Archive for January, 2011|Monthly archive page

Getting Cloud Computing right

Few technologies have received as much hype in the past couple of years as Cloud Computing. Virtually every major IT provider such as Amazon, Google, HP, Intel and IBM is now aggressively promoting their new CC services. Despite the excitement, business adoption has been slow for mission-critical production applications within traditional large IT buyers like financial services, healthcare and manufacturing.

Simply defined, CC is a range of enterprise-level technologies that enable organizations to draw their computing power and data from a centrally managed internal or external pool of compute resources including servers and software licenses.  Acting like an electrical utility, a Cloud can supply users (Companies, operating units and individuals) computing resources as needed, when needed.  In an ideal situation, CC enables organizations to reduce or defer the purchase cost of expensive hardware and software assets, accelerate application performance at peak load periods and drive up overall IT utilization – which for most firms languishes at around 25% of potential capacity.  Importantly, CC also enables companies to move to a more flexible, scalable and efficient IT pay per usage model also known as Software-as-a-Service (SaaS).

CC and its predecessor Grid computing have been around for over 20 years.  If the Cloud is going to move beyond niche applications into the mainstream of business computing, it will need to overcome some important adoption challenges, as follows: 

Standards confusion

Although slowly emerging, there are still a plethora of competing standards that inhibit a quick and low risk adoption of CC.  For example, there are competing standards in the critical areas of IT infrastructure components, security, identity and system interfaces.  CIOs need to ensure their CC adoption plans and technologies are readily aligned with standards as they are set, even if they do not represent the best technology at this moment.  One simple step would be to follow the Open Data Center Alliance, an independent consortium comprised of leading global IT managers who seek to provide a unified vision for long-term data center requirements.

Organizational challenges

CC adoption continues to be stymied by (often hidden) organizational barriers such as who controls IT resources and how is IT linked to business priorities.  Furthermore, ongoing concerns around computing resource availability, external cloud viability and data privacy often make CC a difficult to sell to the business unit owners.  Because of its revolutionary nature, organizations must treat CC like it would any other transformational project.  This requires using change management methodologies, right sizing the organizational structure to reflect new mandates & roles and using pilot projects to build internal support and generate key learnings.  Gary Tyreman, CEO of Univa a leading Cloud Computing provider, says:  “While Cloud looks like an easy way out, one needs to begin by connecting the project to a strategic imperative, orderly define a starting point, identify low hanging fruit and create the white space for the team to make this happen.”

Market confusion

Given its short history, its no surprise that there is considerable market uncertainly and bewilderment over what is CC, how are solutions best deployed and who really can deliver on its promise.  In fact, almost every IT provider of consequence now promotes a CC and SaaS capability. This market clutter has created an adoption barrier for many firms. Despite this clutter, there are more than enough success stories for firm’s study.  “There is now a compelling business case for the Cloud and enough proven case studies across many industries to speed implementation and reduce business risk,” says Tyreman.    

Lack of IT transparency

Many CIOs lack sufficient visibility into their IT infrastructure and operating units to understand which business applications and cost centers represent the best opportunities to deploy CC.  One of the most important first steps to moving to the Cloud is to understand what IT assets firms have, how they are used and where is the cost (hardware, software and operating). 

Given its transformational value and record to date, CC is on the cusp of crossing the adoption chasm in 2011.  Although they need to do their homework, CIO’s should look deeper into how CC can reduce their cost and improve business performance.

For more information on our products and services, please visit the Quanta Consulting Inc. web site.


Can RIM regain its mojo?

Attacked on many front by well-capitalized and innovative foes, RIM is facing what many consider an existential threat.  A year ago, RIM was the smartphone market share leader with a lock on the lucrative corporate sector.  How times have changed.  Over the past 2 quarters, RIM has been steadily loosing market share to Apple and Google. Apple’s iPhone has set the consumer standard for smartphone innovation and design while Google’s Android platform is gaining traction with powerful functionality, an open-source operating system and zero cost to channel partners. Consumer polls that measure Product Desirability consistently favour the iPhone and Android platforms over RIMs. If RIM did not have enough to worry about, Apple’s new iPad has outflanked the market by creating an entirely new product category, forcing RIM and others into catch-up mode.

