the MS 365 portal for his company - a rather terminal looking screen came up which was very disconcerting for a punter like I.

This all sounds decent value for a fully hosted, maintained and supported solution. Companies like Core and Trustmarque, clustered around the MS stand offered the same. The added value service over just going to MS is that they might do the email migration from your current provider and set up the SharePoint back end to your liking, plus then do first line support. What margins the reseller makes, goodness knows. And where was the Distributor in all this and why should they have a slice of the action, you may ask? Credit risk management, as the solution is bought from MS? As I have said before, the beauty of The Cloud is that if you don't pay, you don't get. Resellers or MS who are not paid in any month have the option to simply switch off the service and effectively cripple the non-paying users' company.

You have to worry about Distribution in this simplified world. For the user, there are still many questions which remain unanswered by Microsoft. There is a lack of clarity on upgrades, some one year fudge was mentioned which I didn't understand. Disk space allocation - what do you get, how can you flex it and how do you manage data that spirals out of control? Interoperability between applications? There should be answers to all this ready as this is what SMEs need from The Cloud. Peace of mind at a set monthly cost that only grows in line with their requirements.
To be clear, The Cloud is NOT about just sticking current applications on a co-hosted site and then charging in a different way. The real Cloud is about having an entire solution provided - the whole service is not just about being robust it is about scalability and usability. Answers need to be ready.

OK, nirvana time. Who can serve my Office applications and backend accounting from one source, manage it for me and send me a single monthly bill? Let's lob in CRM and mobility for good measure.

Back on the MS stand and this time I get to meet 2 companies. First is Program Framework who know their MS 365 - "You get all this and guess what the price is?" I ruin the lady's day as I already know. For some reason they glibly say it's all incredibly cheap but no one I have met has done a cost of ownership analysis over a 5 year period and floored me with the comparison toi buying the normal licences. So I pose the question - can I get 365 and CRM? Ah yes, you can get the CRM via our partner over here ConsultCRM. Here I am told by a very professional guy that MS Dynamics fully hosted is £22.75/user/month and will go up to £29.50 after June so buy early while the cakes are hot. I can't seem to buy MS 365 and Dynamics from the same company let alone get it on the same contract. And as for back office functions like accounting, perish the thought.

I mention NetSuite and the man shivers as all his comparisons are for (again it's point products in a world where SMEs want solutions) and say I can get back office and CRM in one solution, one price. The man is floored. There is no answer. I am slightly floored too as I am not sure if I was right. What was disconcerting was that he didn't know if I was right or not.
There is a huge ignorance about the main players who already have credence and market share in The Cloud. There is an automatic assumption that MS will come in and change the world. Is this true or is there an opportunity for companies like and NetSuite to clean up and take advantage?

Again, where are the Distributors? Not a single stand from a Distributor at the event. Arrogance? Hubris? Ignorance? Who knows?

There you go, I'm not so daft. NetSuite - accounting, CRM and eCommerce in one solution in The Cloud ( starts $2/user/month but is better at $15/user/month rising to $65/user/month and territory management etc goes much higher up to $250/user per month. It's hard to compare like for like but in my opinion for an SME's needs would suffice at $15/user/month while MS Dynamics will be £29.50/user/month. Both offer decent MS Office integration. Go figure. Stop Press* - I did my free trial sign up to Dynamics and imported my text file from Act. Nightmare - complete khazi. Did the same for last yera, worked first time and looked great. Dynamics looks naff, you have to be honest.

It appears that MS is putting a finger in the air on pricing and is trying to charge SMEs enterprise-grade pricing. It really is a poorly thought through strategy, based on poor research. Current Cloud players have worked out how to get SMEs bought in at a sensible price and take away the fear factors. Microsoft have much to learn in this market.

In search of answers it suddenly struck me that it is who is not here that is more significant than who is. After all, there are only so many hosted centres, infrastructures, security identifiers and mail traffic optimisers that you can buy. Where are the Distributors? No one here. Not one. Where is NetSuite,, Taleo, and more? Where is VMware or EMC, Oracle (OK, they have a cubbyhole meeting room if you look hard)? Where is the largest of them all - Google? This, clearly, is not an end user solutions event.

So a quick chat with a friendly MS Consultant and you get honesty if total confusion at the end of it. Office 365 does not communicate with MS Dynamics hosted version. Oops, that wasn't clear before. MS is looking at a PBX system in partnership with BT offering the Lync service which can route calls. But where does this leave the recent acquisition of Skype which has got a strong following in consumer but is creeping into the corporate market place? Can't Skype build in a virtual PBX facility on top of its other features? Where is RingCentral or BT at this show? On the wandering phone front for SMEs, Vodafone offer a virtual PBX based on mobility, but wouldn't it be better if this is fitted into real office applications too? Where was RIM?

It strikes me that some of the big players either don't think The Cloud is a serious proposition or that they they don't have a solution that they can articulate? It seems the buzz of this show is backbone facilities which if you are a reseller will scare the hell out of you in terms of investment and management. Maybe the REAL Cloud application providers have moved on as Marc Benioff suggests. Maybe The Cloud is really passé after all.

There was an absence of Social Media sites like LinkedIn or Facebook. The Cloud embraces it all and there seemed to be key elements missing at this Forum.

So where does this leave the market and the channel? As I have said before there is room for a player to come from left field. It's not about simple aggregation - it's about providing best in class end to end solutions that work, on one bill. Microsoft is putting just a toe in the water, the story is rubbish for SMEs and the resellers have no idea how to articulate the proposition. If anything, they seem to augment the status quo. There is no leadership by Distributors and each vendor is waiting for the other to deliver some kind of strength of proposition. It's a waiting game with some posturing. Little leadership.

To be frank, I thought Microsoft's strategy was based on the status quo with amortised pricing. Where was the real value proposition? Where was the enthusiasm? Where was the research and the competitive positioning? Where was the end to end strategy for solution provision to SMEs?
Oh for and NetSuite at this show to illustrate how to deliver Cloud solutions in a world class form. Be off with you, purveyors of Private Clouds, hosting facilities and analytical tools. Users want solutions. Think of The Cloud as the telecom cloud - no one worries how calls get to phones they just want applications, robustness, security and sensible billing and costing with scalability. Come on someone, just do it. The time is right.

A Funny Turn

"Not in my lifetime," said a very tall man from a large Building Society who wished to remain anonymous but whose branches are nation wide. He was answering my question: was he planning to use The Cloud to host any of his core business applications? However, his company is already using The Cloud in varieties of ways, not least in many of the third party facilities they may have such as Clearing Systems, internet banking portals, feeds to IFAs and their networks etc. They might even look at communications, in terms of video conferencing or PBX. He confessed they may look at the concept of Private Cloud and the idea of getting some back end scalability. But when I indicated that all these networking, infrastructure and optimising companies were looking for him to part with vast sums of cash, he laughed. "Not in my lifetime," he said. That was bad news for some - he was younger than me for sure.

