Be on the wave or under it™

The News – 07/08/03

The Cheap Revolution, Part 4

In parts 1, 2 and 3 of this series, I talked about a variety of trends that are shaping both business and technology that I am grouping, or inelegantly lumping, together under the buzzword The Cheap Revolution. The buzzword was coined by Forbes, but I’m not letting that stop me.

Anyway, there is a bit of a paradigm shift occurring in business and in computing in which some of the conventional wisdoms are being challenged. Wisdoms like “Bigger is better” (get high end computers to manage large computing tasks; grow huge companies to gain efficiencies); and “Information wants to be free (it also wants to be expensive); and “You need to measure it to manage it (but analysis can lead to paralysis and the future’s coming faster, faster, faster).

The buzzword for the future of business is likely to be “Fast, Cheap, and Out of Control.” I’ll amplify a bit about the “Fast” and the “Out of Control” this issue and then let this topic alone for a while.

Of all the provocative things I said in the first three parts of this series, the claim that the pace of change is accelerating got the most comment. Last issue, I reported Prof. Andrew Odlyzko’s objections to this assertion and went on for a bit about why I agree with Ray Kurzweil that change is changing faster than before.

While it’s true that it still takes a while for technologies to catch on, they are indeed catching on faster in the last thirty years or so than they did in the previous thirty. Go to www.kurzweilai.net and check out Ray Kurzweil’s plots of the rates of adoption of various technologies.

Besides, we’re talking apples and oranges. I’m saying there are more and more and more emerging technologies as time goes on. Even if they all take the “normal” amount of time to develop and gain acceptance, there are so many of them, all firing randomly into the public’s consciousness, that the effect will be ever accelerating change.

It will get to the point that society can’t absorb any more. We can argue how long technologies take to mature and reach acceptance but you can’t deny that in the last decade multiple life and business changing technologies reached mass acceptance almost simultaneously: cell phone, Internet, laptop computers, PDAs, wireless LANs, CDs, DVDs, airbags - the list goes on and on. The last decade was a period of time unlike any other in terms of the quick assimilation of new technologies. It dwarfs the previous period (’83 – 93) and towers over the one before that (’73 – 83). If that’s not the accelerating pace of change, then I’m an avuncular ape decendent.

The point is: I don’t really care how long it took each of these technologies to go from lab to mass acceptance. There are so many more of them now than there were before, each egging others on in a virtuous circle. And it’s not going to slow down, at least until we reach some kind of societal saturation point. (Of course, one thing could slow this all down: a nasty global occurrence such as a depression or world war.)

I’m not saying the Bubble boosters were right. They don’t have to be right for this hypothesis to be right. However, they may have just been a little premature. The Bubble DID transform business. The Bubble DID transform our lives. The transformation wasn’t sustainable at the level the Bubblers brayed about, in part because of bad business plans, and in part because of curmudgeonly naysayers who were determined to bring down the hubris-filled dotcommies.

Frankly, I think the Bubble burst because Greenspan pulled back the money supply post Y2K. The Fed had increased the money supply in case there was a bank panic, and it was obvious they were going to rein it back in after the big date. (I just wish I’d done what I’d said I’d do: Get out of stocks in late December 1999!) It’s no coincidence that the Bubble burst roughly a quarter after 2000. The central bank just yanked the money supply back, and Greenspan pricked the Bubble. He did it on purpose to curb the “irrational exuberance.”

Of course, it was all a house of cards and bound to fall at any point. Greenspan chose a controlled crash at a time of his choosing rather than a potentially messier disaster.

Be all that as it may, just wait until nanotechnology really hits. Yes, I know it’s been in the works for decades. When you see the violent changes rolling through every industry, you’ll no longer disagree about the rate of change.

Alert SNS Reader Jeff Ellsworth takes issue with the entire idea of revolutionary technological change but then ends up coining a terrific phrase that could be the buzzword of Kurzweil’s Singularity:

I disagree on part of your theory on accelerating revolutionary technology.  I think that everybody is a little too quick to label something revolutionary. The telephone was [revolutionary] because of what it was compared to: Morse code! And, it took a serious amount of time for any new revolutionary product to take hold - one generation is the usual marketing allowance. The Internet in its revolutionary form had been around for well over a decade or so and the Web explosion was (as some other and more expert than me say) the acceleration part of the adoption curve.

What the dotcom bubble said was that adoption was accelerating and that everyone's products were revolutionary. When in fact most were dependant on truly revolutionary products and were derivative improvements. [Like] WiFi is to networking.

