Apple Doubles Everything

In stark contrast to Microsoft's earnings announcements, there were considerable crowings at Apple. Microsoft showed that without a strong enterprise performance, their overall numbers would have looked pretty grim and now it seems there will almost certainly be my predicted earnings drop in 2012 at some point.

But Apple just plough on. In fact revenue over doubled comparing the last quarter to the same last year with 118% growth to record over $46bn in revenue. And profit rose the same degree to $13bn and they added $17bn of cash in the quarter too.

Over 37m iPhones were sold and 15m iPads putting Apple back at No. 1 in both categories while Macs shipped over 5m units rising a steady 21% as the PC industry took a noticeable dive in shipments and earnings.

Considering there is a pipeline of amazing new products on the horizon, Apple's future looks very rosy. There may be a few green faces in Seattle. After a long and clever plot, Apple is now a serious product in the eyes of corporations despite the fact it is expensive and it doesn't run Windows.

Now who would have predicted that 10 years ago? OK, other than Ty.

Is Billing Aggregation the Nirvana in the Cloud?

If you want to buy Salesforce.com the most common way is to work out what you need in seats and the types of user, then work out the monthly total charge, multiply it by 12 to get the annual fee then add any project management work to go in and you have your first bill. Eh? You mean that despite the advertised monthly fee you actually pay annually up front?

Actually as a residue of the world of SaaS this is exactly how Salesforce.com operates. As did my company, PlaceWare. Even with a minuscule discount for cash offered, most companies paid the annual charge up front rather than pay monthly.

Here's the even dafter thing, companies buying the Salesforce.com actually accrued the charge monthly to the profit and loss account despite paying annually. Meanwhile, Salesforce.com themselves smoothed the revenue recognition equally over the 12 months for the seats while recognising any project management fee up front.

So why this difference in the cash and P&L? The old way of buying software was on the capital account - pay up front but depreciate the 'asset' over 36 months. Salesforce.com offered to not use the capital account but to pay for the software through overheads as a service while saving the cash account the extra two years. So to some extent, paying annually up front represented a positive on the cash-flow versus the old way. And it stuck.

Until now there hasn't been that many mainstream successful Cloud software offerings with the exception of Salesforce.com, and maybe NetSuite, Taleo, Workday and a few others. SaaS has kept its little notion of paying 12 months up front as a peculiar thing to software. You even get it to some extent in buying storage space as Dropbox, Box.net and others all advertise monthly costs but charge annually.

The next wave of the Cloud, where many more software packages will migrate to the Cloud, is reckoned to be offered a different way. Gone will be the days of up front annual charges but monthly invoices will be payable for all the software licences consumed by companies. Currently, firms average less then 2 or 3 Cloud based software services each in the US and that's considered relatively high adoption. Most SaaS is offered directly from the vendor and so there is no middle man reseller involved in the main. So it is easy to provision and charge in a certain way.

But the next wave could be very different. For one, it's likely to use channels to a much greater extent. Why? Because most of the new entrants into Cloud based software will be traditional software vendors migrating their offerings as a web alternative. They will most likely leverage the channels they already use to service customers and so resellers may be selling multiple SaaS offerings from varieties of vendors to lots of end users. Pretty soon, keeping track of all those licences in play will become a pretty intensive task.

But if the end users are only buying 2 or 3 SaaS offerings, why would they be worried by over complexity of bills? Might they still be happy to buy the service paying annually but smoothing the charge over the P&L monthly? In the case of larger companies that may be the case - they have deeper pockets and can negotiate harder. But SMEs will be different. For one, they are greater credit risk to resellers and vendors and secondly they have less inclination to pay up front for 12 months, is the theory. But secondly, one of the great advantages of the Cloud to SMEs is that they can smooth costs for IT as they scale rather than having pump, cash-intensive periods of investment - each incremental user is a simple additional monthly cost.

So the aggregation of bills on a consumptive basis is seen as the way forward. Companies offering billing platforms which will take all that sold licence information, storing the history and producing one monthly bill based on the amalgamation of all that information per end user is important.

Well, not actually as important as it will be for the resellers who will have to produce bills for all their customers. It's actually the layer in between which has the greater need. End users may be happy to consolidate bills as usual - after all they have multiple bills coming in from multiple suppliers already with enough staff in accounts to deal with it. SMEs may appreciate an amalgamation service but realistically isn't that what their credit cards are for?

If an SME buys its SaaS on a monthly credit card account, all the bills will be in one place with an average 30 days credit.

Resellers, meanwhile, will have tons of data to deal with and those distributors who offer an aggregated billing service will be adding significant value in the supply chain. The question is - how much will that service be worth? 

Today, if you want to pay for Salesforce.com monthly, you can get it with a finance charge through a select band of resellers or you can play really hardball with the vendor themselves and they will cave in if the deal is big enough. But will all vendors operate the same way?

What if the aggregators offered monthly billing to resellers but the resellers charged up front for 12 months? What if the aggregators bought all licences with 12 months in advance but billed monthly with a finance and service charge added? In general it means that software bought via aggregators will inherently be more expensive as the cost of the service and any finance will have to be added. This reduces the reseller margins. Some high end resellers will possibly be able to afford their own aggregation billing platform and make more money in the long run.