Despite these worrisome signals, it is too early for RIM to wave the white flag.  The firm still maintains significant corporate capabilities, a strong brand and a large (and still growing) customer base.   What RIM’s management needs to do is to return to the strategic principles that made them category leaders in the first place.

Protect their lucrative corporate niche

First and foremost, RIM must retain the high margin and device-loyal business user that propelled BlackBerry dominance.   To do this, the company must quickly improve enterprise level functionality in areas like system interoperability, stability and security as well as continuing to develop winning channel programs to lock up distribution.  RIM will need to move fast.   Sooner rather than later, Apple will begin aggressively targeting the corporate segment.  Moreover, the days where firms handed out free Blackberries and stipulated that the device was the corporate standard are over.  Increasingly, employees are allowed to use their personal iPhone or Android handsets for work. As a result, there is a risk that RIM’s appeal may be diminishing.

Expand the consumer franchise, RIM’s way

RIM’s prospects will come in large part from their ability to penetrate deeper into the growing yet fickle consumer market.  To date, RIM has appealed to consumers primarily with their BlackBerry Messenger functionality.  While important, this strategy is insufficient by itself to win in today’s consumer market.  RIM must build consumer appeal beyond BlackBerry Messenger the same way they tackled the business segment.  In particular, the firm needs to develop a consumer-focused functionality around mobile productivity similar to what worked with business users while providing enough useful apps to satisfy the majority of users.  This feature set would attract soccer moms scheduling practices or a group of teens planning a party.  As well, the company needs to combine product excellence with newer, more compelling marketing campaigns that plays to its core strengths and consumer needs, namely people who primarily use the phone for different kinds of communications.

Avoid Apple envy

With the BlackBerry Torch, RIM introduced a product that incorporated features that Apple pioneered, such as touch screens and mobile apps.  Despite good reviews, the Torch did not deliver product superiority or stem share losses.  Yet at the same time, RIM was ignoring key weaknesses and opportunities with their operating system and hardware that were more fundamental to their value proposition and core segments. Going forward (especially with their iPad targeted PlayBook), RIM runs the risk of focusing too much time and resources on aping Apple and not enough on understanding and leveraging their own unique business franchise. Management should realize that RIM will never be Apple, nor should they. 

There is nothing pre-ordained about Apple or Google’s success.  Each company has had its share of setbacks.  For their part, RIM has enjoyed an excellent string of product successes and retains some impressive capabilities.  RIMs’ strategic challenge will be how to get back to their earlier winning formula without taking their eye off of a rapidly changing consumer and technological landscape.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Do genes influence consumer choice?

Perhaps, according to a new study coming out of Stanford’s Graduate School of Business.  The research, the first of its kind, studied the link between genetics and consumer decision making.  Conventional marketing wisdom says that consumer choice is unpredictable and can be influenced through advertising, packaging etc. The new findings suggest that consumer choices are in fact very stable, if not genetically pre-determined. 

The authors, Itamar Simonson and Aner Sela, explored the impact of genetics on consumer decision making by studying the behavior of identical and fraternal twins. Each set of  twins were subjected to a number of questionnaires in order to analyze their choices and opinions on a variety of issues. Where they found a greater similarity in behavior or trait between identical rather than between fraternal twins the authors concluded that the phenomenon or choice in question was likely to be inherited and therefore predictable.

While the researchers found no iPad gene, they did note that people seem to be genetically predisposed to one of two alternatives when making choices.  For example, people either:  make compromises or take more “extreme” options; select sure gains or take gambles; prefer easy but non-rewarding tasks or pursue challenging but more rewarding ones; and chose utilitarian items or hedonistic ones.

Simonson and Sela also found that people’s preferences may be genetically hardwired towards liking specific products such as chocolate, mustard, and hybrid cars. As well, there is a genetic predisposition towards certain musical forms such as opera and jazz, and in the case of films, science fiction movies. Of note, the study was not able to determine genetic influence on a host of other behaviors including the tendency to choose attractive over unattractive items, and the preference for larger rewards later versus smaller rewards sooner.