I do agree that there are more revolutionary products out there at the same time. That is, the phone stood alone for its period - whereas it is possible that there are a few [similar innovations] all becoming revolutionary and adopted products today.  Some would say this is not surprising since there are more things out there - therefore more things can be conceived.

“There are more things in heaven and Earth, Horatio, than are dreamt of in your philosophy.” That was the buzzphrase for an earlier millennium. This thousand years’ motto might well be, “There are more things out there; therefore more things can be conceived.” I couldn’t have put it better myself. Perhaps we’ll name it Ellsworth’s Maxim and I can bask in its reflected glory.

Leaving the change thing aside for a moment, I’d like to conclude this philosophical harangue with a consideration of how we are going to be Out of Control and yet remain undamaged. The key is self-organizing systems, otherwise known by the Forrester Research moniker, organic systems.

Now while what Forrester describes is really the first baby steps toward self-organizing information systems, the trend is definitely real and will eventually produce a computing fabric that can be out of control in the literal sense, while obeying organic laws to produce the desired effect. And, oh, by the way, it’s also Cheap, or at least cheaper than many current offerings.

But organic IT infrastructure is only one part of what needs to happen if businesses are going to be able to roll with the coming changes. (And by the way, many manufacturers claim to have learned from the Bubble and vow not to be left in the wake of the nanotechnology revolution. Prospective SNS Reader Orlin Melstrand sent along a pointer: “incumbent industrial interests are working hard to ensure that they aren't caught by surprise,” according to the Nanotech Report 2003 from Lux Capital.)

So all my yammering about The Cheap Revolution boils down to this point for businesses: We are just leaving the “Chewing Gum and Bailing Wire” era of business and business systems interoperation. The next wave will produce autonomic business systems that run quite nicely without all the messy human intervention that’s all the rage now. When demand at the customer ripples instantly and efficiently through the supply chain to tweak manufacturing or logistics or some other component, we’ll know finally that we’re not really in control.

I just hope the whole thing doesn’t run on Windows.

The Cheap Revolution Part 1
The Cheap Revolution Part 2
The Cheap Revolution Part 3

Briefly Noted

• Shameless Self-Promotion Dept.: It’s here: A new service from StratVantage – The WiFi Guys. The service is targeted at Twin Cities consumers and small businesses who buy the wireless networking gear, but can’t get it to work. We visit and get it up and running fast. Check out the Website at www.TheWiFiGuys.com.
  
  My feature article, Grid Computing Takes Off in the Enterprise, was published in the inaugural issue of Fawcette Technical Publications’ Enterprise Architect magazine. (Registration required to view.)
  
  I updated the Prediction Tracker page to reflect the rash prediction I make in an item below.
  
  My article, “Innovative Marketers Target Unwired Customers” was published in the NetSuds newsletter.
  
  Coming Soon: A new eBook, Be On the Wave Or Under It™ will collect the best of SNS’ insights over the last couple of years, along with additional material from CTOMentor white papers and new material. It will make a great gift (Independence Day?) for associates and friends in need of a guide to the latest and greatest technology. Watch for more information in upcoming SNS issues.
  
  Several issues ago I debuted SNS Begware, an opportunity for you, gentle reader, to express your appreciation by tipping your server via PayPal. See the sidebar for more info. Total in the kitty so far: $56.48.
  
  I repurposed and adapted an article about the wireless service known as Short Messaging Service (SMS) for the Reside newsletter. It’s entitled, Wherever they go, there you are and it points out how marketers can use – carefully – this new way to contact their customers.
  
  StratVantage has been accepted as a member of the World Wide Web Chamber of Commerce and now displays their logo on our Websites. In addition, I’m featured in Manyworlds’ Thought Leader Showcase, which lists a few of the white papers I’ve done. I’ve also added their fancy icon to the StratVantage site.
  

• Off-Shoring May Not Be As Cheap: Prospective SNS Reader Cal Butteris sent along an article that challenges some of the assumptions regarding savings companies can realize by sending IT work offshore. Industry analyst firm Forrester Research estimates that 3.3 million jobs accounting for $100 billion in wages will move offshore over the next 12 years. Those of us in the IT industry cringe when we hear the “giant sucking sound” produced by this trend. Most – 70 Percent – of these lost American jobs will go to India, with its large pool of English-speakers, a half million outsourcing workers currently, and more than two million college graduates every year.
  