Most companies have not considered the transformation of billing services required to support the Cloud. Things are going to get complicated and most current billing systems do not perform well on monthly recurring billings and the burden on cash collections is heavier. Meanwhile, if cash collected is only one twelfth of the annual fee then cash-flow is hit a little harder for the reseller making that hyper jump to the Cloud all that much harder.

The end result is that there is a lot yet to play out in the world of Cloud software billing. Services like cohosting already have moved to monthly billing and cash but software has not. Will it really change or will the original SaaS vendors' models of annual collections up front pervade?

Will aggregators provide enough value to charge for their service to resellers and possibly end users? Will this new billing model negate some of the cost benefits and ROI that Cloud purports to offer over on-premise solutions? All this has yet to really play out.

However, if you run the numbers on Microsoft Office 365 over on premise Exchange or even Hosted Server Exchange, there is little or no cost benefit of moving to the Cloud. The only saving could be monthly billing and payments. Surprise, surprise - Microsoft's most popular payment method is 12 months in advance.

Either the end users are a strange lot or some assumptions about the monthly billing models are wrong. The answer has yet to be clarified.

Is Curbing Executive Pay the Right Thing to do?

Vince Cable is in his element. He has the sort of face that seems to say he has it in for someone and he has. In his line of fire are the executives of public owned companies and he is proposing to curb their pay. His reasoning is that over the last few years the combined performance of the top companies in Britain in terms of share price has been static at best while in that period executive pay has risen 13% each year, every year. He has a point.

Or has he? After all these companies have survived a recession, haven't they? And we should be glad of that. Besides, the incentive schemes that executives may be on could be bottom line related and we all know that share price has not always reflected the actual performance of companies in terms of profit making but is more a barometer of the market generally - perhaps more exactly, the sentiment of a select few traders of shares in the world and dastardly computer systems.

It also belittles how a company may be managed in terms of its performance measures. After all, some companies may be going through a transition and require large investment and less profit for a while, others may actually measure profit per head which may increase despite overall profits decreasing. Key Performance Indicators may vary from company to company depending on market conditions and just looking at share price is a very narrow way of assessing the overall success or lack of it for companies. But Vince Cable does have a point.

We have seen spectacular pay offs for executives who fail rapidly and monumentally - take Fred Goodwin for one. But it is becoming the norm. The faster and more effectively you fail, the more you can get in terms of a severance package - so why succeed? This is something most of us find abhorrent in modern day business.

It would seem the way forward being proposed is to reward long term share performance and to let shareholders have some kind of binding say in the matter. That's not always practicable. After all, the significant shareholders in companies may be pension funds managed by well-off mangers who actually only look at a short window of up to 5 years maximum. Why would these significant shareholders vote against a pay award if there are not in for the long run? It may be fanciful to believe that small shareholders can actually club together and organise a revolt that's binding as there may be thousands of individuals to organise.

And what happens when the markets recover? Business will boom and everyone will want the most hung-ho, highly rewarded executive no matter what. Worrying about exact pay now is only a symptom of the austere times we are in. When Britain's back on its legs, no one will worry how filthy rich an executive gets so long as we are all earning something. Isn't that right?

Anyway, lets' get to the nub of this matter. What we are all unhappy about is not so much executive pay but the pay of a thin wedge of incredibly well paid people in the finance sector. In truth, the finance sector only accounts for around 9% of our GDP, yet there is a disproportionate amount of money earned by specific staff within that sector, nearly all working in the City. These are the people who over the last 15 years have hardly increased share price, netted out the profits of their companies to zero at best and in many cases drove their companies to the brink of oblivion. Yet in that same period they earned on average around £3m each and it is rising this year to around £4m each.

Let's face it, these are the people who have made sure that we have extra tax to pay for the next 30 years. Even as we speak, the CEO of RBS, Stephen Hester, will receive a substantial bonus even though the value of our 83% holding in the company is still showing over a 40% loss.

These companies and their high earning staff remain untouchable. They are supposedly regulated by the FSA whose own staff actually received bonuses as they presided over the implosion of the British banking system and their response was to pick on the array of Independent Financial Advisers and drive most of them out of business while bank executives named their salaries and bonuses despite owing us a fortune.

No, Vince, you are looking in the wrong direction. Focus on what's really wrong first before hacking at the general melee of executives. There is a specific, massive problem that affects each and every one of us because we underwrite their failure. We have skin in the game. Our call is to pick on bank traders and executives first - curb the way they earn, how they earn, what its paid for and what they can trade. Then pick on the other guys who also do need curbing too.

The price of failure in banking is always laid upon the general retail banking staff and the taxpayer. And failure wins bonuses. With logic like that, banks should be the first port of call.

Kodak - What can Tech Businesses Learn?

Today one of the pioneers of the photography, Kodak Eastman, filed for Chapter 11 bankruptcy protection in the US. After 132 years of dominating the world of photography, Kodak is on the outtake pile.

Yet the photography business has never been bigger. We buy more cameras, take more pictures and share them more today than we ever did and the market is growing. How could a savvy giant like Kodak have so misjudged the market? How could it just stand by and watch the world around it change? How could it stand up, King Canute-like, to the sea of change and get drowned so very easily?