It augments the view that much of this forum is missing the point. Already The Cloud is becoming synonymous with parting with vast sums of cash, incredible complexity, management and data issues, security, archiving issues and much more. It must be scaring the heck out of companies. Particularly SMEs. Big boys tackle such issues daily and throw vast sums at it, this is just a different question in a different space. To some extent I was failing to see the compelling advantage to a large company in utilising The Cloud such was the complexity of offerings and issues to consider and prices. It was as if the vendors were vying to present a combined business case against The Cloud.

But SMEs are being glossed over, yet this has to be the easiest of sells. Scalability without critical mass is crucial for SMEs with smoothed costs - Cloud based solutions present the perfect solution. Yet whenever I mention I am a 10 man company (which is a gross exaggeration) their eyes gloss over an they can't wait to get shot of me. That's because their selling model doesn't account for SMEs. The same for Distributors and the same for vendors. Therein lies the rub. Cue Apple, Google and Amazon - fill your boots, chaps. Volume, monthly, high margin transactions? We'll have some of that.

The gap in the market is for serving SMEs with gold plated solutions with one bill, one support line - everything working, robust and secure. Who cares what back ends all that in all honesty. That's why we call it The Cloud.

Monday, 20 June 2011

If Greece goes bust....

Boris Johnson's vote-attracting column in today's Telegraph might get a few knowing nods from the anti-coalition chapter but is this just his love of Rome clouding his vision?

Having read his book comparing the Roman Empire to the EU, I am a bit lost as to where he puts the Greeks in the same scenario being as most modern civilisation, law and sophisticated language in Europe originates from the Greeks. It now seems he has nailed his colours to the mast. Let the devils sink.

The Euro is defunct, the EU fiscal policy is to be shredded and let any country that cannot hold its own whither and die. Heath was a traitor for taking us into the EC, Brown a genius for keeping us out of the Euro. Oh Boris, where do you stand? It's dog eat dog out there, survival of the fittest and one less mouth to feed at the table means more for the rest of us, perhaps?
There is a slight problem with this noble argument. Firstly, should we let Greece fail then they take all that nice money we lent with them down the creek without a paddle. Secondly, where does a bankrupt country go? Do we all pick over the assets and choose which relic we want, how many olives can we carry away, which Greek island becomes ours and do we eat all the moussaka we can? Thirdly, where does it leave the global financial system?

To think that Greece can fall into oblivion peacefully all by itself is naive in the extreme. You play the game of high risk finance in a globalised money market and you pay the price. Now we are into the realm of picking and choosing who we want to cull. We saved our banks who participated in this craziness, now we think we can play God in the world in which we allowed them to participate. Think again.

You see, we could not afford to see Dubai go down - far too many Brits have interests over there. We couldn't let Ireland go down, they represent a large trading partner. We wouldn't let Portugal or Spain go down as we have properties, holidays and wine interests to protect. Italy is far too nice a place as we like their fast cars, low sense of morals, football and fashion. Greece? What have they ever done for us bar a few nice holiday resorts and feta cheese?

So it's a nice vote winner to pick on Greece. Easy target, no one cares if it disappeared off the map.

Or would they? It's a small fact but if Greece went down an estimated 7% of entire EU financial liquidity disappears. Drachmas have no value if they were to start again so who would trade with them? Here's a thought, when you look at the 'Law of Unintended Consequences', when Argentina defaulted on its debt back in 2002, 20% of the Italian pension system went with it meaning hundreds of thousands of Europeans lost their life savings. For the UK, we have around £14bn of lending exposed and £3.4bn of Government debt. Money we can afford to lose?

The resultant aftermath of a major default let alone bankruptcy is the cost of borrowing goes up for others. For the other members of the PIGS (Portugal, Italy, Greece and Spain) this would be disastrous as they would be the next in line to be cut off. But hovering precariously around the edges are countries like the UK. As we battle our own issues, what a lovely idea that we can be cold-hearted to those in a worse position? The way I Iook at it is that that just bumps us one place forward in the queue of countries next to go on the Credit Rating black list. And what joy that would be for us all.

On this subject, France and Greece each have exposure of $79bn to Greece and Germany a further $43bn. For the knock-on PIGS debt, Britain's exposure to PIGS Government debt is actually the largest in Europe. Of all the PIGS countries, the total debt exposure in the banking system is a mere $2.9 trillion, so no worries if there is a domino effect.

So as we sit here pontificating and gloating as the Unions prepare to make our lives hell as we suck in our breath to make our girth fit our financial belt, we are but a few steps away from a similar fate. The Euro was wishful thinking at best but it's way too late to start bleating about it. We live by the sword in financial terms, we die by it. This isn't like a bank failing, there are no insurance schemes, it is the slippery slope into financial gloom.

Beware, Boris, what you wish for.......

Saturday, 18 June 2011

Hubble Bubble

The year is 1720 and we are in a coffee shop off Exchange Alley.

"Can I interest you in in a joint stock offering in a discount voucher scheme?" says the nice jobber sipping a latte.

"What's a discount voucher scheme?" we ask.

"It's an enterprise so secret and mystifying yet exciting that I cannot tell you but if you miss out on this IPO you will look stupid," says the jobber.

"Count me in then, although it sounds awfully familiar," we say.

It sounds really stupid but in 1720 a few people caught a bath in what came to be known as The South Sea Bubble. Even intelligent people like Sir Isaac Newton who knew a thing or two about making money as he ran the Mint lost money. The organisers of the company, by some spooky coincidence all sold at the top and made literally millions.

As Alexander Pope put it at the time:

A bubble is blown up in air,
On which fine prospects do appear;
The bubble breaks, the prospect's lost,
Yet some bubble pay the cost.
Hubble Bubble all is smoke,
Hubble Bubble, all is broke,
Farewell your houses, lands and flocks,
For all you have is now in stocks.

This resonates to the modern day. Not that we learn any as we went through Web 1.0 and we even have been through the worst financial crisis since the Depression (by the way, we are by no means clear of that after papering over the cracks, Greece might yet pull us all back in), now we are web x.0 and we are talking up the valuations yet again.

The odd thing is this about things like Facebook. It's run by a loathable person about who there is more than a modicum of doubt about his provenance on the idea, in order to get at the 'riches' trapped within they will probably have to break data privacy laws, and the whole fad is getting passé as new and better networks emerge. But Facebook hangs on hoping for yet bigger valuations before going public. In their wake comes Groupon with a $20 billion tag that only has 481 competitors, two of which are Amazon and Google, and with a business model that you and I could copy tomorrow. And there's plenty more on the way.

