Archive for September, 2008

Arthur Grimes sets himself up for crucifixion

Published by Ben Kepes on September 30, 2008 in Business, Design, Economic Development, Efficiency, IT, New Zealand, Society and Strategy. 1 Comment

Now here’s a brave, brave man.

We’ve all been hearing recently of the step change that broadband will bring to New Zealand – it seems to be one of the big election issues with both main parties coming to it from different angles. Both of these angles have however main the mistake of assuming economic benefits from broadband as a given – without the empirical analysis and data to back that claim up.

Into that breech comes Arthur Grimes, of the Motu Research and Education Trust. Grimes spoke last week at Victoria University’s Institute of Policy Studies and discussed infrastructure in general and had some interesting points about broadband.

In essence grimes stated that unlike traditional infrastructure (roads, water etc), broadband has no clearly defined purpose and as such falls under the “general-purpose technology” category rather than pure infrastructure.

We’re trying to get a handle on what are the benefits of broadband and who might they accrue to. Give me another six months. At present I wouldn’t have any particular answers; but the conceptual answer is that there is a difference between broadband and road straightening. With broadband we just don’t know what the benefits will be. I suspect that under traditional cost-benefit analysis, we would say it’s hardly worth rolling out broadband. We’d look at what benefits we know about and apply appropriate discounts and consider that it’s very expensive anyway and we’d say ‘those numbers don’t add up’. But if I look at the uncertainty and its role as more of a general-purpose technology, then maybe the answers are very different. At the moment, there doesn’t seem to be much of a framework for thinking about it. We’ve just got two parties saying ‘we’ll spend’ and ‘we’ll spend more’. I don’t think there’s much real thought been given to why you would do that; but maybe there is a reason that justifies that approach.

Like I said – a brave man indeed. Not quite as pointed as Telstra-Clear CEO Allan Freeth who claimed that;

the main result of faster broadband links to the home may be more downloads of pornography and movies rather than improvements to productivity

Which is something neither Helen Clark nor John Key particularly wanted to hear.

My take on this? I believe widespread broadband is an enabling technology that is beneficial for the country – this however is a different statement from those who seek to differentiate the general benefits of broadband per se with the supra benefits of FTTH.

The jury’s out but we’re fools if we think they’re able to make a decision without the full data.

Bring it on Arthur Grimes and Motu!

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Big big oops…

Published by Ben Kepes on September 29, 2008 in Business, IT, New Zealand, Society and Strategy. 3 Comments

From that category of "what a complete cock-up" comes news that ISP Slingshot’s iTalk VoIP service went dead the other day. The reason? An expired domain – it seemed the Slingshot staffer set the domain up and used his/her personal email address as the contact, resulting in Slingshot not getting the subscription reminder.

It’s back up now but it seems there are a bunch of less than satisfied customers out there.

Justification for using a more robust telco provider perhaps?

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On building communities of interest

Published by Ben Kepes on September 29, 2008 in Business, Design, Efficiency, IT, New Zealand, SocialMedia and Strategy. 8 Comments

It was interesting to read this post by Ben (another Ben) who details the rise and rise of Vodafone’s community forum site.

Ben says that there is a reluctance within corporate New Zealand to invest the time to build web communities – possibly due to a fear that they’ll build it and no one will come.

Ben reports on the results that Voda have had;

launched an online forum at August 1st 2008.

Investment was:

  • $150 for forum license
  • 3 people engaged over a month, checking in every now and again to keep an eye on it
  • Link under Help on Vodafone website and a mention on Geekzone

Results:

  • 250,000 visits with an average time of just under 4 minutes.
  • That’s a whooping 1 million minutes/ month.  Or the equivalent of 697 days (back to back) of attention.
  • 356 registered members and ~3000 posts (till Sept 17th)

From other forum’s Vodafone has run, they have found only 1 out of 5 questions requires an official response.

Over time the forum will build a repository of information that will provide answers to users without ANY extra work by Vodafone.

I’m involved in a project that’s building a community of interest in New Zealand – we’re getting closer to going live now (a couple of months away) and these results are the sort of thing that are music to my ears – it’s not necessarily about the traffic (although traffic is good). It’s about the level of engagement, the efficiencies gained by conversing directly with your customer base and the credibility gain that comes from being out there and prepared to talk.

