October 2006


Nicholas Carr reviewed Andrew McAfee’s recent HBR article.  

I’m reminded of most of the  speeches at Caesar’s burial. They begin by praising someone, but then go onto do the opposite, and get a crowd excited.  Unlike Mark Antony and Brutus, Nicholas is less than convincing this time. (Shakespeare and Nicholas do have similar views on the wisdom of crowds stuff though)

What Nicholas didn’t say is far more interesting.

Two weeks ago Nicholas argued rather smuggly that there has been no rebound in IT spend,  this, he feels, vindicates his IT doesn’t matter position (2003)

Andrew kicks off his article:

corporate IT spending has bounced back from the plunge it took in 2001. In 1987, U.S. corporations’ investment in IT per employee averaged $1,500. By 2004, the latest year for which government data are available, that amount had more than tripled to $5,100 per employee. In fact, American companies spend as much on IT each year as they do on offices, warehouses, and factories put together.

Nicholas didn’t challenge this. That is because the facts are on Andrew’s side. IT spending is up. Organisations are spending even more money on ERP and other Enterprise stuff than ever before. SAP and Oracle’s financial results illustrate this clearly.

AMR backs up Andrew’s point with some  soothsayerisms,

AMR Research forecasts U.S. companies will increase their ERP budgets by 11.3 percent in 2007. “This year and next will experience levels of ERP investment that we haven’t seen since the late 1990s,” said Jim Shepherd, a senior vice president at AMR Research. “At that time, new customers were replacing legacy systems with ERP suites. Today, spending is driven by a healthy mix of new customers, consolidation projects, add-on applications, and deployment to additional users.”

Most industries would call an 11.3 growth pretty good. And this is boring old utilitiesque ERP. Additionally, if we look to the booming hip SaaS sector, we see SFDC, successfactors and others doing really well too. Collaborative tools like wikis are taking off (Socialtext and others are doing rather nicely)

Andrew’s final sentence is key,

Vendors offer a wide range of FIT, NIT, and EIT, so these technologies are not rare and seem to be highly imitable. However, people often forget that while the software itself might not be any of those things, a successfully implemented system isn’t easy to replicate. Because of the managerial challenges inherent in its implementation, IT meets all four criteria when a company succeeds in applying a technology and, consequently, gains valuable capabilities.

 I’m not the only one that thinks that Nicholas gets it wrong. Neil over at  Macehiter Ward-Dutton notes

However, I disagree with Carr’s conclusion:

McAfee’s article may not be quite as clarifying as it is intended to be.

Had McAfee had stopped at the classification then I would have agreed. It’s the marrying of the technology classification to the organisational implications where McAfee clarifies things, since it helps to facilitate a dialogue between business and IT in a language which both sides understand. Equally importantly, it moves beyond the technology selection phase to outline the role of the business during adoption and subsequent exploitation.

Nicholas picks up that Andrew’s 3-tier model is  a simpification of reality, and it doesn’t work in all contexts. But no model does.  Sitting here in software land I find the model more useful than blunt 1.0 vs 2.0 oversimplifications.  Does the model help managers understand IT better? Well yes it does.  In a page or two of an HBR article packed with case study snipbits one can’t really expect much more.

Nicholas, as a former editor, should know that Harvard Business Review is not really an academic publication- It is aimed a business manager readership, and lets us businessy types think that we are reading something academic. That makes us feel cleverer than we are, and that is a nice, warm feeling.  It is made up of short, interesting thought pieces but it is not the home of rigorous academic model building.  I think it is a fabulous magazine, no mistake.

I’d suggest that Nicholas should read this paper from Andrew and his colleagues, Erik Brynjolfsson, Michael Sorell, and Feng Zhu.  It is dense, heavygoing and empirically sound.  And it knocks his IT doesn’t matter argument for a Kevin Pieterson.

 To quote a bit….