It proves just one thing. You can be the biggest, even the best, but you have to move with the market and change. Microsoft needs to watch this implosion very carefully and mull over just what happened here because you have to innovate to survive. And when management goes to sleep or gets to swallow too much of its own story, that's when danger occurs. The market moves swiftly and pays no respect to status.

That's the Kodak lesson, learnt the hard way.

Is Microsoft doomed in its Current Form?

It seems Microsoft has had a dose of reality in the last week. At the Consumer Electronics Show in Las Vegas, Tami Reller, the CFO of the Windows division, has warned that PC shipments will be lower than an already gloomy forecast in this quarter. In her case, she put this down to supply problems in the Thai flood regions where the high waters are still causing havoc to component makers, particularly on hard disks. Some UK distributors have plenty of servers but no disks which will impact their sales in the next few months.

Finally, it seems that the penny is dropping at Microsoft. Their figures are actually dependent on the shipment of PCs to a very high degree. I have illustrated before that Windows itself and Office Productivity products constitute the majority of the revenues and profits generated at Microsoft and these numbers are directly dependent on the number of client devices sold into homes and corporates. As PC sales alarmingly decline, so will Microsoft revenues and profits - in their very heartland.

Microsoft is a well spread company, for sure. But with servers taking a decline lately, Windows Server, already under severe attack by Linux, is also suffering. All this is occurring as Apple see sharp increases in the sales of its PC-like devices while tablets and smartphones continue to boom - all these devices coming with largely Apple and Google operating systems.

The threat also is that corporations are wising up. They have paid through the nose for arguably second rate products in their companies for too long. PCs which seem to fail conspicuously in less than 3 years, an operating so clunky it takes 5 minutes to load up each morning, office productivity tools which seem to suspend and crash for no perceivable reason, occupying ever expanding disk space.

Apple may charge top dollar for their hardware but you get a robust operating system, rich in features and free utilities of high quality which takes seconds to load up or resume, no matter what state you left it in. And office suite software is far cheaper with a breadth of products available at below £20 a pop - except Microsoft Office for Mac which is £189 but at least half the price of the PC version and many times better.

The fact is that tablets and smartphones are changing not just the array of client devices and how we use them for home and work but they are changing the way we buy software. Suddenly, we have a plethora, a vast hypermarket of innovative, low cost and clever software available to us that costs just a few pounds to buy. And we buy tons of the stuff. Finally, we are finding there are alternatives to the status quo that has frankly held us back for years in terms of real productivity.

Steve Jobs called it the post-PC era. I would liken it to the IT version of a 'renaissance' as people dream up all sorts of clever software and just punt it out in volume.

But there is a new trend. Bring Your Own Device (BYOD) is the consumerisation of IT. This is the concept that we buy our smartphones and tablets, even PCs ourselves and bring them to work as devices of choice to work with and demand access to the corporate networks and all its facilities and data. In the old days, at job offer time, we were told you would get a salary package and then a PC and phone would be provided. Already in the US, job offers go out with no PC or phone provided but the recruits are invited to bring their own.

This is one reason why Apple as a PC, tablet and smartphone provider and its counterparts in the tablet and smartphone arena are doing so well in the corporate world as users rebel against the constraints of the old PC world and flourish in the new post-PC era.

These are worrying trends for Microsoft. I heard of story of a Microsoft executive going into an Apple store to bait the salespeople with a new Nokia Lumia with its noddy-like tiling on the front having already arrived late and behind the market. It must have been a pathetic sight as an army of Apple customers looked up from their iPhone 4S devices and thought, 'whatever'.

This is part of the problem with Microsoft. This ingrained belief of impregnability and that users really have no place to go, so they swallow whatever Microsoft do and say. It's a Windows world, it's an Office world. The Spanish bank BBVA has proved that this is not necessarily the case in choosing to migrate its entire 110,000 staff to Google Apps for Business after a successful trial - encouraging all their employees to ditch the past. They have embraced the advantage of the Cloud to run their company by allowing the web to be the platform, not the PC which unshackles users from being given sub-standard machines and to choose a device of their own.

15 months ago, I bought the top of the range Lenovo Thinkpad - a great machine in terms of weight, PC sexiness and performance. Its battery life was always rubbish even though it was advertised as 10 hours and even though it runs Windows 7 its performance has degraded over time as I have found with every PC I have ever owned - it's as if they get fatigued from running rubbish software. Yesterday, as I walked into the atrium of a Microsoft building, it literally died. One minute I was looking at the presentation I was about to give, the next it was blank and dead. It still is dead.

In supreme irony, I had my Macbook Pro tucked in my bag (having not wanted to antagonise by using it) and latched onto the guest wifi and loaded up the same presentation from Dropbox. In seconds, without skipping a beat, I hooked up to the projector using my convertor cable and without pressing any button the projector and resolution was detected and my presentation was given. Jaws hit the table when they saw the Mac and I expected to get escorted out by security but when they saw how their own software behaved on a Mac with so many more options on how to run a slideshow from a PC and time your delivery, they were impressed.

