As CEO you have undoubtedly heard about cloud computing. Under cloud your company's data and applications can be contained and run on the computers and networks of a third party like Google or Amazon, theoretically lowering your cost and reducing your data centers (along with staff).
If I sat you down for coffee, here are five things I'd tell you about cloud:
1) Pure cloud constitutes an interim step -- App Internet will offer better solutions. Local devices like your iPhone or Android tablet or server are becoming ever more powerful -- under App Internet those devices will join up with the cloud to solve problems. Compare an iPad (with apps) to a Google Chromebook and you'll get the idea.
2) Storing your most sensitive data in the cloud is a bad idea. Because cloud vendors typically do not reveal their security protocols, there is no way to verify how safe your data will be. And if it is lost, you are liable, not the cloud vendor.
3) The cloud can be cheaper. Some vendors are claiming 50% cost reductions -- that's hogwash. But in some cases it could reduce operational costs by 10%-30%.
4) You can't just flip a switch and go to the cloud. Before you go, Forrester recommends a full audit and rationalization of: 1) your data portfolio, 2) your applications portfolio, and 3) your security architecture. In other words, your roadmap must be plotted before you go cloud -- or you'll be repaving cow paths.
As a CEO, you want low prices and innovative products from your suppliers. You will get neither in the network business if AT&T buys T-Mobile. That deal will trigger the inevitable merger of Verizon and Sprint -- limiting your choices and slowing the development of new offerings.
We've seen this movie before. The US car industry devolved into a few players, and decades of decline were the result. A few years ago in a post, I asked the question: "Why can't America build a great car?" Bob Lutz, a 40-year car executive, answers the question in his vinegar-soaked book (which I recommend).
I'll take license and distill his answer: The American car industry faded because of poor leadership and management. Lutz blames the failure on a culture of over-planning and bureaucracy. Spreadsheets were valued over common sense, customers were ignored, and too many over-educated over-analyzers focused on arcane process and rules rather than the job at hand: building great cars that people want to drive. It's not the unions' fault, it's not bad workers, it's not government regulation, it's not healthcare costs. It's leadership.
Which brings me back to the network business. When markets are reduced to a few players (as was the US car business), you run the risk of under-diversifying management thinking. In nature, a lack of diversity increases the risk that a species will be wiped out by a single infectious disease -- as almost happened when the group think pathogen ravaged Detroit.
Twitter is searching for a way to make money -- a prerequisite for a Bubble II IPO. An idea it's been pushing since April is something called promoted tweets -- auctioning the rights to place advertising at the top of popular Twitter streams.
Google places ads -- why can't Twitter? One big fat reason: Twitter's ad imposes itself into a discussion among real people. It's as if you held a dinner party and an uninvited stranger barged into your house screaming self-serving non sequitors -- and you can't get rid of him. A search ad has the potential to help you; a "conversation ad" is simply disruptive.
Promoted tweets appear to be directed at the B2B space. Only one problem: Forrester's research indicates that Twitter possesses very limited influence over B2B transactions, at least in the technology space. Twitter influences one half as many Business Technology (BT) buyers as Facebook, and only a third that of LinkedIn. You can find a very short precis of the report here. Promoted tweets are a bad idea on many levels -- Twitter should scrap them and head back to the whiteboard in search of a less intrusive way to justify its irrational market valuation. I'd love to get your comments...
Intelligent CEOs scan the horizon for distant threats and unaccounted-for risks. Add this to the list: getting caught in the crossfire of a growing trans-national cyber-war.
It appears that independent and government-backed hacking groups in China, North Korea, the U.S. and other countries are engaged in a contest of escalating computer attacks. The most alarming recent salvo saw the compromise of one of the most commonly used authentication mechanisms -- RSA’s Secure ID technology. Since the breach many government contractors including Lockheed Martin and L-3 Communications have recently disclosed that their networks were targets of cyber-attacks apparently using information stolen via the RSA breach. The U.S. government has threatened to retaliate, putting the world on footing to begin a "Code War" mirroring the decades of Cold War between the former Soviet Union and the U.S.
The problem for you is that this quiet war will injure many innocent bystanders -- corporations whose systems are breached by the highly complex new attack technologies. Instead of employing a smash-and-grab audacious approach, the attackers are increasingly utilizing a "low and slow" attack methodology, gathering sensitive information over weeks or months. Increasingly these hackers are targeting intellectual property that companies and governments have built over decades. Google, Northrop Grumman, and Siemens have recently been caught in the cross-fire, and some have said that RSA, a subsidiary of EMC, may not be able to survive as a business given the breach of its core system.
CEOs must assiduously guard against ideology. They should avoid choosing a path for their business based on a rigid worldview. Ideology has killed many great industries, from railroads to word processors to fax machines. It interferes with logical, market-sensitive thinking, leading CEOs to ignore, and ultimately offend, their customers.