This section empirically investigates the effects of rapid IT adoption on the competitive dynamics of US industries. As Figures 1a and 1b show, the U.S. economy became substantially more IT intensive from 1987-2004. Figure 1a plots corporate IT stock (at historical cost) per FTE by year; the graph shows accelerating IT intensity from 1987-2000, followed by two years of decline corresponding to recession. IT  per FTE resumed its upward trend in 2003. By 2004, at more than $2,600, it was the highest it had ever been and was more than three times higher than it had been in 1987, even before adjusting for the large increase in real computing power delivered per dollar of expenditure. Figure 1b plots IT’s percentage of total investment in tangible wealth each year, together with the equivalent percentages for equipment and plant (the three values for each year sum to 100). IT’s share of the total increased more than 10% during this period to almost 23% of total tangible wealth.

Stretching my Shakespeare metaphor beyond repair, it is time for Nicholas Carr and Andrew McAfee to meet at Philippi. 

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Like at Office 2.0, when the crowd wanted to know how to sell Web 2.0 into the enterprise and I said, “Um, the chaotic and grassroots nature of Web 2.0 is antithetical to enterprise. However, I do see the next generation of potential employees disrupting all that is enterprise anyway. I believe the nature of business itself is changing. It’s only time before the grassroots disrupts it.

If you read some folks in the blogsphere innovation is a magic dust sprinkles down only on folks that embrace chaos, cluetrains, grassroots, and openness.   Lots of these folks believe governments and big enterprise are evil bureaucracies that trample on the innovation flowerbed.  They predict revolutions and wholesale corporate carnage.

Indeed, many inventions and innovations percolate, and are serendipitous.  Post-it is the poster child, and every organisation can point to their own fabulous innovation that came from the deep cover boundary (cricketing equivalent of left field)

But I’ve a problem with an anti-enterprise dogma. I don’t buy that the workers will revolt with web 2.0. (workers of the world unite you have nothing to loose but your second life)  and I’ve reached my tipping point with the long tailed wisdom of the crowd. Not because of my deep rooted enterprisey conservatism, but because I’ve checked out some history.

”The likely prime reason for U.S. software supremacy is a paradoxical one –government support for the industry. The paradox arises from the fact that, although the United States is non-interventionist in principle, in practice it promoted the early industry massively by creating a market for computers and software through programs such as the SAGE project, the Department of Defense’s ADP program, and the NASA program, to mention only the largest..”  check out his book Martin Campbell-Kelly, From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry, MIT Press, Cambridge Mass., 2003.   

So, next time someone says check out this cool 2.0 thingy, remember that the biggest bureaucracy of them all made it happen.  No DARPA, No Internet.  If there is an innovation that is going to revolutionise anything anytime soon, odds are, a government or a big corporate somewhere is funding it. 

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Oh dear, Over on the cyberlaw site at Harvard I came across a paper I’d seen before but not actually read. I read it last night. Spam Works: Evidence from Stock Touts and Corresponding Market Activity.  by Frieder and Zittrain. Read it. It is scary stuff.  Here is a quote….

We match price and volume data from Pink Sheets, LLC to ticker symbols that appear in email touts received by one of the authors and by the Internet Usenet newsgroup net.admin.network.abuse.sightings (“NANAS”) between January 2004 and July 2005, and compare the presence and volume of spam that touts particular stocks with the price and volume behavior of those stocks before, during, and after the touts.

We find a significantly positive return on a day of heavy spam touting of a stock, along with the day preceding our detection of such touting. Volume also responds positively and significantly to heavy touting. Returns in the days following touting are significantly negative. Though we have no way of directly knowing if the spammer actually has holdings in the spammed stock apart from the spammer’s own admission, when it appears, and the surmise that some pecuniary motive inspires sending the spam, the evidence accords with a hypothesis that spammers tout stocks in order to increase trading activity and price enough to unload their positions at a profit. Selling pressure on the part of the spammer then results in negative returns following heavy touting.

Does this worry anyone else? Bill Gates reckoned he would have the SPAM problem fixed by now, but we are absolutely miles from any kind of resolution. SPAM filters are not the cure, they are  band-aids applied to a bullet wound.  The Internet is not all huggy huggy web2.0 goodness and freedom. Surely the SEC and others should go after these folks?