Of course the real test is what happens when the conversation on the forum takes an unplanned for, and uncomfortable turn – will Voda still be happy to invest the time in it? I certainly hope so.

We’re all to prepared to say that the online community is only a small proportion of the total population. While this is true the results above show that it’s a proportion that is more than happy to engage – and engagement is an exceptionally powerful driver.

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Knocking against silo walls

Published by Ben Kepes on September 28, 2008 in Business, Design, Efficiency and IT. 1 Comment

A friend of mine is involved in creating a community website overseas and recounted to me an interesting tail. It seems had a preference to using one of the open source content management systems, and maybe going out to the developer community for any tweaks that were required to make it work to her specification.

The development team she were dealing with decided that in the interests of a "robust and secure" offering, they’d hard code it from scratch in a proprietary development application.

This of course had some unintended (well hopefully unintended consequences) in that it then required a degree in computer science to make even the most basic of changes – thereby tethering her to the development team pretty much for the life of the project.

Now I’m no developer – but I’ve spent a fair amount of time using WordPress, Joomla, Virtuemart and of course the tools we’re using, and helping create, over on CloudAve – and nothing in that experience has proven fragile or insecure. Those systems all have the added advantage of being readily extensible (even by a klutz like me) with a massive community out there building widgets and plugins which, generally, work straight out of the (virtual) box.

Here in New Zealand we have the awesome company SilverStripe doing their own open source CMS, and making revenue from the add on servicing and customisation that invariably goes with a build job.

I was motivated to read this post after seeing a post by Rodrigo – in it he talks about the democratisation of the tools for software creation and congratulates both his own company but the marketplace generally for opening up and making things easier.

Now in the case of my friend, I don’t think it’s a pure and simple case of the development house being "evil" in an effort to guarantee themselves future work. I believe that they’re concerned about doing the job and also about the security of a platform they’ll spend hours creating – however this attitude flies in the face of the realities of the web.

The fact is that things change – and fast. Any platform needs to be ready to be changed, added to, deleted from and generally played around with in a independent, nimble and agile way – nothing that I’ve seen from proprietary systems gives me faith that they enable that.

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When the Boss Buys In, You’re Bound to Win

Published by Ben Kepes on September 27, 2008 in Business, Collaboration, Design, Governance, IT, New Zealand and Strategy. 1 Comment

image  Next weekend I’ll be up in Auckland attending the inaugural TelecomONE unconference. The organisers, in an attempt to explain what TelecomONE is all about, have come up with the following;

The Right People + Opinions + Discussions = TelecomONE Innovation

Basically the unconference seeks to create a forum where information can be shared, questions raised, ideas mooted and the status quo questioned. I’m fortunate to have been included in a small group of external invitees (I mean external to Telecom employment rather than sitting outside during the unconference sessions!)

These sort of events are great, but sometimes end up being talkfests unless the organisation has bought into the concept at every level. I was stoked then to read on Miki’s blog of a message that he’d received from unconference facilitator Nat Torkington;

@gripnostril and I met w/ the CEO of Telecom today. He is bigtime clueful, grokked Foo Camp faster than anyone I’ve ever explained it to.

Other than the atrocious spelling and grammar (Twitter is no excuse for lackadaisical standards Mr Torkington ;-) ) it was awesome to see this message – to know that it’s not just a talk fest, that innovation is both welcomed and expected and that we’re not just a bunch of freaks off on a junket is pretty cool (anyway – how can it be a junket – we’re sleeping in sleeping bags on the floor of a hall FFS!)

Bring it on – I can’t wait!

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The natural shift from Code sales to SaaS (Software as a Service)

Published by Julian Stone on September 26, 2008 in Business. 2 Comments

“Code customers only make up 8% of our customer base (today), it shows you the move from code to SaaS, 100% of our customers used to be code”
- this was a quote I noticed on a staff members Twitter account.

He’s right though. We operate a leading project management software company – www.proworkflow.com. We’ve been around since 2002 and have seen a few things over that time. The most obvious is the natural shift from a ‘Code Selling’ model to a ‘Subscription/SaaS’. I say a ‘NATURAL’ shift because over the past 4 years we’ve been marketing a single solution with both code download and subscription option.

When we began, we only offered the code download option, and listed in many code libraries. 2 years later, we started the subscription offering (SaaS/Software as a Service). At no point did we ever really push the deployment option as a marketing angle. Simply put, our approach has always been that we have a solution, and customers can either download locally or host with us on subscription. It’s their choice – not us pushing.

