The new Mac App Store is launching today it would seem, although one needs to install the new 10.6.6 OSX to get it. Will the new Mac App Store have the same profound effect on our desktop that the existing app store had on mobile apps? Likely not. iPhones, iPod Touches, iPads are mobile devices and usually accompany their users on every outing, not so with laptops and desktops.
With that being said we will likely see a great number of apps from the existing App Store make it into the Mac App Store.
First thoughts around this are positive for me. I like apps that update themselves, as a developer it would also be helpful not having to build up an ecomm system as I suspect in-app purchases will accompany the new SDK for apps in the Mac App Store as well. Of course, Apple will take a healthy chunk of the revenue from the app.
At any rate, apps on iPhones, iPods, iPads will now be ubiquitous across (nearly) all Mac devices.
What do you think? Will this revolutionize the app distribution methodology for desktop apps? Or is this just another cash grab from Apple?
We recently completed our Frost & Sullivan 2010 North American Enterprise Telephony Equipment and Implementation and Management Services Markets update. The study found out that, in 2009, that market generated about $4.35 Billion in revenues from the delivery of telephony customer premises equipment (CPE) services, which represented a decline of about 10.7% from 2008. The global recession was the single most powerful factor causing the revenue decline.
While implementation services, closely correlated with telephony equipment shipments, were severely impacted by CAPEX reduction policies, budget constraints were, in fact, one of factors driving demand for managed services. Alaa Saayed, the lead analyst on this project, observed: “Some of the main drivers for managed CPE services adoption include the ability to select the management of specific ongoing administrative tasks (modularity) rather than outsourcing the entire operation, the advantage of cost savings and profitability because of performance optimization, the benefits of problem prevention through the use of proactive remote management tools, and the ability to monitor and manage different systems and networks throughout a multi-vendor, multi-site environment.”
An increasing number of enterprises report utilization of managed services. A 2009 Frost & Sullivan survey, that interviewed 102 U.S. C-Level executives, revealed that companies had either maintained or increased their use of managed services within the previous 12 months.
The same survey reported that only 7 percent of the respondents were planning to decrease the usage of managed services within the following 12 months. Overall, C-Level executives were planning to continue their current use of hosted or managed services, or even increase their utilization within the next 12 months. This is not too surprising since managed services play an important role in addressing the IT and telecom management needs of an organization in the time of a recession. As organizations cut costs to stay afloat or improve their competitive positioning, they typically seek to compensate for reduced internal resources and improve network and overall organizational efficiency by partnering with an experienced managed services provider.
Demand for managed services varies by the size and type of business. Small enterprises are more likely to utilize contractual maintenance, hosted solutions or economical managed CPE alternatives. Medium enterprises, on the other hand, are more likely to employ a piecemeal approach to network management outsourcing, whereby large companies may either opt to manage their telecom and IT infrastructure in-house, or outsource management to ensure a more uniform approach to their multi-vendor, multi-sited environment.
Similar factors seem to trigger the acquisition of managed services across different company sizes and verticals. As managed services are primarily adopted by those looking to reduce labor costs, customers tend to first resort to the lowest-common-denominator package – some remote monitoring and alarms, backup & restore, limited help desk, basic software updates (no major upgrades), a package of MACs, and so on. They could, eventually, move up the ladder based on their individual needs and demands.
The CPE services market is becoming more fragmented over time – with few service providers possessing all the required skills to manage all aspects of a customer’s ICT infrastructure. In fact, Alaa states that there is some confusion about who’s offering what: “Customers are finding it hard to understand where to look for CPE telephony services. They find the relationships among telcos, value-added resellers, system integrators, manufacturers and their channel partners confusing. When searching for managed or professional services, they often run into an overlap of solutions and responsibilities. Single point of contact is becoming key to avoid these multiple and confusing relationships.”
Here is what the competitive structure in this market looks like:
In terms of revenue, traditional equipment manufacturers have the largest market shares with stable or flat growth prospects. Telecom operators and system integrators are experiencing an increasing demand for services as they can offer economies of scale and competitive managed services packages. VARs, on the other hand, seem to serve specific markets where either local presence or some technical specialization is required.