 Check out the Spamhaus site for more details on the extent of the spam problem. Neither existing laws nor the current Internet governance seem to be workin. Spamhaus noted in 2003  that

As an international organization, but one which is based in the United Kingdom where the sending of Unsolicited Bulk Email is now illegal, Spamhaus sees the introduction of the CAN-SPAM Act of 2003 (S.877/HR 2214) as a serious failure of the United States government to understand the Spam problem.

3 years later it would seem that they were right.  I do find it rather odd that the organisation leading the fight against spam is a 25 person non-for-profit organisation.  The UK government won’t fund them, and they rely on donations to keep operating.

The spamming software is getting more sophisicated.

“Although we’ve seen automated spam networks set up by malware before…this is one of the more sophisticated efforts. The complexity and scope of the project rivals some commercial software. Clearly the spammers have made quite an investment in infrastructure in order to maintain their level of income,” the advisory concludes.

Geeklawyer  led me to a case in the UK and the US  relating to spamming .  This has all the making of a Rumpole episode. Details here and here I think. Zoli suggested an approach to deal with some of the spam you get. In addition to Zoli’s point, stick the FTC on cc. According to the FTC website.

If you get spam email that you think is deceptive, forward it to spam@uce.gov. The FTC uses the spam stored in this database to pursue law enforcement actions against people who send deceptive email.

enough said.

 

I prefer Emergence and emergent  to Enterprise 2.0, as I ranted recently One of the folks at SAP who walks this walk is Craig. He is one of the main guys driving SDN at SAP, and he has an interesting personal blog too, never mind all his SDN evangelising.

I’ve read a lot about the Office 2.0 event, but I really enjoyed his post on why he was there.

….ways for the Information Worker of tomorrow to get their jobs done we’ll see more and more ways of integrating enterprise levels processes into online and collaborative environments.

This is not that far away from what Kagermann said to AMR the other week.

Herewith AMR talking to the SAP CEO.

AMR Research: What do you think of all the buzz around Web 2.0?

Kagermann: (He laughs). Hasso was just here yesterday saying that we need to do build more Web 2.0 into our software. (He is referring to Hasso Plattner, one of SAP’s cofounders and his predecessor as CEO at SAP.) With SOA, you can have all these different user experiences with 100% business system integrity.

AMR Research: Inside SAP, your company is using a lot of collaborative tools like wikis. Do you see these becoming part of future SAP products? The primary concern seems to be the lack of security.

Kagermann: You’re right. We will add wikis and other tools when we can tie them into our security layer.

I’m not sure the future of E2.0 is only about startups spelt without vowels. SAP Ventures was an early investor in Socialtext, and SDN is not only a growing network, but a fabulous live experiment in emergence.  As with any new space, new players will spring up but it would be a mistake to assume that the enterprisey crowd will miss this train.  Is just my SAP zealot glasses  or SDN have something of the cluetrain about it?

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If anyone asks me for Netweaver-SOA  impact evidence,  the first thing I point to is the GUI.  I have commented on Duet, AJAX and Adobe in an SAP context before.  The decoupling of application logic and GUI layer has laid the groundwork for a lot of innovation and change in application presentation.

The other week  a customer told  me, “It is all very well all this openess business, but it is a bit confusing with all these options.” He was right, and this is not the first time I have heard this. Choice means decisions. 

Well, SDN to the rescue again.  Herewith the first of several whitepapers on SAP GUI strategy. (Hat tip Filip, and I’m sure he would appreciate feedback, postive or otherwise)

The paper provides a description of the Muse project (mentioned at Sapphire and Teched), - SAP’s approach to Rich Internet Applications.  

I sense that we are moving to a world where the GUI will change often. As new UI concepts emerge, (often from the consumer space) then enterprise applications will  adopt them, but without disrupting core application logic. I think we are seeing the start of this now.

I’m always on the look out for cool examples of bespoke UI stuff. Last week I was sent a fabulous  example of employee performance management at a global pharmaceutical. Once I have a few more together I’ll post them.

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I spend a good portion of my time talking with large hairy and scary global companies about global systems. Often they employ 100,000′s of employees and make billions. The projects are complex and highly political, what with IT departments, users, executives,  consultants all with hidden and not-so-hidden agendas.

Projects often take on a political dimension that reminds me of Yes Minister.