The bubble is being inflated. Alexander Pope would be as wise today as he was all those years ago. People will make and lose fortunes, but when the dust has settled we will all marvel over the really trivial ideas all of these things were.

Just like the fever pitch in Exchange Alley in 1720.

Anti-Social Networking?

We are all like kids in a sweet shop. We just can't get enough of social media this and social media that, what's our Klout and the next best social network.

It's as if socialising never existed. And as everything grows like topsy we all vigorously defend the right to free speech. Shame on China, shame on Arabia for not allowing Facebook and Google in - it should be the right of every person to have an account on which to post silly pictures of their cat and share anti-Muslim jingoistic emails from outraged Americans.

We are a generation (even us oldies) who have re-invented the term social. I mean, you are simply not influential if you can actually talk to important people - you have to have an extremely large network of followers who hang on your every digital word to be really influential these days. 'What goes on on tour, goes on YouTube' and other phrases that have entered our lives and suddenly what we do is far more public. We fight for data privacy and then we log into Facebook and make sure our profile is 100%. We 'out' Ryan Giggs on Twitter but we abhor spam attacks. Life is suddenly full of odd paradoxes.

But what of the legacy? Today, if I was so inclined, I could seek out chatrooms which trade in private bank data by the batch of thousands, I could join interest groups that organise Jihad, I could become a member of a pedophile ring, I could join groups and groom young children for all sorts of things, I could join sites which cater for the most bizarre sexual acts in life. The world is my oyster.

In that morbid and mundane place we call the real world, people starve and crimes are committed by weird people. Online, people are cool and the only crimes are our lack of imagination and a low PeerIndex score. Losers are those who haven't joined tumblr or received hair removal from Groupon. Pedophiles are merely active social networkers, after all. We can organise raves, parties and terrorist acts while getting to the events on special offers on The world is limited only by our imagination.

I have yet to hear the term anti-social media or networking. We have yet to have any real impetus on law making that embraces the internet and social networking. Groups will fight it as it spoils the fun. But it will come, I suppose. You can have too much of a good thing.
We are in an important period for the digital world. The fever pitch is high as valuations get talked up and the last thing you want is law makers stepping in and spoiling the fun. But we may be creating the easiest and most useful ways for anti-social people to commit their anti-social acts.

Here's an interesting statistic. Crime has not gone down any but car theft is at it lowest for years. I wonder what all those artful criminals are doing these days? Checking who's online, who's travelling on Tripit, who is buying and selling what on eBay, scamming us on our Microsoft support? (Surely we are all just glad of a call mentioning Microsoft).

At some point, I dare say we will all sober up from the party and with sore heads survey the mess that surrounds us. It will have been such good fun at the time that we just didn't see the obvious happening. But we will see it some day.


Friday, 17 June 2011

Caught with their pants down

Another day and another mobility giant disappoints.

This time around its RIM, makers of the Blackberry. The once darling of the markets and the must-have device of any workaholic executive, the Blackberry led the way for corporations to serve their emails on mobile technology. It had so many things that were wrong to start with - the clunky wheel mouse, inability to read attachments, constant scrolling up and down to find messages, that blinking deductive text that made so many messages just total rubbish. It didn't matter, the Blackberry was simply a cutting edge device, we put up with it all.

Suddenly the world is different. Profits dropped in the quarter to May to $695m down from $769m on the same period last year - missing even their revised forecast. Talk of challenges and cost cutting is rife - shares are down 12%. Oh and any company that has joint CEOs is asking for trouble.

The same could be said for Nokia who, having absorbed Symbian, had got so locked into their own world of mobile phones they simply failed to see the Smartphone revolution as a threat. HTC, Apple, Samsung have all battered them repeatedly and now they have turned to Microsoft as a last ditch effort to be saved.

For Blackberry, their woes have gotten worse as there have been delays in delivering their new tablet product which would be just another catch up device in a rapidly filling market. Google Android came from left field with Apple to invade the mobility market and their power and brilliance has simply left the traditionalists behind. Innovation at RIM and Nokia seems to be a thing of the past.

In both cases, RIM and Nokia have been caught with the pants down. RIM has at least got a decent share of the corporate market to defend but when it took me precisely two minutes to configure my email client on my Android with ZERO new software on any server, you know that Blackberry are struggling for the future.

Analysts are saying that users are not waiting for Blackberry - they are moving to other platforms. The same can be said of Nokia. Too little, too late.

Clouds Brewing

I have had a problem with Private Cloud. But then again I get awfully confused about some people's use of the term, 'The Cloud' anyway.

I am a veteran of what was The Cloud, SaaS. The concept of having a software application residing outside the firewall and passing into the firewall from the internet via a port in the firewall. It meant that the central backbone of that application could be centrally served and stored while a 'thin client' of the application used on the PC.

It was a revolution in many respects. It meant you could scale far more easily, everybody have the same version, get updates automatically, maintenance done real time and the costing model be more innovative and representative of true ongoing cost to the business. It meant that a lot of compute power could be saved as no dedicated servers or storage were required, no data centre, no power or cooling or real estate issues to solve.

The buzz in the software industry just prior to The Cloud has been Virtualisation. The idea that expensive devices like servers and storage can be seen as a communal services to the organisation independent of their location has helped decrease costs and data centre issues. To my mind, this is pretty much Private Cloud. You can add in now, for arguments sake, that some of the communal services might be hosted off the main premises but they would be included within the firewall. To my mind, this is not really the concept of The Cloud and we are getting bastardisation of the terminology.

Also, The Cloud itself is suffering. Many are mixing in co-location of data centres or outsourced Managed Services as The Cloud or Private Cloud. Basically any situation where hardware resides off premise. To my mind again, this is just Virtualisation and outsourcing.

The Cloud, in the context of SMEs, is much more about having basic applications served from outside the firewall either by a vendor or a third party intermediary. The software is fully maintained and updated by the vendor directly - true SaaS.

Marc Benioff, CEO at, puts it best when he calls The Cloud passé. Once again, in order to bring the terminology back onto the turf of traditional application vendors, there is an attempt to make The Cloud something which describes pretty much status quo IT with a few nuances added in.

I think cost benefits will start to get hidden and nullified if this remains the case. The true issue for an SME is how to truly get their business applications served on a scalable basis from outside of their organisation for a single monthly cost so that they can get on and use their money to invest and grow their businesses.

If all they do is a bit of Virtualisation then they will not be embracing The Cloud cost model and they only slightly defer major spends.

The major difference will be if a company chose between running their SAP based CRM on servers hosted at a 'virtualised' data centre offsite versus running There is no one who can argue that you are comparing apples only. One is scalable independent of your business, the other isn't.