Admittedly, the past 6 months our focus is leaning towards the idea of a full subscription model, but only because the ‘Code Download’ option has declined to the point that it’s obvious it’s a trend. We want to invest our efforts where the best return is for ourselves and the customers.

“So we’re not forcing subscriptions, rather the customers are now ‘preferring’ that option.
- This marks a change in businesses perception of SaaS as a viable and credible option”

At our company, ProActive Software (www.proworkflow.com) code sales these days are nearly non existent as users are looking for SaaS solutions so they can outsource the maintenance aspect of their core software (They just want to use it – not have tech/IT hassles). It may cost them a little more in the long term for SaaS solutions, but we’re finding that in this economy businesses don’t have large piles of cash for traditional perpetual license purchases. They are looking at their cash flow and budgets monthly rather than annually. The Subscription/SaaS model suits this as it’s typically a low monthly price, and they can have the flexibility to leave at any time.

Some software co’s may say “flexibility to leave at any time” is a bad thing, however the opposite is true. SaaS companies must perform, deliver and support at a high standard if they are to keep their customers. This adds value to the customer as it’s not a purchase, but an ongoing relationship with the SaaS co.

Support is better, more proactive. Updates are delivered faster. The feedback loop from customer to developers is closed and all customers start to work on the central solution with a couple of common goals.

Customers – Make suggestions to the software company so the solution will work better for them

SaaS Company – Works hard with customers to perfect the app and systems so they can reduce support load and increase customer satisfaction.

So what’s the difference in regards to the software company making money?

With traditional software solutions (perpetual licensing), the software company would need to make double the sales to double their revenue.

With SaaS companies, the software company only needs to hold onto the customer for twice as long to double their revenue.

And we all know it’s a lot easier to retain a customer than to find a new one! So to put it very simply, With SaaS, the software company MUST satisfy it’s customers not just once, but continually to succeed. And that has to be good for the customers!

About the author:
Julian Stone, CEO – Project Management Software visionary for:
ProActive Software, ProWorkflow, ProWorkflow Blog & Julian101

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Sanity returns – and from the Godfather no less

Published by Ben Kepes on September 26, 2008 in Business, Design, IT, Strategy and Web x.0. 8 Comments

This is music to my ears – at the recent Web 2.0 conference in New York, the father of Web 2.0, Tim O’Reilly, questioned where Web 2.0 is at, and where it is headed.

Tim is quoted as saying that;

(These are) pretty depressing times in a lot of ways, and you have to conclude, if you look at the focus of a lot of what you call ‘Web 2.0,’ the relentless focus on advertising-based consumer models, lightweight applications, we may be living in somewhat of a bubble, and I’m not talking about an investment bubble. (It’s) a reality bubble.

Tim, in a pretty bold move at the home event for all things hyped, proceeded to use two examples, the first was the popular Facebook application SuperPoke, while the second was the popular iPhone app "iBeer," which simulates chugging a pint.

Time then rhetorically asked;

You have to ask yourself, are we working on the right things?

At last – I mean it is so patently obvious that we’re living in an over-hyped world where real estate that has no current or indeed plausible future monetization path can be heralded as the "next best things".

Over on Broadstuff, Alan Patrick did a "back of the envelope" calculation and came up with the following;

The total global Ad industry is circa $0.5 trillion, the online biz globally is about 10% of that at most, and the 80/20 of that goes to Google, Microsoft, Yahoo and AOL. That leaves about $10bn for everybody else, and much of that (say 80/20 again) is being hoovered up by existing high quality and/or high volume existing web assets, leaving in the order of $2bn for everyone else. Assuming every Web 2.0 startup wants to be worth at least $100m, and assuming that is on a 10x multiple of revenues, that means every successful company is running at $10m ad revenues pa. Thus, $2bn / $10m = c 200 startups can live on Ad funding globally on average. Even if I’m 10x out, so its 2,000, you can see that 100% Ad supported business models are not a majority play. And Advertising overall is likely to be in the decline for a few cycles now.

Of course what Alan didn’t factor in is the impact of the eventual discover that online advertising doesn’t really work, and that there are a bunch of emerging technologies that could cause a significant dent in how much of the ad biz comes the online way.