But they still don't get it. Even when the graphs point out the clarity of the numbers and trends, they don't seem to get the fact that their very heartland, the core product set of the company is under persistent threat not by their customers but by users. No amount of canoodling with the CIO will make a difference. Users are rewriting corporate policy and deciding the future IT strategy.

I predicted that Microsoft will make a profits warning in 2012 and Keller's announcement prior to Q2 results was seeding some bad news. At some point, a hole will appear in that lucrative area that Microsoft has depended upon for years. If nothing else, the price of MS Office has to collapse in the future - nobody is going to pay the kinds of prices of the past for that product for the future. 

I predict that Microsoft will survive but not in the same form. It will have to radically change and find new ways to make money. Right now, it's not at all clear how they will do that. Is it time for management change? Maybe that's the starting point. 

But what do I know?

Is Britain Becoming a Nation of Bureaucrats?

One of the biggest growth areas in the last 15 years has been the rise in the number of jobs in the Public Sector. In fact, the Office of the Deputy Prime Minister never existed before the last Government and now it is one of the largest departments in the firmament of 'Big Bureaucracy'.

It was fashionable to spend more money in those booms days on frivolous red tape and many argued that there was a salary gap between private and public sector that had to be closed. It didn't just close - the kinds of salaries earned in the Public Sector, and then add in fine pension schemes, are fast getting ahead of the Private Sector.

In fact, this morning's story that in Wales the Public Sector wages are now around 18% higher than in the Private Sector is shocking news. It means that the Private Sector is finding it hard to compete in terms of salaries which means that Wales is staring down the barrel of becoming a haven for bureaucrats while innovation, entrepreneurship and business creativity will be stifled because people cannot afford to take Private Sector jobs. It also means that if there is an austerity package meaning Public Sector jobs and pay decreases then the Welsh economy gets hit disproportionally harder.

It's a fast turnaround. Some years ago, thanks to the inbound stimulus of investment by the Welsh Development Agency, Wales was attracting far above its fair share of inward investment by Private business when compared to the rest of Europe. 

It's a sad state when good experienced business people take Public Sector jobs in the middle or end of their career to get high salaries and pension benefits rather than keep the innovation going in business - where the economy can really get stimulated. But that's the reality. If you want to be an Interim Manager/Practitioner, Public Sector pays far more on a daily rate than Private Sector (Oil business excepted). If you want to be an IT consultant, the Public Sector have plentiful openings at great rates as they waste more and more money on useless, never ending contracts.

At one point in the Blair/Brown years, 1 in 4 jobs in Britain were in the Public Sector plus plenty of 'temporary' jobs and many more indirectly in support functions. The Public Sector accounts for, some say, as many as one third of the jobs in great Britain.

It's little wonder that our economy is struggling under that burden of payments but more importantly, how many of the people employed in these 'more secure' jobs could be contributing vibrantly to the Private Sector to help stimulate real growth?

Today, MPs will vote to pass the new High Speed Rail link that first goes to Birmingham costing around £32billion. While the Construction Sector will get great benefits from this stimulus it doesn't seem to be the wisest way to spend money to spawn a massive new Public Sector monolith to cost, administer and manage the project which will inevitably over-run and cost far more than originally intended - you can already write the book on it. And is a rail link to Birmingham the highest priority on stimulating the economy? You get the feeling that investing even a 10th of that into technology and construction of schools would be far better for the long term.

But that isn't what the City wants. £32billion will be split nicely between the construction companies and the banks to make this happen while a big proportion will be to fund the red tape around it. Good business all round.

And one of the biggest issues of a more attractive Public Sector over a Private Sector is not only that the tax burden on funding the jobs goes up but also the long term accrual for the pension deals also rise. For every one job created in the Public Sector around two could be created in the Private Sector (I can't prove that but it wouldn't surprise me).

Public Sector employees work in the same jobs longer, stifling the future for our young and it will mean ultimately that Britain becomes less competitive as it becomes just a sprawling, unimaginative bureaucracy supporting the Finance Sector.

Maybe that's our future. We are so good at administration that we become the new Offshore Outsourcing Centre for all of Europe's Civil Services. Lord knows, we are good at it.

Pity we didn't put so much time, effort and investment in encouraging Private business and entrepreneurship.

Should we Allow Phoenix'ing a Company?

It seems a weird thing when accountants suggest a course of action that deliberately puts a company into administration in order to be bought by someone else free of any old accountability but that's what 'Phoenix'ing' is all about. And accountants seem to love it.

Blacks is the latest firm to go into administration for a very short period so that the company can be bought free of creditors snapping at their backs. In this case, it is Dragon's Den Peter Jones who appears to be the buyer after Mike Ashley of Sports Direct, the biggest shareholder, refused to rescue the company.

I have seen it argued that by doing this Blacks saves the employees, around 3,500 of them, from the vagaries of going bust and the wrath of the creditors who will haggle over the assets left to pay outstanding bills. However, the Phoenix process avoids this by declaring the company safe from creditors then allowing the good assets to be bought cheaply by a new buyer and the debts left behind and so the new owner gets the good bits while the creditors and shareholders get nothing but losses. Nice.