Welcome to the real Cloud.

Thursday, 16 June 2011

Cloud Strategy - Why playing catch up is not a plan

The Cloud? Ah, don't worry. When the action really starts, I'll get my strategy together and get a piece of the action.

Tell that to The SaaS based CRM specialist reported over $500m revenues in its third quarter up 34% on the previous year as it continued to outperform market expectations. And don't think this is just a US thing, as 20% of sales came from Europe which is growing faster. It's highly profitable, cash generative and it's revolutionised the whole approach to database-centric applications for road based salespeople. Then there's NetSuite, a SaaS based accounting, ERP, BI system, which has grown quickly to over $170m per quarter when on premise solutions like Oracle have seen declines in revenue.

Wait a minute. These companies are not mainstream players, are they? No. If you are in the channel and locked into premise based solutions, then you will have not heard of these products other than to compete against them. Well, most of us has by now heard of if you are in the business of selling.

You see, in The Cloud there are already established players leading the field and they do not have to reinvent their strategies and invest in massive back end infrastructure and hosting farms to compete. With Salesforce and NetSuite they are already there as that was the whole purpose of their businesses. Current on premise vendors have to enter their world, on their terms. And so too do the channel - or at least that's what you hope they will allow you to do.
So if you were today a company looking at embracing The Cloud pretty fully, you surely would not have many options would you? Think again.

For your accounts, ERP, payroll, planning, business intelligence, NetSuite is the established leader and it challenges anything on the market today in terms of capability. Salesforce is there for CRM but it goes far, far deeper with its superb modular approach to linking to established business systems like SAP so that you can take lead management and tracking to commission payments in nice leaps and even run your support ticket system or internal IT requests as well as whip the sales teams on KPI performance. Microsoft 365 has solutions for standard front office systems already in place but look closely at Google, their approach in The Cloud is far more flexible and their Apps are already available for multiple devices such as iPad or Android machines allowing cross platform synchronisation. Evernote is another good example of a brilliant alternative to MS OneNote.

Data Management solutions are plentiful but many are just offering back up space in The Cloud. True Cloud applications are better like Novastor or Zmanda or Vortex. For phones and communication, at the low end Skype is good for small businesses, but RingCentral, Vonage, Unity, VoiceBus and others offer great virtual PBX systems that allow you to receive calls wherever you are as if on a switchboard.

Mobility solutions are well established with RIM as the leader, but I like the Android set up. I really think Google is thinking more practically. HR solutions have some excellent systems with ex-PeopleSoft staff behind and the talent management system, Taleo, is now forcing its way on the scene.

There are many more. The point here is that The Cloud has leading players out there and playing catch up is a costly strategy. Particularly costly for channel, as many of these lead players in Cloud applications have either shunned channels or use very different ways to reach users. Old assumptions are not applicable here. For many of these vendors, the world changed the day they started and they are not about to cow tail to the old market now.

So, if you are going to wait on the fence in channel world, watch out for splinters in the backside.

IPv6 - What's that got to do with The Cloud?

It seems like Y2k all over again. Another scare for the software industry and a chance for charlatans to sell 'snake oil' remedies for protection. Is that IPv6?

Nope. This one is not optional and there will be change. But there will still be charlatans selling snake oil.

You know all those silly little numbers we only get to see when something goes wrong? You know the clusters of 4 three digit numbers separated by dots that all look the same? Yes, the IP addresses. Well like London telephone numbers a few years back, in that format there are only so many of them you can have as the number of possible combinations run out soon as all the possible permutations are close to exhaustion. IPv6 solves that by introducing hexadecimal and changing the formats so that the theoretical limit is, err, limitless. Well near as dammit.

You see as the numbers of users and logical devices have exploded on this thing we call the Internet, World Wide Web, gizmo, thing, the chaps who invented the address system didn't realise its potential and so their original system has run out of steam.

So there will be a transition to the new format. US Federal agencies are moving swiftly while Enterprises are well behind in terms of understanding the implications, according to research. And therefore there are opportunities for the Channel to become trusted experts in the change.
Once again it is all about how software handles the new structure of the IP address. Most have the current format embedded within them and so it will test IT Manager's skill, patience, planning and skills to get to the nub of which vendors are prepared and which are not and what to do about it. When the full change occurs, we may find several devices sitting there not being able to be addressed and therefore not work.

Why is The Cloud important in IPv6?

Here is a case in point. Enterprises and Government departments will spend fortunes investigating, planning, preparing and tackling the issue. But what happens to SMEs? How can they afford to go through another Y2k scare - and this one is non-optional and fundamental?
This is where The Cloud plays a part. By effectively outsourcing large tracts of your IT applications to The Cloud, these are updated automatically and almost daily, so the worry of such enormous changes is mitigated. Cloud based applications will be ready, prepared and updated well in advance and automatically - all included in the price.

This is an enormous benefit of The Cloud to SMEs and it is why it is so crucial to their future. The Cloud not only handles mundane and key tasks in the ether but it means you get the new features and debugs immediately plus you get the advantages of scalability as well. All for a single, smooth monthly cost, making sure that major changes like IPv6 does not make a sudden dent into capital or IT budgets when you can put that money to better use on growing your business.

IPv6 is a profound change for everyone and is an illustration of why The Cloud is of great importance for the future for SMEs.

Wednesday, 15 June 2011

Taming the Turds

140 characters forces the mind to come up with some gems. How about this for a quote, "Virtually all innovation emerges from piles of turds".

The writer goes on to say, "Good news: Lots of turds around hence matchless opportunity to innovate or start up business."

I have been saying similar things myself in deeper vernacular. This writer also says that, "Only tough times produce heroes." He does caveat it with "more or less" but again I see his point. When the going gets tough, the tough get going and all that malarkey.

In fact, this writer again goes on to say, "Name me a US President you can remember who didn't achieve memorable status by taming turds." To be frank, I didn't know turds were uppity so you learn some thing new each day. The vision of Nixon fencing with an angry turd is amusing and apt. I see the writer's point.

The theme is somewhat grim and perhaps a bit cynical of our times. But we are all pulling in our belts, consumer confidence is very low (Argos had bad numbers recently), the PC market has dropped sharply and dominate companies like Nokia are being hard pressed. Times are not rosy.
And as the Irish would say, "You need some prime shite to grow beautiful roses."
We may not agree with the details of all this but it is true to say that the innovators make things happen in tough times and opportunities are taken. When tough times come businesses, it is courageous and creative leadership that wins through.

So the time is right, the opportunities are there - get creative and tame those turds.

The writer? Oh, some guy called Tom Peters said it on Twitter just this afternoon.