In terms of brand name recognition, the leaders of the pack include established vendors market participants such as Avaya, Cisco, Mitel, NEC and Siemens among telecom equipment manufacturers; Black Box, Shared Technologies and Dimension Data among telecom VARs; major systems integrators such as IBM and HP; and AT&T, Verizon, Bell Canada and Telus among telcos.
While some traditional equipment vendors directly compete with their channel partners, others prefer to delegate most telephony CPE services to channel partners. Channel-centric vendors acknowledge the fact that dealers and other partners are turned off when vendors compete against them and take away the best deals. Therefore, such vendors choose to ensure the support of their channel partners in growing product revenues at the expense of services revenues, which they leave entirely to the partners.
We asked the channel what they expected from their vendors and here is what they told us:
Also, the channel commented on the overall level of support they received from their vendors over the past couple of years:
For businesses looking to outsource SPE services and managed services more specifically, we recommend they select their partners based on:
- Financial viability
- Product and services roadmap (including SIP expertise and ability to support next-gen SIP and SOA-based architectures)
- Multi-vendor technology support capabilities and ability to consolidate multiple vendor relationships through a single contract
- Customer service and attention to specific customer requirements
- Flexibility to provide modular capabilities and price services based on application complexity rather than total number of users
- SLAs covering resolution and not just response times. One of the biggest pitfalls in managed services is the inability of certain vendors to guarantee the latter in spite of their commitments to the former.
- Managed services vendor staff training and experience. Staff turnover is one of the industry’s major challenges and service providers that invest heavily in staff training and job satisfaction can deliver the greatest value to their customers.
- Find your best match! For a global organization, a large, global SI may be best, but for a small business, a local partner is more likely to provide greater attention and a customized approach.
On October 19, TELUS and Teletrips announced a unique business solution, promoted and delivered jointly by the two organizations. The Intelligent Enterprise QuickStart system, tools and related services help businesses design and implement more effective flexible-work programs.
Most telecom pundits know TELUS well; however, fewer people are familiar with Teletrips. It defines itself as “the leading provider of online tools that help organizations optimize their triple bottom line performance through Intelligent Workplace and Workforce Management”. It has developed the SaaS-based Teletrips Work Anywhere System and the Intelligent Enterprise QuickStart set of tools that enables businesses to identify specific characteristics of their workforce (mobile or deskbound, more or less collaborative roles, etc.) and develop effective flexible-work strategies and programs. This data-based approach helps organizations reduce costs, improve employee retention and satisfaction, and better protect the environment – hence the triple bottom line benefits: return on investment, return on employees, return on environment.
Teletrips boasts successful implementations with major organizations such as TIAA-CREF (The Teachers Insurance and Annuity Association – College Retirement Equities Fund) and TELUS itself. These organizations have been able to gain varying benefits from promoting more flexible work styles.
Many individuals today are consciously making a choice to work from home or various remote locations, and although their motivations may vary, the common objective is to improve their work-life balance. The time saved from lengthy commutes can be used to complete additional work tasks or handle house chores and family-related matters, or it can be invested in personal betterment (sports, entertainment, rest, etc.). While today many organizations readily support such programs, mostly in response to employee-expressed interest in working remotely, few are actively promoting flexible work styles. Many businesses are just not fully aware of the tremendous benefits a more flexible work approach could bring to the individuals, the organization and the environment.
TELUS is sharing the results of its At Home Agent Program (AHA), partly supported by Teletrips. The AHA program is aimed to improve the way TELUS’ call center agents work and live and to promote personal, community and environmental wellness. Of TELUS’ 6,500 call center team members, 1,000 are part of the AHA program and 20 percent of those use the Teletrips People and Places Reporting System (PPRS) tracking tool. This is a web-based interface used to log daily agent commute choices and assess their impact in terms of time savings, fuel and vehicle maintenance savings, and reduced emissions. At the end of the first 24 months since the program was launched, the following results were reported based on the regular entries of about 133 agents:
- Over $122,000 in total maintenance and fuel savings or approximately $900 per agent per year;
- Agents avoided driving a total of 903,827 km or about 6,665 km per agent per year;
- Reduced CO2 emissions by 204 metric tons
- Agents reported net savings in actual commute time of 14,000 hours or 104 hours per agent per year
TELUS reports savings in furniture, equipment and rent. Additionally, the AHA program has reduced team member absenteeism and attrition, which has also translated into hard-dollar savings from reduced hiring and training costs. Furthermore, AHA members have demonstrated higher engagement levels and greater productivity (estimated as being about 20% higher on average compared to that of the rest of the agents).