Of course, in saving the workers a good thing has been done, argue the accountants. However, it seems they have lost their capacity to add up as debts remain and the creditors don't get paid and shareholders lose their capital. Some may not shed a tear for investors as they should know the risk but all companies need creditors and if they have to write off bad debts then they suffer the consequences of Blacks' demise. It is the creditors who have to lose the money, lay off staff or curb their plans etc. They may get some insurance back but there are always losses.

And of course, this ensures that banks and insurers get more prudent and so there is less insurance cover and creditors lend less after getting stung. The argument is that this is better than Blacks going out of business as it could not be sold as a going concern.

So who is to blame here? Well the survivors are generally the same managers and directors who have brought the company to its knees as they are the magicians who use the Phoenix system. The workers will inevitably suffer as there will have to be severe restraints put on the business by the new owner to stem the losses. The accountants, meanwhile, get fat fees for their wizardry.

There is something cheap and nasty about the whole thing. There is something laissez faire about the management cavalier use of it. There is something distinctly odd about accountants using it. There is something very unfair about it for creditors. There is something downright shameful for the directors who leap from one boat to another freeing themselves of the responsibility of failure.

But the new owner won't care about that. The assets are bought for a song and it's back in business. I wonder, in the world of 'zero sum accounting' that governs all such matters whether the spread of losses make this any the less traumatic in the long run or is this just a convenient way for directors to get away with daylight robbery?

Ban Social Networking at Work?

Yesterday I blogged about the sales collapse at Groupon in the lead up to Christmas and I have also looked at the apparent large drop off in use of social networking sites like Twitter over the traditional holiday period. In the two blogs, I have suggested that there seems to be a marked indication that social networking is being 'transacted' largely in working hours. If, I surmised, that the majority of all social networking is for 'social' use and not business, are employers going to get wise to the apparent fact that their workers are using social networking heavily in working hours which may be impacting productivity?

Indeed, should companies actively ban or limit the use of social networking at work? Should they have a distinct policy about its use? Should they only allow social networking to be used by agreed members of staff and for company promotional use only?

I ask these questions as the mini-debate in the comments on my blog sparked quite polar views. On the one hand it was suggested that people with certain types of job like bank-telling or police on the beat as examples should not use social networking as their job demands their full attention. As a good example, you would not expect a professional footballer to use Twitter while 'working' playing a match or a boxer during a fight or a rugby player during a game.

However, you might expect all of those people to engage in social networking outside of their working hours. Perhaps in their breaks - although I can't imagine Sir Alex Ferguson's reaction during the half time team talk if Wayne Rooney had his head down tweeting.

On the other hand at least two people argued that there should be full, unfettered access to social networking as this would enrich personal and team performance and make employees more productive as they are being more creative and happier. And there is a fair argument in working relations terms to show that happy employees are productive employees.

I have worked with companies who have distinct policies - say no more than half an hour on certain websites during work hours or social networking sites being filtered out completely. I have also worked with companies who have had full, unfettered access to the internet. I can honestly say that my own observation is that access to internet is vital for most people to do their job. However, at those companies where there has been a policy there has been a range of performance observations.

In the companies where there was unfettered access to the internet there was a cross section of performances on show. In one company I have worked with, a general monitor was put on staff to measure time spent on certain sites. The information was not used as an HR or management tool per se but it was used to develop policy although it was clear that certain individuals were spoken to casually about their usage specifically of Facebook afterwards. The results showed that specifically salespeople who spent more than 30% of their woking day logged into Facebook were markedly less productive than those who logged in less than 30% of their working day. 

A very interesting correlation showed that those who intermittently accessed the site during the day actually were more productive even if they were logged on on more than 30% of the time  - and there was no real timing pattern to this like lunch hour. 

The result of the survey was that company developed a policy around Facebook use specifically but it was extended to a number of websites including online stores like Amazon. There was a serious kickback at first and the policy was amended to accommodate some of the feedback but it eventually went forward with a limitation of use of Facebook in peak working hours. This has remained in force.

The results have shown that overall productivity as measured in a very detailed way in terms of access to work related systems, orders entered, sales achieved, profitability achieved, cash collected, supplier orders placed, stock reduced etc etc has not really increased or decreased appreciably. However, the company did hit all its fiscal targets in the following year having underachieved the year before. However, the budgets reflected the economic climate so were less onerous.

But, in certain job functions where there was a distinct measure on performance, productivity increased. More outbound phone calls were made, more access to the company CRM, online order and backlog systems were made, more physical transactions were made, more old stock was reduced.

It's arguable that none of those increases actually were related to decrease of use of Facebook specifically and they did not run a similar detail 'before and after' use comparison, mainly as there was some kickback about 'Big Brother' use of monitoring impinging privacy. But the biggest measure that was impacted was staff churn. In this specific industry, staff churn, particularly in the desk bound sales area, is high at around 45%. This fell to below 40% for the first time in 5 years.

I have only read the findings but anecdotally, I have worked with a company where there was no access to social networking or sports or retail sites during the day and that company has bombed since its IPO two years ago. Meanwhile, I have worked with a firm with unfettered access to the internet and seen salespeople even communicate in offices via Facebook - the company performance was poor and sales call out days were the worst I have ever seen in participation terms.