Tuesday, 14 June 2011

Have you got Klout?

There is a rumour that in the future employers will use a measure of your 'influence' on people in social networking and media to assess your suitability for a job. Is this a good thing?

Websites such as Klout and PeerIndex offer computational ways to assess your 'influence' over people in the digital world. Depending on how often you are retweeted or how much you blog and various other inputs, the sites will determine an 'Index of Influence' for you. How cool is that?
In fact, your digital friends can actually help you by giving you things like +K's on Klout or +1s on Google or 'Likes' on Facebook to help boost your Index, so you had better start being nice to people. Or not writing guff, perhaps.

I read an interesting retort to this by Simon Ellinas who offers his indignation that a web-based algorithm can shed any real light on 'influence'. I tend to agree but I also believe that there needs to be a way to sort out who is really influencing the digital world and who isn't.

Where Simon is absolutely right is that numbers of clicks, retweets, likes, volumes of posts or tweets are only a bland measure of what is one of the most profound of forces in life. Things have influence over things - we don't have to be specific about life itself even. Gravity has influence over celestial bodies, independent of life. More practically, Klout has no rating for a dead author whose online works still may influence people today.

To say that Klout is a measure of a person's digital influence is like so much of what goes on the web today. It is a very web-centric point of view and ignores the fact that a whole world exists outside of it - and has done for eons. It's as if the digital world is the only world that exists.
What the web has done is open up the world of possibilities. Suddenly, what I say has the potential of reaching millions pretty easily. I now have the possibility of networking with and influencing people who I hope to do business with more quickly, cheaply and effectively then ever before. The rest is pretty mundane. And that's the point.

So I don't think the fact I have posted a video of my young son on Facebook for family and friends to see and 'Like' has any relevance on my CV or to an employer, unless I did it in work time! I don't think it's of great relevance that I write up the bedtime stories I tell my young son on a blog has a bearing on my worth to a future employer.

So there is a context and relevance that is completely missed here. A future employer would be pretty astute to be cynical of a Klout score if it was influenced by who liked my son's video. But they might want to know who reads my blog on business and likes it. There is a big difference. In other words, these indices are just a bland measure of activity and response with no real relevance to what constitutes influence in people.

Here's a for instance - if my employer measured influence by the number of emails I sent out and received replies to, then they miss the fact that the ones I might get most replies on are the 'Joke du Jour'. They might miss the fact I send few work related mails! Hypothetical, of course.
If clicks and algorithms cannot even differentiate between business and messing around in the digital world then it is highly unlikely to know whether anything I have said in my blog has made any difference to a business.

I would far rather a future employer take the word of those I have actually worked for who would either write a reference or take a call rather than use my Klout score.

Maybe that's just me being old fashioned.

Sunday, 12 June 2011

Is Social Media Just Another Goldmine?

Amongst all the banal guff you get on Twitter, I decided to pose a philosophical question. Has Social Media done anything to better the world or is it just another goldmine?

To date, I haven't had a single reply. Perish the thought of a retweet. It isn't that surprising really as the lack of answers sort of answers the question.

The fact is that you could present arguments for and against. Only a few days ago I saw great sportsmen like Freddie Flintoff, Michael Vaughan, Graeme McDowell and many more create a trend on Twitter for a young girl with terminal cancer which was part of her 'bucket list'. I see Marieme Jamme developing a narrative for Africa through her activities in Social Media, today her questions were on vaccination programs. I dare say we have plenty of examples of this kind of 'force for good' that some use Social Media for.

Equally, I could just say that most tweets are from attention-seeking wannabes who just like the sound of their own tweets.

Despite the incredible growth in Social Media and the massive usage, we still fight wars, people still starve and there is still incredible social injustice everywhere we look. Although Twitter can claim some small victory in helping debunk the idiot law on Super Injunctions, it has done little else to further social causes beyond the promotion of individual plights, though often for very worthy motives.

In reality, the biggest buzz about the whole phenomenon is about the valuations of each platform. Vast, astronomical amounts of money are being talked of and paid in some instances. It seems the ultimate motives behind Social Media are ones of greed and vast personal wealth.
Perhaps I am being idealistic but when I saw such powerful tools for interaction and networking come into being I did believe that at least one side effect would be that more people could communicate for the good. Perhaps we could find out that we have more in common with Muslims than we don't. Perhaps the same could be said of the Chinese. But when money's at stake, the only reason that we gripe about China's crackdown on Google and Facebook is because we cannot exploit the vast population there for 'monetisation' not because we really care about freedom of thought or speech.

Will Social Media be the biggest opportunity ever missed? Will we only really care about our personal standings in Klout and PeerIndex or measure our personal worth on our numbers of followers? Or will we ever care about changing an unfair world?

In no small way, Simon Cowell was blocked from his tasteless commercial hijacking of Christmas when an Internet wave made 'Rage against the machine' the Christmas No. 1 instead of it being the automatic right of the X Factor winner. That tiny, trivial rebellion illustrated the power we have at our fingertips.

It's just a fact that Tim Berners-Lee and all the originators of the information world we now exploit never made a bean out of it. Their vision was for an opportunity for us all to communicate and share ideas. Somewhere along the way, a bunch of people hijacked the concept and made fortunes.

Don't get me wrong, we all need to earn a living but are we missing the point on Social Networking?

Thursday, 9 June 2011

So You Want to be a Dragon?

So you would like to be like the Dragon's Den team on TV and have your own portfolio of investments in private small businesses?

Good. Because now everyone has a chance to be a real Dragon. This month's IOD Director Magazine features an article about an innovative and exciting new way for entrepreneur's to attract inward investment and for small investors to get a piece of the action. Set against the backdrop of banks unwilling to lend to small businesses, despite what was being said yesterday, who have solid orders and decent business plans because they have no collateral assets upon which to secure the loans, you now have the chance to make your own decisions based on these facts.

Enter, the new website and private investor club who specialise in investing in small businesses with big ideas. It's just like Dragon's Den in terms of the range of business types and what people are asking for and there is something for everyone. Rather than behaving like some arrogant tosspot for the TV's sake, you can either use your own judgement or just gamble with a minimum investment of just £50 in a single company.

Crowdcube is free to join but read the legal stuff at the beginning diligently and, just like the TV show, none of this amateur investing is governed by the FSA. So you are investing on your own judgement and you can lose the lot with no comebacks. This is real world stuff and not for the fainthearted.

Crowdcube acts pretty much like an angel network but investors can speculate on a small level and spread their money across several interesting ideas if they wish. There is a forum for chatting over ideas and there is an easy feel to the whole thing that makes you feel as if you are anything like small minded or have to be 'Bertie Big Bollocks' in order to invest in non quoted companies. It also means that you are part of small groups of investors in new ideas which are the lifeblood of the UK economy when Private Equity trade in buying and selling companies only and banks are more interested in trading debt. Without investment in simple ideas then Britain will not continue to replenish the 97% of all companies that make up this economy.