Sun Microsystems (which has implemented a flexible work program as well) and TIAA-CREF reported significant savings and benefits as well. Most savings seem to come from real-estate costs, but additional benefits include greater employee satisfaction and morale. Sun Microsystems managed to transition about 56% of its workforce to a flexible work program over a period of about two years. The transition was enabled through advanced technologies such as virtual desktop and thin clients, which helped gain additional savings – for example, the number of desktop support administrators was reduced from 1,100 to 7 (for the support of about 42,000 desktops)!
TELUS and Teletrips are now engaging in a partnership to jointly promote and implement the QuickStart System to help others gain similar benefits. Their approach is based on six key steps to launching a successful flexible-work program:
- Gather data and size the opportunity: data-based decision making can produce superior results
- Build a case for change and create a strategy
- Choose and deploy enabling technology
- Start a flexible work pilot
- Measure the impact to the triple bottom line
- Share your success and duplicate
Additionally, TELUS and Teletrips advise organizations to identify a clear end goal and commit to a planned investment. And even more importantly, acknowledge that this is all about people and that they have to be at the center of this process. TELUS, Sun Microsystems and TIAA-CREF also recommend that organizations pursuing the implementation of a flexible work program should appoint and empower a leader and ensure the cooperation of three key business units – HR, IT and real estate.
TELUS and Teletrips are looking to explore a significant opportunity in the North American market. In the U.S. only, they have estimated about 130 million knowledge workers, 58 million of which are able to work remotely.
I believe technology and changing life styles will drive a continued evolution of work styles as well. A growing number of people will work remotely or wish to do so and it will be important for organizations to ensure they have effective programs in place in order to gain maximum benefits.
On September 15th, Avaya announced several new products that nicely round up its Unified Communications (UC) applications and endpoints portfolio. The product launch focused mostly on video conferencing and video collaboration. Unlike its arch rival Cisco, Avaya has been lacking strong video capabilities, though it has been working closely with partners such as Polycom to provide end-to-end UC solutions to its business customers.
With its new Avaya Desktop Video Device and enhanced video support through Avaya Aura 6.0, Avaya is now able to deliver more comprehensive video conferencing capabilities on its own. The new Android-based device features a small form factor, touch-screen technology, HD video and audio, bandwidth efficiency, mobility (using WiFi, Bluetooth or 3G/4G via a USB plug-in) and a competitive price in the range of $3,000 to $4,000.
One of the most fascinating aspects of the new video device is the Avaya Flare experience. Avaya Flare is a user-centric UC interface with a spotlight in the middle that highlights ongoing communications sessions (IM, audio or video calling, and so on); on the right hand side – a list of contacts arranged by source – corporate directory, Facebook, etc. – and searchable by name; and on the left-hand side – a list of applications (such as calendar, for example). The Flare interface allows users to conveniently drag contacts into the spotlight and choose a communication mode based on presence status and/or the user’s preference and purpose. With an easy click of a phone icon, for instance, all contacts in the spotlight are immediately joined into a conference call. Other possibilities include video, IM, email, social (networking) and slideshare. Web conferencing is built into Flare as well.
In essence, the Avaya Desktop Video Device is a high-end, SIP-based, multimedia endpoint that enables users to conveniently use a variety of communication modes to communicate and collaborate more effectively. While the price point is certainly high for the average phone user, for users looking for cost-effective video, the Avaya Desktop Video device offers a compelling alternative. Typical users of such videoconferencing endpoints can be found in the legal or healthcare sectors, for example. Dr. Alan Baratz demonstrated a scenario in a healthcare environment where a specialist doctor was contacted via video to properly diagnose a patient. For a busy, multi-tasking and typically mobile executive, this device can prove a highly effective communications and collaboration tool, competing with a Cisco CIUS or an iPad as well as emerging smart deskphones.
The good news for those looking for a smart interface, yet not crazy about video or unable to afford the premium price, is that Avaya plans to introduce the Flare experience on other devices as well. In the near term, Flare will be available on select Avaya 9600 series phones and eventually – on smartphones. Integration with Microsoft Outlook for contact management and ability to control voice, conferencing, IM and presence can turn the SIP deskphone into a smart device providing a single point of access to communication tools currently available on disparate endpoints (e.g. IM and presence on PCs and laptops, voice on phones, and so on).