Google's announcement of its Chromebook constitutes a real-time case study. Chromebook hinges on the idea that we no longer need local storage or applications on our computers -- that the Web can handle most tasks.
Without the Web, Google's business model fails. Every time we search, Google gets a chance to make money based on advertising. That's why the company wants us to ditch our powerful laptops and trade them in for Web-centric workstations that won't work unless they are linked to Google's servers.
There's only one problem. While networks get cheaper and faster every year, processors and storage devices improve at even faster rates. That's why the iPad 2 has the power of a 1990s-era supercomputer. This means that the dominant future architecture will leverage powerful local devices and services available in the Internet cloud. Forrester calls this App Internet, and we believe that it will push the Web (and Google's current advertising model) into the background.
Why is tech so healthy? It's a different story depending on where you sit. In the "Tech Twelve" (Canada, the US, Denmark, Finland, the Netherlands, Sweden, Switzerland, the UK, Israel, Australia, Singapore, and New Zealand), the early adoption of fourth wave systems like smart computing, app Internet, and cloud computing is fueling growth. In these countries, tech is driving GDP. But in the BRIC countries (Brazil, Russia, India, and China) the reverse story holds. Strong GDP growth is stimulating and necessitating higher tech spending.
CIOs tell us that both hardware and software spend is driving this growth. 35% of technology decision-makers will spend more on hardware this year than they did in 2010, while 34% will spend more on software. Our forecasts predict that computer equipment and IT consulting and systems integration services will be the leading categories of tech growth. Close behind are software and IT outsourcing services.
What do CEOs want from Chief Marketing Officers (CMOs)? I asked that question on Forrester's CMO community site, triggering some excellent comments. You can check it all out here.
The CMO must provide the basics: “Increase revenue, decrease costs, no embarrassments.” But what about the non-obvious?
1) Innovation. CEOs know that innovation usually lies outside of the company -- in the free market of partners, inventors, new channels, and new technologies. Procter & Gamble plays this game brilliantly -- partnering with AstraZeneca on Prilosec OTC, Clorox on Glad Wrap Press'n Seal, and with its customers on the redesign of Tampax. The CEO wants the CMO scouting the path ahead -- outside of the four walls of the corporation.
2) Mediate the cultural conversation. As Herb Kelleher of Southwest Airlines used to say, "Culture is what people do when no one is looking." Culture is the honest, unvarnished, beliefs and behavior of your customers and your employees. In an age of social, customer culture and undiluted company culture continually butt up against each other -- producing ugly or amazingly productive moments. The CMO must moderate that raw conversation, protecting and elevating the brand as they do so.
3) Translate and illuminate technology. The CEO can’t keep up -- the CMO must continually teach what technology change is brewing and what matters. "Here comes app Internet -- what does it mean for us?"
The Kindle is a young device, but it's already on the way out. If you're a CEO about to move to eBooks, I would recommend going straight to the iPad or an Android tablet.
I was an early Kindle user -- I always kept one with me on the road and one at home. But I recently ejected my traveling Kindle out of my backpack and, as you can see from the picture on the left, my home Kindle is gathering dust in the stack of books next to my bed.
What happened? Blame it on Keith Richards. I bought Richards' autobiography, Life, over Christmas. As an experiment I decided to read it on my iPad, using the Kindle app. The iPad offered a bunch of advantages:
1) The backlit screen made it easier to read, especially when my wife turned off the lights at 11:30.
2) Underlining text with a flick of the finger is far better than joy-sticking through paragraphs.
3) Moving between pages was seamless, with none of the slow refresh that you get with the eInk-based Kindle.
4) The iPad is a multifunction device -- I use it for music, pictures, email, browsing, applications, viewing business documents. Books fit naturally in this environment.
But the big difference was how I used the capabilities of the iPad to give me the "extended" eBook experience. When Keith referenced Altamont, I quickly took a look. When he talked about G tuning his guitar, I checked it out. I was getting his book+, in one look.
In my recent travels, I have been asking tech CEOs a simple question: "Are you satisfied that your sales force is advancing your strategy?" The answer has been a resounding "No!" They give it a C- grade.
Here are the problems, according to the CEOs I talked with:
1) “Speed.” The sales force is always 12 to 18 months behind strategy.
2) “Calling too low.” Sales reps aren’t getting to power.
3) “The sales force can’t tell the story.” The focus is on price and not on the full value and quality of products.
4) “We have the wrong people.” Not smart enough, not tuned in to the market.
CEOs are translating their frustration into action. Many are about to "completely overhaul" their sales forces. Here’s what CEOs have in mind:
1) “Make sales more like engineering.” Engender high collaboration, high touch, higher IQ.
2) “Become more customer-focused.” One CEO trains his sales force to ask about and respond to the top three problems of each client.
3) “Better technology.” 43% of salespeople say they have better technology at home than at work.