Tim gave some examples of businesses that actually mean something – he used the example of online businesses founded to effect social or political change – as opposed to those founded to enable virtual poking.

So let’s once and for all give up on free – find a way to monetize that doesn’t rely on ad revenues and stop over-hyping the latest time and effort wasting social offering out of the valley.

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Choice is a Damn Fine Thing!

Published by Ben Kepes on September 25, 2008 in Business, Design, IT and Strategy. 0 Comments

I posted a few days ago about a guy who created an iPhone app that competed with a native iPhone offering. Apple subsequently decided to withhold acceptance of his application – citing concerns about the competing nature of his offering. My post was under the guise of asking how Apple manages to get away with being this evil.

Well now our hero, Alex Sokyrynsky has an option – Google’s Android. Sure it’s new and there’s not a lot of devices yet (well one and it’s only just been released) but nonetheless it’s an option. As Alex said;

All I wanted was for someone from Apple to contact me and tell me how we can work it out so that I get into the app store. Instead, Apple took the cowards way out by simply disabling features in my developers portal. This seems like a childish move for a company that has been proving such high quality service and products in the past.
A lot of people have speculated that Apple might incorporate features similar to Podcaster in the future. If they do, they will simply be stealing from developers (me in this case)…
I plan to make Podcaster for the Android operating system. At least there, I will be welcomed instead of being walked all over. I will also try to port the app to a jailbroken iPhone.
So a final note to developers. Try to stay out of Apple’s grey area. Don’t build anything that would compete with Apple. Don’t spend too much time before you submit to the app store because it could be all for nothing.

If nothing else Google’s Android levels the playing field – no longer is Apple the only kid on the block with a cool device who can run roughshod over anyone who wants to come play – hopefully the competition will level the playing field somewhat for the developers.

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New Media for Old Media – Congrats to RWW!

Published by Ben Kepes on September 24, 2008 in Blogging, Business, New Zealand and cloudave. 0 Comments

Big ups to ReadWriteWeb who along with GigaOm and VentureBeat are contributing to the New York Times‘ technology section. It’s a great win for a New Zealand blog (well OK of the RWW writers, only Richard (and on the odd occasion that I contribute to RWW myself)) hail from New Zealand – but if we don’t claim it the Aussies will so it seems best.

It’s also interesting in light of the Technorati survey which TechCrunch tells us indicates that a blog with 100k uniques per month should earn around USD75k. Does that mean Richard is pulling in USD900k a month with his 1.2million uniques? Do tell Richard!

Of course I’m pretty dubious about old media – I’m currently involved in a project that involves new and old media getting along – so far my experience is that it’s very much a one way street – old media is more than happy to have content from people who actually understand this stuff. However "partnerships" with old media tend to be fairly one way – which is why publications like Idealog start up that verticalise media without the old/new demarcation.

So anyway – I’ll not tell the story again – suffice it to say we’re proud of the quiet chap beavering away from a suburban house in Lower Hutt – give us a year or two and there’ll be another hyper successful New Zealand run blog!

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On start-ups and paying CEOs

Published by Ben Kepes on September 24, 2008 in Business, Efficiency, IT, New business and Strategy. 5 Comments

At the TechCrunch 50 conference Peter Thiel, Silicon Valley uber investor was quoted as saying that there is a ceiling in terms of CEO salary for a startup, beyond which you begin to “have issues”. For a more general take on CEO salaries (not tech specific) check out this article.

After spending a few days with a bunch of boot-strapped start-ups at the Office 2.0 conference I have to agree to a certain extent with his thoughts although I’d extend them further to include spending generally – not just C level remuneration.

But first a disclaimer – I’m not suggesting that startups should scrimp and save every penny – it costs money to build a brand and sometimes there are things you just have to do (spending up to go to tech conferences for example) – but startups that let go of the reins – paying themselves high salaries and hosting lots of launch parties – run the risk of burning through their cash before they have a product.

The fact is that a startup should act like a startup – leave the top shelf partying to those who’re actually making the revenue.

My role model for sensible expenditure is a SaaS business that I’ve been following for awhile – rather than being located in high rent silicon valley, they’re domiciled in a much more affordable location. Rather than big ticket offices with plush sofa and carpets, they’re working out of a converted garage. They’re also scaling pretty fast, making good revenue and deriving profits from their endeavours – while their startup brethren are out partying on their investors dollars.

I wonder who will still be around in a few years time?

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