Furthermore, Avaya one-X Communicator 6.0 will provide ad-hoc video conferencing capabilities to Aura customers looking to use their PC or laptop as their primary interface to multiple, integrated communication and collaboration tools. Presence and IM federation, tight integration with Outlook, Communicator, Microsoft Office, IBM Sametime and Lotus Notes, video interoperability across Avaya’s portfolio and third-party endpoints, and centralized management through Aura, make Avaya’s one-X Communicator UC solution an appealing option for desk-bound knowledge workers and other heavy communications users.
Avaya also announced its Avaya Aura Collaboration Server – a virtualized platform delivering all Avaya Aura 6.0 core capabilities, including the Session Manager, Presence Services, Communication Manager and System Manager, on a single server. This is a cost-effective (list priced at $27K) solution for up to 50 users that allows businesses to leverage Avaya Flare and Avaya videoconferencing while avoiding a large CAPEX commitment.
Avaya also highlighted its professional and managed video services capabilities, which will be key in complex environments and with businesses lacking sufficient in-house expertise to deploy and manage advanced video applications on their own.
Finally, Avaya launched the Avaya web.alive Experience – a cloud/SaaS-based collaboration solution featuring a 3D environment with avatars. Avaya web.alive enables users to collaborate using audio or video conferencing and sharing presentations and other content. Businesses can license a “space” within that environment and then customize it based on their needs. It is also available for on-premises implementations when security and control are key concerns (for instance, in government deployments). While the avatars create the illusion of an immersive experience, their movement on the screen may be distracting to some users. They may wish to use a 2D version and still leverage the full range of collaboration capabilities available on the platform. The web.alive Experience is being touted as particularly effective in marketing and sales scenarios (when presenting to customers and demonstrating the capabilities of specific products or solutions) and in e-learning environments. The platform provides interesting analytics tools that can be used to assess the effectiveness of collaboration and each participant’s contribution to the collaborative process.
Some customers inquired about the possibility of Avaya delivering certain advanced features such as video call park, hold, transfer, and so on in the future. Avaya confirmed that it can eventually enhance the video capabilities using Aura. Avaya was also asked to substantiate its claims of significant hardware cost reduction compared to competitors. It responded that it had benchmarked itself against Polycom and Cisco/Tandberg and came up at a 20% to 30% cost advantage vis-à-vis Polycom and up to 70% cost advantage vis-à-vis Cisco.
During Q&A, Avaya also provided some clarifications around the deployment options for the new video solutions. All new capabilities are available with Aura 6.0; however, previous Aura versions, as well as IP Office, can be front-ended with the Collaboration Server in order to leverage existing infrastructure and take advantage of the new capabilities. Additionally, through Aura, other vendors’ telephony platforms can also be integrated with Avaya’s video solutions. Furthermore, Aura provides bridges between Avaya’s new SIP-based solutions and existing H.323 video systems.
With the new announcements Avaya once again demonstrated its commitment to innovation and continuously enhancing the value of its products and solutions. It’s made some strong claims about the cost efficiencies and productivity benefits of its solutions and it remains to be seen how those become realized in individual customer scenarios. Also, Avaya has traditionally benefited from its more partner-centric approach (vis-à-vis Cisco’s one-stop shop approach), including in the area of video collaboration, and it will be important for Avaya to continue to function effectively in a broader eco-system. While the Aura architecture enables Avaya’s customers to leverage multi-vendor technologies for best results, it is possible some of its former partners may feel threatened by the new move. However, with the growing recognition of the value of videoconferencing in replacing costly travel and helping geographically dispersed teams collaborate more effectively, Avaya has rightfully sought to enhance its video capabilities. The new video solutions are likely to help it broaden its customer reach and add new sources of revenue.
My colleague Alaa Saayed and I have embarked on a new research project studying the market potential for managed telephony/UC services in North America. I also authored a managed services white paper which you can find here. We are defining managed services as managed customer premises equipment and applications and are clearly differentiating those from hosted or cloud services.