Sir Humphrey: It is characteristic of all committee discussions and decisions that every member has a vivid recollection of them and that every member’s recollection of them differs violently from every other member’s recollection. Consequently, we accept the convention that the official decisions are those and only those which have been officially recorded in the minutes by the officials, from which it emerges with an elegant inevitability that any decision which has been officially reached will have been officially recorded in the minutes by the officials and any decision which is not recorded in the minutes has not been officially reached even if one or more members believe they can recollect it, so in this particular case, if the decision had been officially reached it would have been officially recorded in the minutes by the officials. And it isn’t so it wasn’t.

Somehow they manage to get implemented but the software is the pawn in the corporate chess game..

I often search on Google for SAP related stuff,  and I found a gem this morning.   It made me think about a different type of global company. The small global company.  How do you make a global supply chain work, how do you handle multiple tax and currencies… Not easy when you are big, but a real challenge when you are small.

Next time someone says SAP ERP  can’t support small, innovative companies,  I’ll point them to the Lonely Planet.  While lurking in Google looking for examples of big global titans, I found this presentation from the SAP Australia User Group meeting.  I’m simply blown away by what they have achieved, in terms of ambition, scope, resourcing and speed. Awesome.  I’ll be showing this to the big guys next time.

The success factors are the same whether you have 100 or 100,000 employees. Lonely Planet stated:

    We over invested in ensuring that we had clearly defined roles and responsibilities for everyone involved in the project, including our partners

• We changed peoples personal goals to reflect their responsibilities

• All subject matter experts (SME’s) are full time on the project and have had their day job backfilled

• We appointed process owners and empowered them as a group of decision makers through the whole program

• The project team sits together (and celebrates regularly)

• The project sponsors are very actively engaged in all aspects of the projects

• We have invested in formal change management including technical writers, trainers, communication managers

If only every project did this. Lonely Planet rocks. 

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There has been a mixed bag of positive and negative blogger comment out of European Teched.   But SDN continues to receive lots of kudos, even from the modern day PyrrhoDennis.  David is also impressed.

 What’s unique is the scale of the thing, and the way that SAP is embracing the changes it will bring.  There are over  570,000 subscribers, it is completely open, and the core service is free – I’ve just joined this morning.  You can ask any question you like, and there is passionate community, 94% of which aren’t SAP employees, who are willing to answer questions.  As well as spreading their knowledge, and promoting their expert status, contributors are awarded with a points system, which gets them things like free entrance to TechEd (and badges!).  There is an complementary service called or Business Process Expert community.  This offers the same kind of facility, but aimed more at the business analyst and consultant community rather than developers, with around 50,000 members and only a little overlap with SDN

It struck me that one of the best ways to convert those that doubt the power of the wiki (and blogs for that matter)  as an enterprise tool, would be to suggest that they watch how the SAP Wiki on SDN develops.  Tesha Harvey and the gang from SAP have done a fine job in getting it up, I’m looking forward to seeing it fly..

Have a look at the BSP stuff and the Enterprise Services Packages as a start. This is the future of application and process documentation.  Put simply, it rocks.  No walled gardens here.

The Enterprise Services Packages Wiki, a section of the SDN/BPX Wiki, exists to explain what ES Packages are in general and to provide detailed documentation of the services offered for specific ES Packages. The goal of the ES Packages Wiki is to engage the community of developers inside SAP and those in the customer and partner organizations who are using services in ES Packages and to promote the sharing of information. That is why anyone who has an idea can add it to the wiki. We encourage you to learn and to share your knowledge. The ES Packages wiki is the place to do the following things:  

Learn about how to put the services in ES Packages to work building composite applications

Share tips and tricks related to the use of the services.

Share ideas for new composite applications that could be constructed using the services.

 if wikis can be used effectively for documenting software development and processes, surely they could be used to document any other multi-person process? Coupled up with workflow and the right security, I could imagine all sorts of document intensive processes on wikis, performance appraisals, audit reports, designs, contracts, compliance documentation.

 I will leave whether this is a revolution or not to Susan, but it seems to me that the content and document management space will never be quite the same again.

BTW. while over on the BPX site I saw a competition that may interest some of you.

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