Simonson himself issues a few cautions about his research. “People are not born with a Prius gene, a compromise gene, or a jazz gene,” he notes. “Instead, these tendencies probably reflect a yet unknown combination of genetics, and gene expression characteristics, which, in turn, are influenced by an interaction between nature (genes) and nurture (environment).”

This research has interesting implications for companies.  For one thing, genetic considerations could in the future inform firms which new products and technologies could have a better chance of being well-received by particular genetic segments. According to Simonson, “genetic research could potentially reveal that a video game that uses a motion-sensitive remote is likely to benefit from certain genetic predispositions, perhaps even suggesting the most promising target consumer segments.”

Although these findings are a good first start, further research is needed to establish a direct link between specific genetic characteristics & clusters and preferences, traits and behaviors.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

The ten commandments of germinating innovation

Increasing innovation is now the mantra of many executives as they seek to address key developments like sustainability and regulatory change or boost performance in areas like cost reduction or service levels. Considerable attention and resources is now being paid to identifying and implementing organizational strategies that cultivate product, operations and workflow innovation.  

My experience over the past 20 years – which is now buttressed by ample scholarship – is that it is easy to make innovation a corporate priority but it’s a lot harder to germinate it within the organization.  Typical barriers include an inhospitable culture, lack of leadership and sub-optimal management practices. 

Fortunately there are now best practices to fostering innovation in organizations regardless of industry.  Some of these include:

1.         Enable the employee

Innovative enterprises like 3M and Google require employees to spend a specific amount of time on “creative” projects even at the expense of their daily responsibilities.  These firms also design performance measurement and reward systems that reinforce innovation goals. 

2.         Break down organizational silos

Innovation flourishes when there is a rich exchange of data, learnings and technologies between business units, people and functions.  A variety of approaches including knowledge management tools and departmental transfers can help facilitate this cross-pollination.   

3.         Encourage diversity

To avoid groupthink and shared bias, innovative firms focus on hiring and cultivating diversity within their staff, project and management groups.  Diversity, in terms of intellectual approach, is also encouraged in critical areas like analytics and problem solving.  

5.         Create shared values

To take root within a company, innovation must become embedded within the cultural norms and practices.  This requires strong and consistent, top-down executive support as well as a solid business case and company-wide alignment.   

6.         Use stretch goals

Management can trigger innovation by setting aggressive stretch goals around revenue and profit.  When properly used, stretch goals harness a team or individual’s stress and anxiety to look beyond existing strategies towards breakthrough thinking.

6.         Evaluate realistically

Not surprisingly, typical short-term financial measures like payback and ROI are not suitable to evaluate unique innovations, particularly when key information like market size is unavailable.  At an early stage in the innovation project, other metrics like consumer appeal should carry more weight.  To avoid expensive failures, companies also need a gating process that quickly kills off poor innovations. 

7.         Aim for home runs but welcome the small wins

Home run innovation like Apple’s iPad can deliver major rewards but so can a number of smaller improvements, which together, can increase product value, streamline operations or reduce delivered cost.  Small wins also have the benefit of building internal momentum and nurturing organizational learning.  

8.         Engage outsiders

Given the speed of technological change and globalization, virtually no company can innovate by themselves anymore.  Savvy innovators like P&G engage academics, suppliers and customers around the world for good ideas.   As well, emerging open innovation models like crowdsourcing are bringing the ideas and thinking of the masses into the firm.  

9.         Focus on Commercialization

For many firms, innovation is only about R&D.  Insufficient attention is paid to getting the innovation to market in a timely, effective and cost-efficient manner. Truly successful innovators like Apple and GE fully leverage their ideas by being expert at commercialization including marketing, sales and product management.  

10.       Be patient

Innovation usually does not happen overnight.  The innovation process is often unpredictable and false starts are inevitable.   Furthermore, it often takes a long time to refine the idea and commercialize the innovation.    

Getting these elements right will create the right conditions for innovation to flourish.  However, some firms could still under-perform because of a variety of institutional biases and strategic misconceptions.  These will be discussed in an article next week.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.