Yet those companies with clear guidelines seem to get something back. As in all things, there is a balance to be had. What the firm who did the study found was that there were some staff who just spent an incredible amount of their day on sites non-work related, but particularly Facebook. There was no doubt that those who did were the worst performing members of the company by some distance. But more importantly, these staff members actually brought the performance of their teams down.

I still think you have to look at this issue on a case by case basis. It was clear from this in depth study that people performed really well when they seemed to finish tasks and took a break on the internet. Those who never logged out were contributing virtually nothing and poisoned the performance of others. In reality, this is not rocket science and it's nothing new, as the HR Director pointed out in the narrative. This is just a case of certain workers either being in the wrong job or not being managed or trained well or being plain lazy, finding distractions to make their day more interesting. On company time.

So in my own, mini experience, I have seen companies like Google with the most whacky work environment possible for distractions to productivity become one of the biggest companies in the world, I have seen a public company hurtle downwards after restricting internet access and I have seen a company with a sound and fair policy get gains.

A balance is to be had and as with all things, where people know and understand the boundaries, you get good results.

Now here's the corollary to the findings at the company I mentioned. The policy of use of social networking sites ( and certain other sites) is a guideline and is voluntary. There is no monitor on the system stopping them after a certain time. The employees themselves police their own policy. Use of Facebook specifically has more than halved since the implementation of the policy and very few staff now log on for more than 30% of their working day. There have has been only one disciplinary related to excessive use of social networking and that was raised after members of the person's team brought it to their manager's attention.

I like to think that's a victory for common sense all round.

Apple is Anti-Competitive?

It had to happen. When you analyse how you can buy an Apple PC product, the Apple Authorised Resellers concept is really not particularly healthy, it seems. It appears to be even more more unhealthy when it comes to its own stores.

My own experience of buying an Apple Macbook Pro was not entirely pleasant, I have to say. I went to Solutions Inc in St Albans and made the fatal error of asking for some money off the bill as a discount - as you have the right to do as a consumer, you know. I was greeted with almost revulsion by the local sales manager who made it clear that Apple Authorised Resellers are 'not allowed' to offer discounts or they might lose their status. This status, he explained, was hard earned through training and other such things but it meant that in return, Apple always gave them first in the queue status for stocks of new products.

I actually did connect on LinkedIn with the owner of the reseller but after an initial interest he was more concerned that the sale was lost to Amazon who at least offered a few quid off the deal.

I actually think Apple Authorised Resellers and their Stores are a credit to Apple. They present products brilliantly, the staff are incredibly knowledgeable and you can get all sorts of added services from them which could make the buying experience brilliant. The easy comeback to me by the sales manager was to indicate all that value versus the lack of attention I would get from Amazon before and after the sale. As a simple for instance, there is no such thing as an Amazon phone number and support on any product is not offered. That would have been the best justification for the few pounds difference in price.

But what Apple and its Resellers seem to be risking is the obvious wrath of the European Competition Laws - and they are serious stuff. The spat in France is centred around stock allocations. Theoretically, no matter what status as as  store or reseller may have, access to stock should be on a timed order basis. But it appears that this is not the case.

The case in France is specifically about Apple favouring its own stores over its Premium Resellers but I suspect that this problem could spill over into ether areas. There may a suspicion of some level of collusion between Apple, its stores and the Premium Resellers to keep prices at one high level. If this is proven, then it has some nasty repercussions, as the penalty for breaking European Competition Laws is a fine of up to 10% of global annual revenue.

That's a big 'ouch' and on the face of it and through my personal experience as a buyer, I think they should be worried.

Groupon Fails?

It's a real swine when you get something right like a prediction for 2012 but I only made my observations about a  month ago and already it seems one has partially come true. Groupon has suffered a major set back and concerns about its business model are now getting serious. I predicted that Groupon would fail in 2012 and the news of a 46% drop in gross revenue in the lead up to Christmas and after Thanksgiving is a huge warning bell.

Like my blog over Christmas about the massive drop off in social networking activity at family holiday time, it seems that Groupon suffered from the same effect. Retailers in the UK, in the meantime, had strong a Christmas period rescuing a mediocre year with John Lewis reporting bumper sales. So it is not that we have suddenly gone off bargains, there is a real smack of traditionalism at this time of year. TV advertising and viewing peaks, social media goes down. Retailers have strong offers, voucher schemes suffer.

There is not an obvious correlation here and this must be worrying to Groupon's investors. Interestingly, Groupon's travel business continued to perform strongly so this is its core business that is creaking. We should also remember that this is a week's data we are looking at but it is a huge drop by any standards, so the full Christmas picture has not emerged.

But I have my suspicions. If 'social' type interactions decrease sharply during traditional family holiday periods (i.e. whole nations are not working at once) then it seems that Groupon also suffers. This would sort of suggest (anecdotally and not backed with real evidence) that most of the Groupon transactions are being done in working hours by people at work. This is once again a worry for investors in social networking companies. If businesses really get wise to this then I believe that social networking will get suppressed by companies during working hours. And if Groupon really does correlate to social networking, then its model could be at similar risk - given its offers are very transitory.

Whatever the root cause here, it seems that not all is well thought through in the business model. I have highlighted in the past that Groupon is a business of the period (we are in austere times), that it attracts 'discount junkies' and not long term customers, that retailers are not thinking offers through properly and that it is wide open to competition not just from like-minded businesses but from traditional retail. 