Here is a chart that shows what is typically included in managed services offerings:
Most vendors and channel partners reported an uptake in managed services throughout the recession. Workforce reduction led businesses to seek to out-task routine network management activities as a more flexible alternative. In fact, throughout the years, reducing labor costs and/or augmenting internal staff capabilities have represented the primary drivers for managed services. In cases of slow or uncertain growth, more cost-conscious businesses have chosen to maintain a minimal number of IT staff and frequently find themselves unable to handle peaks in activity or properly support the infrastructure when IT staff becomes temporarily unavailable (e.g. during annual vacations).
Furthermore, as the complexity of communications infrastructures increases and businesses look to consolidate not just networks and applications, but also the management of all their hardware, software and vendor relationships, managed services are becoming increasingly popular. Currently, businesses have separate arrangements with multiple vendors – for voice, data and applications. In multi-vendor voice environments, there could be separate contracts for each platform with multiple vendors, VARs and service providers. Managing all these relationships is costly and frequently ineffective in ensuring synchronized infrastructure upgrades and a migration to a more consolidated, tightly integrated communications environment.
Though the benefits of out-tasking infrastructure management to a single party seem obvious, businesses frequently perceive the move to managed services as presenting challenges on several levels. Internal IT and telecom staff fear they may potentially become obsolete as the managed services arrangement evolves and matures. Additionally, a managed services contract commits the business to recurring costs throughout the course of several years, which appears to increase the total cost of ownership (TCO) of the communications infrastructure. Also, for some verticals with dual budgets such as government and education, managed services can also help shift costs from CAPEX to OPEX, thus enabling these organizations to take advantage of certain subsidies and thus lower the TCO.
Nobody is particularly fond of insurance and likes to pay high insurance premiums. Yet, there are multiple occasions when we’ve benefited greatly from the mitigated cost of an unforeseen adverse event. In my mind, managed services provide similar protection with the added benefit of actual cost savings along the way. The frequently overlooked variable in a TCO analysis is the cost of downtime – in terms of lost revenues, customer dissatisfaction, etc. Third-party remote monitoring and proactive performance and QoS management can provide a safety blanket to businesses with round-the-clock customer-facing services such as healthcare, financial services, hospitality, etc.
The chart below identifies some triggers for managed services implementation in the large enterprise and SMB sectors:
Managed services will evolve over the next few years along several dimensions: some vendors will focus on greater SW support, blending maintenance and managed services with software assurance programs; other vendors will sweeten managed services deals with equipment financing and leasing arrangements; yet, others will package managed CPE with hosted/cloud offerings. Pricing will become increasingly more competitive. Customers can take advantage of vendor efforts to secure managed service deals and ask for better SLAs and various incremental benefits (e.g. SW upgrade support, more detailed reporting, etc.)
Any other thoughts on managed services?
I know I have dedicated quite a bit of blog space to discussing cloud and hosted communications. I have also, however, pointed out that premises-based solutions will continue to dominate the market for a long time to come. Growth in this market will be driven primarily by the replacement of the installed TDM base with advanced IP telephony solutions.
Multiple trends are converging to drive further penetration of IP telephony into the business market. The technology has matured, and concerns over voice quality related to jitter, echo, and packet loss are rapidly dissolving. Moreover, high definition (HD) voice is now promising to give end users a superior experience compared with TDM communications. Furthermore, the cost of advanced IP telephony solutions (including platforms, endpoints, and media gateways) is continuously declining, making them an appealing investment even for the more cost-conscious customers. The available pool of professional and managed services expertise is also continuously expanding, driving down the cost of IP telephony implementation and support. Finally, SIP is quickly becoming the de-facto standard for voice communications, and its wider adoption is enabling businesses to take advantage of IP telephony’s full array of communications benefits.
The above chart shows the evolution of convergence technologies and their value to businesses over time. Over the past 10 years, IP telephony has evolved and asserted itself as the communications foundation of the future. Today, we are at a juncture where customers have acknowledged the value of network convergence and are rapidly deploying IP telephony. We are estimating that about half of all business telephony users are on IP or converged systems, though only about 30% use IP endpoints. It is important to note, however, that convergence is a gradual, stepped process for most organizations even today. Most start small and then look to grow bigger by adding more capabilities, more sites, etc.