What frustrates about the stories at Crowdcube, such as Bubble & Balm who are seeking to raise £75,000, is that banks won't lend to the company because the owner, Sue Acton, has been wise enough to outsource manufacture and so has little or no tangible assets in the business. Banks shun this because there is no 'security' despite the fact the company has contracts with the likes of Waitrose and a niche corner of the market that could grow via the internet globally.
In the same issue of Director, a letter pleads in favour of bankers making £8m bonus and that we should applaud them for wealth creation but it is businesses like Bubble & Balm who make up the vast majority of the companies that trade and pay taxes in this country. Innovation is deemed not to be ideas like Sue Acton's but ideas to buy and sell companies like Boots to create wealth and we have to break that mentality in this country or to just believe it is about creating technology based companies.

Trade is crucial to our future. I think Crowdcube gives us the opportunity to be investors in the country's future and to build a portfolio as good as those who have the TV image for far less outlay.

Go onto the website, talk to the founder, Darren Westlake and see what you think. But remember, as with any investment, do your homework diligently. Bubble & Balm is one thing, snake oil is something quite different.

Wednesday, 8 June 2011

How to Sell an SME Business

Lately, I have seen some poor examples of how and when to sell a small to medium (SME) sized business. No names, no pack drill.

Let's face it, if the owners want to take off and run you get to see some pretty shoddy tactics to satisfy their own demands. Meanwhile, you see some people who have nurtured their baby with loving care reluctantly part with it only to see their protege get raked over by the new owner. In the middle lie the staff, customers and suppliers who often are the last to be considered.
I could go on and on about examples I, or we, have all seen, but suffice to say the common theme in bad examples is lack of honesty and communication while in the good it is attention to detail and good management practice.

So if you are thinking of selling your business, firstly get some sound advice and then question yourself as to whether it is the best for the shareholders, the staff and the future. In terms of valuation, timing is one of the most important factors. So many businesses have missed their opportunity for holding on through the good times and selling in the downturn while others got lucky and quit at the top. Oh, the names we could dredge up but just think of Skype and Barings and you will know what I mean.

A few tips then:

  • Keep your staff motivated. The moment you decide to sell, staff will see an attitude change so it's as well that they are a) consistently managed and b) involved in the decision-making. That's a complete anathema to most business owners but imagine the value to a would-be buyer of inheriting good, well motivated staff.

  • Keep cash in your business. Run your business on debt and have low cash, you will get nobbled on valuations. Keep investing as every pound in could mean several more on valuations if the business is set for the future rather than just a quick buck sale. It isn't rocket science. Avoid paying yourself over the odds early even if the temptation is there as it shows at valuation and will get discounted for sure.

  • Be honest and open. When you sell you are going to have to give some pretty hairy warranties and undertakings about how your business has been run. You had better make sure those skeletons in the closet don't come back to haunt you as it is getting harder to simply walk away from problems and keep a high valuation.

  • Time your exit well. The natural feeling for all investors let alone business owners is to keep a good thing going. Knowing when to exit is critical and selling at a high point is hard to accept. Groupon may just be the next big example of a company offered mega bucks by Google to go for an IPO only to find that Google, Amazon and 481 others are hungry for a piece of a business model that you or I could knock out next week. Greed clouds vision when selling. In their case, $20bn was a pretty hefty sum to turn down. Similarly selling too early in a company's cycle may suit the serial entrepreneur but it may leave cash on the table if the business hasn't exceeded critical mass and scaled accordingly. Sometimes a mid-term management change can help (cf. the James Caan story).

  • Be market driven not lifestyle driven. I know lots of people who have built lifestyle businesses and to be honest their valuations will be lower as typically they have built something to be an independent employee of rather than to have a business with a long term future due to a compelling market position.

  • Keep your reputation well manicured. Your brand and customer standing is as important as good financials. Heaven knows Ryan Giggs Ltd has a somewhat tarnished image even if it is rich. Valuations are as much about the management, the staff and the reputation of a business as it is about the balance sheet.

  • Govern your business as others would. Quirky little accounting tricks, dodgy expense policies, sly revenue recognition rules or silly stock management will always get recognised and penalise. Invest early in decent IT, ERP systems and CRM and it will make life easier for a buyer to manage, keep their deal costs down and mean more in your pocket.

  • Time your exit sensibly. If you want to sell your business to retire you are already too late. Think ahead as buyers will want owners to stick around and manage the transition - at minimum they will think they smell a rat. They will most likely keep money back as performance related earn outs. Make sure that staff are involved in these schemes as daft as that sounds so that everyone, not just the owners, has an incentive to make a sale work.

  • Share the love. As the staff sit like pawns in a game there is nothing more demotivating watching sellers and buyers haggle, often publicly. Even with fancy, cleverly worded 'retention bonuses' most staff will weigh up where their prospects lie in the future before seeing if some paltry addition to their wages makes a serious difference. Join staff into ownership early in some way or another either by direct shares or stock options. Make them desire the day a business is sold rather than dread it. Make the process of the sale exciting rather than a death sentence.
    More intelligent people than I know more about this but these are just a few tips from things I have seen just recently. The stories I could tell of people you probably think butter would melt in their mouths!

Small is Better Than Big - The Impact of Social Media on Openness

Big brands can be awfully reassuring but why is that when buying from smaller companies the whole experience seems better?

I know we go to Tescos for our weekly shop and we buy big brand name cars but why do we also use smaller companies to buy things from? If big brand is so powerful, why do smaller companies even get a look in?

Part of the whole thing is that we all feel perhaps a little glad to help the smaller guy. But if that means trading off cost savings for mental satisfaction we usually choose money in the bank. The reality is more that we find the whole experience more agreeable and we think we get better value for our money.

Part of this, so experts now insist, is that smaller companies are more open. A good example is if you go into a superstore you just see products stacked whereas at the local butcher may tell you more about the products they sell, you can see where they prepare their products, they may make much of the produce themselves and they will give you cuts the way you like them. They might even throw in bones for the dogs.

Smaller businesses tend to believe in and know more about what they are selling is what we believe.

But there is more. Smaller businesses will be more honest about their supply chain, overheads, what they believe is important. They will tell you their limits on price and they will try and blend their service to accommodate you, be honest when they can't and try harder when they get it wrong. There is more access to people who make decisions, the service is more personal. Bigger companies tend to shroud their cost structure in secrecy, give less power to staff who deal with customers in terms of knowledge and decision making authority, keep senior people away from customers and they try to make as many rigid rules as possible to keep process and structure to match profit expectation.