The final point here is that I think investors have got deceived by the vanity of the gross sales line. Even collapsing sales by 46% in a week meant that Groupon grossed $26.7million. But this revenue is split with the retailer and then you have the cost of customer acquisition and operating costs to deduct from the residual. There is no doubt that Groupon loses more money the more it sells. Many high growth firms consume cash and lose money heavily in the early stages, but at least those businesses make a good margin per transaction which clearly shows the future profits can overcome the past losses. But Groupon loses money heavily on every transaction and it is not clear when that can end if it takes pastings of this nature in a single week.

I stand by my prediction and this sales drop is evidence that the model invented was wishful thinking. It means that the IPO was vastly over called and investors really should be worried about the future of this business in its current form. In my humble opinion, of course.

No Credit, More Tax - That's the Way Forward, Britain!

Oh it would be too simple to collect the tax, or even just the interest, owed by such big firms as Goldman Sachs.

No, that would be too easy, wouldn't it? The interest lost alone is £millions. It's actually harder to get them to pay, particularly when it seems such companies have cosy relationships with the senior HMRC men. Nope, it's actually harder to go and audit the thousands of small firms who are working their hardest to make ends meet and contribute to British business, employing and managing the bulk of the workforce and already paying disproportionally higher taxes than larger companies.

These small firms don't have tiers of accountants, big auditors or lawyers to negotiate 'tax mitigation' or plain buy the HMRC off them. These companies are largely honest, pay their way and ask only that bureaucracy and red tape are reduced as much as possible to stimulate an already dead economy.

But nope, the HMRC doesn't see it that way. These small firms represent easy money as it is likely that many of them don't have the time or resources to keep their books entirely up to date with all the backing paperwork. And they pay, unlike the big boys who argue the toss or plead technicalities or hide IP assets in tax havens, or simply threaten to move their tax headquarters elsewhere.

Small firms are the backbone of this trading nation and rather than pick on them, the HMRC should be helping them relieve the burdens. A fair tax system with less red tape should the simple way forward and let these firms focus on what they should be doing - creating some wealth for the economy.

I dare say I will get it in the ear from the whinging HMRC people who claim they are over-worked, underpaid and under trained but I say we are in the same place in small business, life is no easier down here as a small business. And it's about to become harder.

It's great to see the Government bleat about it but isn't this their system? After a financial disaster of Depressional proportions, who gets the blunt end of the sword? Small businesses who get squeezed on credit and investment money, get higher taxes and red tape, tougher employment laws and now the merciless scrutiny from the taxman searching for pennies when they could be extracting gold from the big boys.

Welcome to Entrepreneurial Britain. This is the way to really get the economy back on its feet.

How to Win the Lottery in 2012

Here's a sure fire tip for 2012 - you have to buy a lottery ticket to win, so make sure you buy one. That is sound advice, as I can guarantee that if you don't buy a lottery ticket, you won't win.

The odds of winning are pitiful some might say at some 48 million to one for a jackpot win. However, I can tell you with absolute certainty that the odds of you not winning if you don't by a ticket are infinite.

With these sure facts in your mind, your strategy must be to go on line or to a participating shop and buy a ticket - this will dramatically reduce your odds of winning as a first step. Buy two and you exactly halve the odds again. Buy 10 and you will reduce your odds tenfold.

OK, let's wise up. Even if you buy ten tickets, your odds of winning a jackpot are no better than 4.8 million to one, so it's not much of a chance. Even if you buy a thousand tickets, then you are still looking at odds of around 50,000 to one which is still a very long shot, considering you would statistically have to buy the same amount for each draw to stand a chance.

In business, you wouldn't invest in opportunities at such odds, would you? Yet, many businesses will sign up in the new year for snake oil schemes to accelerate their business with secret panaceas sold by ebullient former salespeople who have slipped their cocoon of mediocrity in their own sales careers and suddenly found the obvious things they missed. Now they are selling them at nice profits.

Have you ever been intrigued by these adverts you read in papers about how to become millionaires in short order? When you send off for the literature it tells you that you should place an advert in the paper telling people how to make a million and then charge them for reproducing the same document you received.

Everyone wants to the answer on how to make quick riches. Everyone is selling the solution. The secrets of life, of self-confidence, of social media marketing, of sales success, of business knowledge. Some of these courses may well give some great ideas which can be implemented in the short term but few give the elixirs of future and sustainable success.

Why? Because people are funny things. Some days they are on top of their game, sometimes they are not. Some just aren't cut out for the role they are in, some are. Some may gain knowledge and leave, some may have to be paid more than others. 

Acquiring, developing and nurturing talent is a long term business for companies. People are incredible machines as they are the only intelligent beings in the Universe, as far as we know, and they can outperform any computer over a wide range of tasks. Develop them well and they can be incredibly adaptable. Motivate them cleverly and they will jump off cliffs for you. But keep them in a dark cupboard with no light and they become as dumb as mushrooms to the business.

When it comes to developing new business opportunities, it's fine asking for general purpose advice or training - that will help give the background tools for the job. But some people have specific knowledge, skills and connections and can help your teams 'see' the opportunities more quickly, gain success more transparently and help teams develop the skills for the new markets more quickly by actually doing what's required rather than talking about it.