As UC technologies mature and decision makers become more aware of the benefits of UC, forward-looking businesses are beginning to transition to the next stage of convergence – that of application integration. Yet, it will be at least 3 to 4 years before UC becomes truly mainstream and more businesses integrate communications into business processes. For customers to transition to that final stage and realize the strategic benefits of communications-enabled business processes (CEBP), technologies need to mature further and become more exposed to the larger developer community so they can develop specific applications for specific uses.
My colleague Alaa Saayed just completed our World Enterprise Telephony Platforms and Endpoints research and here below are some of his findings.
The year 2009 can be defined as a very challenging, yet interesting year, characterized by landmark events and trends that will have a long-term impact on both technology evolution and competitive dynamics. On the negative side, 2009 was marked by worsened macroeconomic conditions, rising unemployment rates and a significant reduction of technology investments. Not only did the economic turmoil cause the sales of almost all major enterprise telephony vendors to decline at double-digit rates, but it also caused the demise of the former telco giant and one of the world’s premier technology companies – Nortel.
Nonetheless, history has shown that pulling out of recession often comes on the back of innovation and continued investment in technology development. In fact, the enterprise telephony sector has been one of the fastest and most efficient sectors to quickly adapt to these new challenging market conditions. Important actions that were taken to fight back the negative impact of the recession included major acquisitions and reorganizations (e.g. HP/3Com and Avaya/Nortel), the introduction of new flexible IP telephony solutions, the implementation of very aggressive customer programs, and increased focus on channel expansion strategies. Furthermore, 2009 was also marked by a significant uptake in certain advanced technologies and innovative delivery models such as SIP trunking, virtualization, hosted communications/ Communications as a Service (CaaS) offerings, SIP and SOA-based architectures (e.g. Avaya Aura), and professional and managed services. Finally, although it slowed down the pace, the economy did not completely stop the evolution of some of the key trends of previous years including enterprise mobility, collaboration, social media and open-source telephony. Social media, for example, enabled many telephony vendors to use non-conventional marketing methods to promote and communicate the value of their products and solutions throughout the recession.
It is no surprise the market plunged in 2009, but we do expect a modest recovery in 2010, with North America and APAC leading the way out of the recession and Europe maybe experiencing some continued challenges. This year, we expect positive growth in units, but close to 0% revenue growth. In the near term, there may be some continued hesitation in investment decisions– some Nortel customers debating what route to take, others waiting for Wave 14 to prove its value, yet others looking for cloud models to mature.
Over the next 5 to 6 years, however, we are projecting about 1% growth in revenues and about 3% to 4% growth in unit shipments. We expect customers with TDM systems to pursue IP telephony for both cost savings and productivity benefits, laying the foundation for advanced IP apps and future UC implementations. Infrastructure consolidation through SIP and SOA will be the other two drivers for IP telephony migration and further investments in this space. Towards the end of the forecast period, the user base should be almost all converted to IP , barring the impact of some unforeseen disruptive events. Cloud technologies may begin to have a larger impact in the long term restraining PBX line shipments towards 2014 and 2015.
Google has become a powerful force in the lives of many people. It certainly is my window to the World today as I land on the Google search page as soon as I open my eyes in the morning and before I go to bed at night. It has become a symbol and an icon, our “virtual home”, almost synonymous with the Internet, Internet browsing, and … the Cloud! With its presence already established in the consumer world, Google is also making an aggressive foray into the business market with a set of cloud applications.
Since I promised to post several articles on the raging battle between premises-based and hosted/cloud communications, I will dedicate this one to Google. So much has been written about it, that it seems there is nothing left to say. However, two of my colleagues – Subha Rama and Alaa Saayed – put together two very different pieces on Google that provide some unique value. Subha chose to look deeply into Google’s corporate culture and identified several major factors that have driven and will likely continue to drive Google’s success going forward. Alaa, on the other hand, managed to get a hold of Rajen Sheth, Senior Product Manager for Google Apps, and received some first-hand insight into Google’s vision for the enterprise market.
My key takeaway from the two articles is that Google’s success is largely due to the fact that it’s built on the tenets of the Internet and the Internet age. Its product portfolio benefits from the advantages of the web and the cloud; its culture and internal organization also derive their efficiency from applying the innovative spirit and democratic principles of the new age in IT and communications technologies.
Here I provide excerpts from both articles, as well as links to the complete versions on our website.