The rule is, 'You can have any colour you like so long as it's black'. So often this leads to unmatched expectations and then the fight to get what you think you paid for ends on the sallow ears of call centre staff in the 'Department of Not Giving a Damn'.

Honesty and openness is at the heart of this and part of this is being put down to social media. The theory goes that if big companies embrace social media then they will become more open and succeed. There is credence in this but in my spat with Carphone Warehouse, the person camping on Twitter was just as useless as the rest of them in terms of giving actual service.
Honesty also can work against you. How many times have I heard from phone operatives at large companies tell me that 'Directors don't take calls'. It makes me furious and it also means that I am less likely to deal with an insurance or telecom or satellite company that has that kind of policy than a company that has proper escalation procedures and can allow phone based staff to make judgement calls when required rather being left to behave like stuffed animals with fixed length communication chords.

Information is the key, not how or where you say it.

Openness in large corporations has to start from within. Too often information is shielded at the top and is deemed far too sensitive to pass down. It's not a question of amounts of communication as many companies now adopt the policy of regular 'Townhalls' or floor meetings or mass broadcasts. It is more the type, breadth, depth and quantity of information fed down and, more importantly, what is held back.

As a for instance, how can a company properly turn a situation of poor performance around if it cannot be open about its position with staff? How many times do staff wake up and read in the press that their company is being sold before management have had the good grace to say they are cashing in their chips and walking away?

I see this kind of thing everyday. I don't think social media per se will help necessarily because it is more associated with information leak than flow right now. What social media can do is to get more of that 'illicit' information into the public domain meaning that big companies can be leaking like sieves. Uncontrolled information flow is a big risk. Emails usually come with a health warning on the packet, Instant Messaging has been a big issue in court cases as is the use of things like LinkedIn but Twitter, Facebook, Bebo, You Tube and others now pose real threats to larger corporations as information can be leaked way too easily.

So the argument goes, it is better for big companies to have an internal and external culture of openness and then social media becomes less of a threat. In fact, it can be the opposite. Give enough information to everyone and they can enhance the brand by Tweeting or similar constructively in favour of the company rather than using snippets to snipe.

If smaller companies are more open anyway, then there is a huge opportunity for them to get ahead of the game to Tweet loudly and widely. And this is what experts far more intelligent than I now say.

A case in point only a couple of days ago was when an editor of a Channel news website Tweeted asking for news stories. The next day the website broke the news that the CFO of a large distributor was leaving and this forced the company affected to comment on the story to confirm veracity. If only the same company had led with openness it could have positioned the story positively and with due respect to the individual involved and the people he or she worked with.
Buyer beware

Beware of those 'social media experts' selling snake oil but get your messaging out in the open. You would be surprised how it can help you in the highly competitive world in which we live. If there is one thing that the web has really done is that has given an equal opportunity for companies large and small to expand their horizons.

Use the force wisely and increase your reach. Be more open, customers like it - your staff even more so. That's my sage comment for the day.

Tuesday, 7 June 2011

iCloud, You Cloud

On a day when IDC revised their PC sales figures in Europe down, on the US West Coast, Steve Jobs came off sick leave to unveil Apple's iCloud strategy. It's a sunny day for the industry.
As a dedicated iPad user the one fatal flaw I have been aware of is that the device is entirely dependent on contact with a PC or Mac running iTunes. From a static device, the iPad gets its OS updates, it gets backed up and can be restored (twice in my case after crashes when updating the OS - rule 1: never interrupt a Sync) only when in contact with a host PC or Mac running iTunes.

So will transferring that dependence into The Cloud, the iCloud no less, make the iPad any the better? Yes.

It means that I no longer have to be situated close to a PC or Mac to back up and interact with iTunes, the mother program. I will now be able to do this anywhere thanks to iCloud. And that goes for the iPod and iPhone too. In fact, Apple will automatically update all devices via synchronising from the iCloud. This means that if you add an event in your calendar, all devices will be updated to reflect it. Immediately, if you like. The same will go for documents, contacts and emails.

This is ace. I am a user of the excellent Evernote application, a far better version of MS's OneNote product. Automatically, via The Cloud, it updates my iPad 2, PC and Android phone with changes to every Note I write - immediately, automatically and wherever I am. It is, at last, one of the few programs to really make this possible. Apple now proposes this with all products.

Well you have to remember there is a Mac and a PC world so I would suggest we will not see ALL products reflecting this. But the proliferation of new devices has brought many new developers into play and we are at last getting the kind of innovation we last saw when the PC went open architecture for the first time. It does mean that the rich software companies will gobble up small players as we have seen in the past but there is a hope that we no longer all have to adhere solely to Microsoft's agenda.

And that's good news for us all as they have stifled the stuffing out of the application market on PCs. The world of Mac and Android is where the innovation has been.

The iCloud is a great step forward and what it illustrates is the massive benefit that The Cloud can bring. All devices synchronised, everywhere.

Now isn't that a reason to get excited?

Monday, 6 June 2011

Gold Medal Farce

When it comes to cock ups, we Brits excel - make no mistake.

Last week, when the result for the London 2012 Olympic Ticket ballot was revealed, suspicions were aroused when an awful lot of people were texting into Radio Five Live saying they either had no tickets at all or a tiny proportion of what they applied for.

At that point, I thought there must be an awful lot of smug people who could not be bothered to text in that they were happy with their allocation. But as the days wore on it was becoming apparent that there were few people who were happy. Some people had tragically put a great deal of their savings aside to attend an event of a lifetime for all their family.

It is now revealed on the BBC website that over half of the 1.8 million people, some 55%, who applied for tickets in the ballot for 6.6 million public tickets did not get any tickets at all.

There will be a second ballot for the unsuccessful but no tickets remain for the opening and closing ceremonies. To boot, all the cheaper tickets have gone so for those in the second ballot they will not only pay for less popular sports but they will pay top dollar for them.

I have no idea how this was all done - in sessions the organisers say - but anecdotal feedback I have received seems to indicate it was complex, not through properly and did not give people enough chance to home in what they wanted. For some, the outcome after committing as much as £3,000 for a spread of events was two measly tickets to an as yet unknown event at £40 a pop.

For the showcase, prestigious event that this was meant to be for a fantastic celebration of sport, the first event was a complete farce. Unless of course you shell out for Corporate Sponsorship and boxes.

The Future of IT Distribution

I sampled distribution as my second job after starting life at HP as a fresh-faced graduate. That was mid-eighties and if I am really honest about it the fundamental issues in distribution haven't changed drastically. We still talk about vendors, stock, margins, credit and marketing co-op.