  However, another pundit, Gartner analyst Debashish Sinha, says that enterprises may not realize the savings many outsourcers are touting. When you factor in transitional costs and add the management overhead needed to supervise a substantial overseas technology initiative, clients can't expect major cost reductions until year two or later. “In the first year, you'll probably see a savings of 18 to 20 percent, and maybe 25 to 28 percent the second year,” Sinha states.
  
  Heck, you can get savings comparable to that by outsourcing to rural America, using resources like Cross USA (mentioned in a previous SNS). And those folks not only speak English, they share our culture (well, OK, the Midwestern version of our culture), which can be a critical difference. What’s possibly even more important, they’re Americans, and thus companies aren’t shipping critical information and possibly trade secrets to a potentially unstable or copyright-abusing country (think China).
  
  To limit their exposure to a crisis, some companies outsource to multiple countries so that if there’s trouble in one country, the company can transfer its processing or programming work to another location. “You need two 'hot sites,' not merely a theoretical failover site,” cautions Priceline’s CIO Ron Rose. Processing must be able to be transferred almost instantly, and “You also need load balancing across both sites to ensure both sites are truly operational, and each site should be on a separate power and communications grid.”
  
  Plus, there are substantial upfront costs: travel (flying teams of programmers and managers back and forth), training, and establishing the infrastructure. When you add in expensive considerations like this, it’s easy to see how the attractiveness of paying overseas workers pittances (five or six years ago I was paying a senior Visual Basic architect in India $12 an hour) can be eroded.
  
  Basically, the offshore outsourcing question is too important to be left to the financial people. Enterprises need to ask themselves if putting their enterprise’s secrets and mission-critical processes in the hands of workers in developing countries – especially those with totalitarian governments – is the right move.
  CFO Magazine

• Of Course, I Can’t Win: Last issue I mentioned that the previous issue got tagged as spam by Spam Assassin. Well, since I mentioned the verboten words and phrases in the last issue, of course I got tagged as spam again. Can’t win for losing. So whatever you do, don’t mention drast1cally r3duc3 or 0pp0rtun1ty in your emails or you can get sent to the bit bucket. Some Internet Service Providers (ISPs) that offer Spam Assassin and other spam filters discard the emails before you ever see them. BTW, you’ll notice I adopted the standard spammer’s trick of replacing certain letters with numbers to beat the dictionary-matching algorithms. Of course, some spam filters also flag those enumerated words as well. Ah, well.
  
  
• From the “I Told You So” Department: I’ve been saying for quite some time that there’s no workable business model for providing wireless hotspots for pay. That point was central to my article, “Innovative Marketers Target Unwired Customers,” published in the NetSuds newsletter in May. There’s too much potential competition from free providers for there ever to be any real money in providing wireless Internet access to the public in anything but the controlled environment of an airport or a hotel. What did this wonderful bit of advice cost you? Nothing, nada, bupkis.
  
  Of course, if you like to throw big money around, you could have paid industry analyst group Forrester to advise you. They recently declared that most of the money spent creating public wireless access is being wasted. That bit of advice would have cost $295 for a report or bigger bucks for a consulting contract. Of course, Forrester throws in their tremendously unreliable forecasts: 286 million Bluetooth-enabled phones, laptops, and PDAs in Europe in 2008 compared with 53 million WLAN (wireless network) devices – mostly laptops; only 7.7 million WLAN users in 2008.
  
  When you examine the basis for Forrester’s opinion, however, you see that they don’t think there will be a lot of users (7.7 million) and thus that’s why the business models for wireless hotspot providers will fail.
  
  My reasoning is more basic. Only a fool backs a scheme whose major competitor is free. Free access from coffee shops (like the Twin Cities’ Dunn Bros., mentioned in the NetSuds article) and grassroots groups that have sprung up in metropolitan areas around the world will wipe out companies who try to make money by providing these services.
  
  Grassroots groups alone are a tremendous threat. These groups have a missionary zeal to spread free access far and wide. In fact, I fully expect some government somewhere to try to ban them or tax them out of existence (a prediction I made in March 2002).
  
  Sorry, Forrester, the for-pay provision of wireless hotspots anyplace other than controlled areas like airports and possibly hotels is a non-starter. No one will ever make any significant money doing it.
  
  So if you’d like to get a jump on competitors who use high priced analysts and hear now what Forrester will be predicting a few months from now, just hire me and I’ll tell you.
  Thanks to Prospective SNS Readers Charlie Price and Orlin Melstrand for the pointers.
  ZDNet
  

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