Putting the specific power you require into the opportunity you want, when you want is a fast track way to gain success. Most other methods are as 'Hit and Hope' as buying tickets for the lottery. You may get lucky with a specific course but underlying selling skills are only a pre-requisite. Knowledge of markets is more valuable. In my lottery analogy, you are far more likely to win if you know the numbers that will be drawn - buying the ticket is only the pre-requisite to potential success.

So as you go into 2012 and look at the available opportunities in the Hi Tech markets, think not of buying lottery tickets but placing your valuable investment money into acquiring specific skills and knowledge, even if this is for the short term only. People are incredible machines, they can even learn and they do so better from watching others.

Get the right skills in, at the right time, to do the job you require for as long as you need it. The other members of your team will learn faster from watching success being achieved in front of their eyes.

It's the way I have worked with companies. Roll up your sleeves, show people how to win without talking about general, esoteric concepts. Don't just make contacts and widen your reach, target and value contacts, covet and nurture them. Social networking is a great shotgun but NOTHING replaces the value of individual, tailored, knowledgeable communication and interaction with specific follow up activities.

Nothing speaks louder than actions with successful outcomes. All the rest is just words.

Apple will Fail, Microsoft to Come Back?

In a boring conversation over Christmas, a friend of mine said that Apple will take a dive this year as, in his theory, they have saturated demand for their tablets and smartphones and their PCs will never get taken seriously by corporates. Meanwhile Microsoft will resurge back to normal growth rates, was his other prediction.

Of course, he's right on all counts.

Or is he? Having been recently converted to Apple, first via tablet, then iPhone and now the Macbook Pro, I have suddenly realised that as workers we have been held back from many productivity aids and better software over the years. As a for instance, this year over the Christmas period, I recorded and published a talking book of bedtime stories for my young boy which he can now read and listen to at his leisure from an iPad or one of our iPhones or any device that reads ePubs.

Apple Pages, at £13.99 for the software on a Macbook Pro (full end user licence cost), allows you to write the document while the free GarageBand software on the Mac allows you to record an audio file. You just add the media file to your Pages file and then export to ePub format. The recordings took 15 minutes each and the rest was done in minutes. The look on my little's boys face to see his pictures in the book and hear my voice telling the story? Well, priceless.

But this has nothing to do with business, has it? Oh yes it has. This week, my firm will use my Macbook to write several briefing and training documents about Cloud Computing which we will add audio files to and then export them to ePub format. We can then make them available to all tablet users as a multimedia document which they can listen to on the fly. Imagine you are an IT salesperson awaiting a first appointment with a client to talk about Virtualisation or the benefits of Cloud, these documents will be 15 minutes long as audio files to give first, invaluable briefings to make salespeople sound authoritative. And they can leave them with their clients.

What my friend fails to realise is that the PC market is plummeting - even servers - but Notebooks in particular are nose diving at over 50% per quarter. Vendors like HP, Dell and Acer question the viability at the low end as they can't make products cheap enough for the corporate market. Meanwhile, the software is still buggy and expensive and it does much the same as it always has done with precious little innovation over the last 5 years, particularly from Microsoft.

In the face of this, smartphones and tablets are rising at an exponential rate as the phenomenon of Bring Your Own Device (BYOD) takes off at work where our own devices are attaching to secure networks. And people using these devices buy their software in a different way - over the Cloud and for a few pounds a shot. And there's tons of it.

The revolution is here, have no doubt. And Apple PC's, in the face of the PC decline, are growing at 27% per annum in terms of shipments and revenue. Yet you can't get a bean of discount for love nor money on these expensive products.

Why are companies now paying top dollar for Apple when they are forcing PC vendors to crumble? Simple, the PC market never has really been about price. If you want capability to do a job, people are prepared to pay. The Sony Vaio is touted as the pinnacle of PC's in terms of graphics and portability but have you seen the Apple Mac Air? There's no real comparison.

But Apple is an island in the world of computing dominated by Microsoft so corporates will never buy, will they? Oh, but they will. Microsoft Office for Mac is vastly superior to the PC version and it's half the price. You can now get it as a client for MS Office 365. If you want full PC compatibility then for £67 you run Parallels virtual machine and then port all your MS licences across, automatically by wifi - Apple does it for you.

Of course, I don't think Apple will dominate the corporate market but I think the PC has had its day in the current form. The way in which companies invest in software will change as the Cloud drives prices down and multiple devices will be used to run the same piece of software with files sourced from one spot for all.

This is not a world described by PCs or Microsoft and so either these companies will have to adapt or get left behind. Apple may not win the end battle but they have shown that end or client devices can be anything going forward and users are defining what is paid for them against the corporate mandates. 

Steve Jobs said it before he died, we are in the post-PC era and you don't have to look far to see executives and consumers using the same devices running lots of software that has been suppressed for years by the narrow minded view of the world by mammoth software companies.

2012 will be a year of innovation and the year that the PC market accelerated its decline at the cost of new devices. Apple will get a share but look out for more innovative products and lots of great software at affordable prices. 

If Apple has done this one thing, then it has put value back into the valueless object that was once a PC.