It is fair to say that there has been a lot of consolidation which has brought about a small number of 'super-broadliners' who operate on a wide scale though none of them are truly global. But there are also quite a large number of more specialist distributors and there are plenty of small to medium sized players who service specific markets by products lines or geographies who do very well. What has changed is the overall volume bought through what we describe as 'The Channel' over that time and its importance to vendors.

I remember, as a young General Manager, when Digital invented its Green Space/White Space policy and tried to preclude the Channel from playing in their major accounts and Peter Herke grew DEC Direct to take over. That strategy probably plotted the pathway of destruction of one of the industry's finest businesses. It ended up in the hands of its worst enemy, HP, after scoring an own goal of monumental proportions. That own goal was to underestimate the importance of Channel in the dynamics of the market.

So, after all these years of importance, why are we suddenly saying that the Channel, and specifically distribution, has to change?

Many analysts bring up the concept of 'Value'. The most common misconception of distribution is to say it is only good for moving product in the market and handling credit. So for that, vendors think they should 'pay' no more than a slight premium on what they would pay a good carrier. That might describe hardware, but software has been a different for quite a while. In fact, boxed software only really exists for retail shops these days.

But there is a change happening that is fairly fundamental. The Cloud does create new possibilities. Most large distributors talk of The Cloud as being something that may build momentum over time and then they can play 'catch up' as time goes by. I think that's a mistake.
You see, the writing is on the wall. Hardware distribution is perceived as 'valueless' buy vendors and at one of the scale broadliners are offering new concepts of logistics-led services such as not actually buying and selling but just logistics. That model has only so far to go as ultimately distributors rely on carriers to ship which means only the warehouse space is left and maybe some invoice printing on vendor headed paper. This, to my mind, is one of the shortest lived strategies possible for distributors as they are effectively opening hardware distribution up for logistics companies. This model does not even include credit - it is just distribution leveraging its contracts with carriers.

The other area that is open to large distributors is 'White Goods' like consumer electrics. Esprinet in Italy already trades handsomely on this. In fact, so simple is this form of distribution that its model is more attractive in terms of margin opportunity than high end storage and servers. The big trick is credit as there are tons of small resellers as well as big retail chains. That usually means small credit lines and higher margins. Nice business.

All this detracts companies from what is happening in software. The assumption is that, at some future point, distributors will just become 'aggregators' of software via some kind of portal. Most are looking at working with some kind of hosting centre and then trying to fathom out how on earth they would charge and make money.

But there is a risk here. Having been through the early SaaS model at a vendor, we decided there was no need to use traditional Channels. You see credit was not an issue - we never did a credit check on any company, large or small. If someone did not pay a bill, we simply cut off the service. Despite monthly charges, most companies paid us the annual fees upfront with no discount offered. We only gave discount for multiple year deals.

We used different Channels to offer pay-as-you-go, by-the-minute services as this suited us. And so some users received the service as an event based rental or over-flow facility. Gross margins overall were 80+% as a vendor and there were few middle men and not one classic distributor or reseller. In fact, the major player in that market, WebEx, finally got bought by Cisco for $3.2bn without ever having a real Channel. We got bought by Microsoft and most of the technology got bundled.

There is a real danger here that unless a distributor shows leadership, creates a Channel proposition that can be understood, then the software market could drift away. Years ago, with two partners I started a business based on this precise assumption - over time the Channel role in software distribution would profoundly change and, at best, a whole layer would get removed as it was not required. The three of us still like to think we were precursors to electronic software distribution but we were men of the Channel and we knew the world would change. Maybe not quite then.

This time around, it will change. Aggregation of software will not be good enough in itself. There will be many other services around The Cloud which will be equally if not more important. For instance, one of the biggest arguments for The Cloud for large companies will be comparing financial models. Where do you start with that? By auditing current assets. Most large Corporates either don't have a good handle on what software assets they have or have weak understanding of licensing. Either way, it's fair to say most large companies are overpaying substantially for many products and services they receive from power to telecoms to software. Quantifying that overspend is crucial to justifying The Cloud.

For larger vendors, getting their software into the high volume of SME companies has been a perennial issue. Today, the Channel has an important role in that specific supply chain. That will not last much longer as I believe there will be companies who will offer software from multiple vendors to SMEs who do not form part of the Channel today. Look at Amazon and The Cloud for a sneak preview but look at how Tescos and food retailers have muscled in on the mobile market to understand that players from 'left field' have plenty of profits to invest in a huge opportunity. And then there is Private Equity - always ready to back potential game changers. On top of that, I don't for one minute believe that the likes of Facebook and LinkedIn are not looking at additional models to make money to justify their astronomic valuations.

I read recently that one major, more specialised distributor, was refining its strategy to focus only on a small number of major resellers and the rest could get a 'Lite' version of its service. I think that company will die with that kind of old-distribution mentality. Because the smart money will be exploitation of the mass accounts where their skills to leverage vendor relationships and 'electronic logistics' should yield higher margin business. The argument would be to minimally service large resellers as that opportunity will surely give less value and margin opportunity over time. Heck, we all know how little money there is in selling highly technical goods to someone like Computacenter. That is not a sustainable business model.

So some distributors will see the Blue Sky through The Cloud. I have read a fair bit about Blue Ocean strategies where businesses have moved out of crowded markets into calmer oceans which yield higher profits. The problem is that most distributors think there is no money to be made in The Cloud today.

That's because they don't understand it. By the time they react, it will be late and it will cost more to get in, against a backdrop of their traditional business suffering under higher pressure.

My message is 'Invest while you have the money'. Investing when you don't have the money is a lot, lot harder.

Friday, 3 June 2011

Oh Twitter - How Cool Was That?

Just when I thought Twitter was going to disappoint me, it has made my life worth living again.
Yesterday, the power of Twitter embraced me and I had a brief, but rewarding, conversation with none other than Tom Peters. Yes, THE Tom Peters - the 'Thriving on Chaos' etc. Tom Peters.

How did it come about, I hear you all ask as one? Well Tom, as he likes me to call him, tweeted something about enthusiastic staff making him busy. Then he clarified that tweet by how he was going to do 'Operationalizing'. Being the wag I am, I asked Tom if that was a real word and he replied that he had no idea but had been using it for 40 years. Further, when I suggested I would use it from now on he said that he would take no responsibilities for my actions and not send me cookies when I was in bad-grammar jail.

Fantastic repartee.

Ah my point here is that you can threaten Wayne Rooney, call Piers Morgan a self-publicising fart or have a banter with the great Tom Peters. In short bites, Twitter makes people who you thought were inaccessible, accessible.

The key is original thought - keep that in mind and cut out the irrelevance and maybe Twitter will really become a good place to be.