Subha Rama’s piece is titled: “Google: the IT Iconoclast ”, and it can be found here. According to Subha, Google’s success story is based on two simple tenets: “question established ways and have a healthy disregard for the impossible”. She writes: “As Google grandly outlined in its first SEC filing, its mission was “to organize the world’s information …. and make it universally accessible and useful”. Google believed that the most effective, and ultimately the most profitable, way to accomplish this mission was to put the needs of their users first. This has become more or less the governing principle behind almost all its product innovations.”
Then Subha goes on to ask “What makes Google, well… Google?” She believes that, at Google, “crazy definitely triumphs comfy”. She points to the fact that Google strives to hire only the best talent out there, people who are academically exceptional and are capable of thinking out of the box. You can find neurosurgeons and rocket scientists, in addition to nerdy computer engineers, among Google’s employees. Also, it continues to adhere to its Stanford culture, allowing employees to dedicate 20 percent of their time to work on their pet ideas. This is how products such as Google News, Orkut and Google Images came into being. Subha recognizes that Google employees are constantly challenged to think in new directions and come out with defining ideas. She further notes, however, that Google also focuses on productivity and enforcing deadlines so that it is not drowned in chaos, which can be so typical of highly creative environments.
Further, Subha discusses “the long-tail model”, which forms the foundation of Google’s strategy: “Google strongly believes in the long-tail model, that as the costs of online production and distribution fall, niche products and services can become as economic as mainstream ones. This theory forms the core of a cloud-based service delivery model, which while accommodating a wide variety of applications is not subject to the lowest-common-denominator principle that we apply in a physical environment.” According to Subha, this business model focuses on a large number of products, each targeted at a relatively small audience, thus addressing niche segments, and building customer communities in the process. Further she concludes that the Google business model is in fact based on openness, interoperability, decentralization and accessibility, the pivots around which cloud-based services are built.
Alaa Saayed tackled similar issues of corporate culture and success factors in his recent interview with Rajen Sheth, Senior Product Manager, Google Apps, posted unabridged here. In this interview, Rajen Sheth identified some of Google’s strategic directions as well as some of the key factors impacting Google’s success.
When Alaa asked Sheth if they were finding it difficult to migrate customers to Google Apps, Rajen admitted that it used to be very difficult, but things are rapidly changing. He stated: “Almost every CIO that I talk to is planning a cloud strategy and the value proposition of the cloud is very widely known at this point. For most corporations, now, it seems, it’s a matter of WHEN rather than IF they are going to move to the cloud for a lot of their core services…We are a serious player in most of the conversations we are having about messaging out there.”
Then Alaa asked Rajen about innovation at Google: “Google is well-known for its unwavering commitment to innovation…How is the process of innovation managed at Google”?
Sheth responded as follows: “Having worked in different companies, I could say that Google really operates in a very different way than a lot of organizations out there. It really operates in a way that spurs this innovation. I think there are a few elements to it. The first thing is that we are not afraid to look beyond what an existing space is all about right now, and so if you think about it, in many of the cases where Google has been successful, we’ve reinvented existing spaces … We take an existing space, not thinking about it in terms of how it is today, but what it should be, and how do we make it a brand-new experience”.
“Another big element to it is the notion of cloud computing, and that is actually one of the things that spur innovation. In many cases where you have to build packaged software, you are forced into a stream where you are releasing major updates every two, three or four years. The problem with that is that you have to think three, four-plus years in advance what is going to be the innovation that you want to push, whereas in reality, innovation happens all the time. With the cloud computing paradigm, we have it such that all our applications are centralized and we can update them incrementally, and that actually increases our innovation rate quite dramatically.
Finally, the Google culture definitely spurs innovation. The structure is very, very flat and people are encouraged to think, and to take risks, and think in brand-new areas. In fact, we have this philosophy that we call 70-20-10 and basically what it means, we put 70 percent of our effort in the core of our business, but we put 20 percent of our effort in new areas that are beyond the core business that we think might be fruitful. So we think beyond what is making money right now. Then we put 10 percent of our effort in completely off-the-wall things that may or may not see the light of day, may or may not be a great technology. There are definitely some great examples of technologies that have started out in that bucket and that have become some major areas for Google”.
I believe the discussion above clearly highlights the factors that will make cloud computing and cloud communications successful and will drive continued growth for Google itself. I will still caution, though, that the cloud is not for everyone – both on the supply and the demand side, but that is the topic of another post.