Work smarter not harder

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Work smarter not harder
Presentation to Yorkshire Science Technology
Network Thorpe Park Hotel - Leeds 23 November 2006
Prof. Jim Norton Senior Policy Adviser UK
Institute of Directors Visiting Professor of
Electronic Engineering University of
Sheffield www.profjimnorton.com
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Issues to be covered

• Exponential growth in ICT price/performance.
• The rise of wireless
• The business context for ICT - 8 Cs.
• Customers
• Creativity
• Co-operation
• Commitment
• Final thoughts.

• Charging
• Competition
• Culture
• Cost

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The second half of the chessboard
Original idea George Gilder at the
Cato-Brookings Institution conference "Regulation
in the Digital Age," held in Washington D.C. on
April 17-18, 1997.
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The cost-performance of electronics doubles every
18-24 months (Moores Law)
33 Doublings
Source Analysys
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Moores Law in ActionIntel Microprocessors
2T/18
Source Intel Silicon Image
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Opto-electronics follow the same path (Moores
Law operates in telecoms, too)
33 Doublings
Source Analysys
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Gigabit Ethernet installed base growth
Millions
Source IDC Silicon Image
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The cost-performance of magnetic storage doubles
roughly every 18months
27 Doublings
Source Silicon Image
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Magnetic disk costs (3.5 platters)
Source IDC Silicon Image
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Coopers law for wireless
42 Doublings
Coopers Law, (after ArrayComm Chairman, Martin
Cooper), states that the number of conversations
(voice and data) conducted over a given area, in
all of the useful radio spectrum, has doubled
every two and a half years for the last 105
years, ever since Marconi discovered radio in 1895
Source ArrayComm
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The first half of the chessboard has already
delivered some surprises
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Issues to be covered

• Exponential growth in ICT price/performance.
• The rise of wireless
• The business context for ICT - 8 Cs.
• Customers
• Creativity
• Co-operation
• Commitment
• Final thoughts.

• Charging
• Competition
• Culture
• Cost

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First assertion Whatever starts uni-directional
becomes bi-directional

• ? 19th Century the first UK application of
  telephone technology was for one way
  narrowcasts of live theatre performances
• 20th Century paging gave way to the short message
  service (SMS) and
• 21st Century data traffic may well be dominated
  by peer to peer transfers (music, video.) rather
  than simple uni-directional streaming.

History suggests that, in telecommunications,
whatever we start doing as a uni-directional
service we ultimate seek to use two-way.and to
the broadest of bases.
Source Jim Norton - Speech to Cambridge 3G
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Second assertion Fixed operation always leads
to mobile demand
? Telegraph and telex gave way to paging and
SMS ? Fixed line phones overtaken by mobile
phones(As of end Q1 2006, UK business and
residential fixed lines 33.82M, UK mobile lines
62.07M - Source Ofcom Sept 06)(for comparison
mobile phone penetration in Italy is now 115! -
Source Ofcom quoting national regulators data
2005) ? US Laptop/Palm computer purchases
overtake desktops. (US consumers in May 2003 for
the first time spent more money buying notebook
computers than they did on desktop PCs,
highlighting a shift to mobile computing devices
that has been accelerating in the past few years
- Source FT 3 July 03.)
History suggests then that, in telecommunications,
whatever we start doing through a fixed
infrastructure, we will inevitably seek to do
with complete mobility.
Source Jim Norton - Speech to Cambridge 3G
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Third assertion New applications are pioneered
on the fixed networks first
It is seldom the case that truly new applications
appear first in the mobile world. Whether it is

• that wonderful euphemism adult services
• gambling
• multi user gaming
• health
• education or
• television

They have been pioneered - and the first
customers trained to demand them in the
tethered world. This should not be a surprise -
historically cost and capability have favoured
the fixed environment However, this may change
in the future with location based services,
mobile wallets and RFID.
Source Jim Norton - Speech to Cambridge 3G
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Results from our recent survey
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Results from IoD Dell study SMEs successful
growth through ICT investment

• Technology is still seen as key to realising
  ambitions for business growth. 87 of
  respondents wanted to grow their businesses. Of
  these, 85 saw ICT investment as key to
  facilitating that growth
• Use of wireless has become ubiquitous. In 2004
  57 of respondents used wireless in their
  businesses, compared to 77 in 2006. Of those
  who used wireless technologies in 2004, 6 used
  wireless to access e-mail compared to 94 in 2006
• The critical importance of ICT is now better
  understood. In 2006, more SMEs were more
  inclined to admit concerns about ICT than in
  2004. In 2006 the lead concerns were Business
  Continuity (71) and Data Security (68).

Source IoD Dell Report Small Medium
Enterprises successful growth through ICT
investment Sept 06
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Source IoD Dell Report Small Medium
Enterprises successful growth through ICT
investment Sept 06
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The Broader Wireless Story
Source British Telecommunications (BT)
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Mobility Range Opportunities

• Mobile radio access networks are designed to meet
  certain maximum requirements for grade of
  mobility and range
• WLAN are designed for high data rates, low ranges
  and generally low mobility
• WiMax (802.16e) will extend WLAN data rates to
  wide area coverage across cities

Source British Telecommunications (BT)
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Services Evolution

• Source UMTS Forum

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Issues to be covered

• Exponential growth in ICT price/performance.
• The rise of wireless
• The business context for ICT - 8 Cs.
• Customers
• Creativity
• Co-operation
• Commitment
• Final thoughts.

• Charging
• Competition
• Culture
• Cost

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The new e-business context..or how not to get
lost in the desert

• E-business is evolving at a fearsome rate.
• How can we determine the best approach?
• Some old business landmarks do remain firm in
  this shifting landscape.

Focus on the business and not on the e
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Eight key landmarks to navigate by

• Customers
• Creativity
• Co-operation
• Commitment
• Charging
• Competition
• Culture
• Cost

The eight Cs of e-business strategy...
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Customers - serving them better...

• Outsourcing cost to customers yet improving their
  satisfaction.
• Developing one to one marketing based on
  detailed customer profiles.

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Outsourcing cost to the customer.Dell
Source http//www1.euro.dell.com/content/default.
aspx?cuklensgen
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Outsourcing cost to the customer.Jali
Source http//www.jali.co.uk
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Outsourcing cost to the customer.Jali
Source http//www.jali.co.uk
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Creativity - new value propositions...

• Using the transaction information available at
  marginal cost to generate new value propositions.
• Fundamentally transforming business models.

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New value in pharmaceutical retailing.routing
all purchases through a single site and gaining
automatic warning of adverse drug interactions
Source http//www.drugstore.com
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How can you create value from an online pharmacy?

• Drugstore.com offers superior customer service
  and a host of value-added features, including
• eMedAlert, which alerts members about drug
  warnings, updates, and recalls
• the Drug Price Index, which shows consumers the
  price savings from purchasing larger quantities
  of a drug or choosing a generic version of the
  drug
• the Drug Information Database, which lists all
  relevant data about the drugs stocked by the
  drugstore.com pharmacy
• the Drug Interaction Checker, which provides
  information on drug interactions, including
  drug-drug, drug-food, drug-vitamin, drug-herb,
  and drug-alcohol interactions and
• the Generic Insider, which notifies customers if
  a branded drug they are taking becomes available
  in a generic form.

Source http//www.drugstore.com
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Co-operation - new types of intermediary

• Customers agents for collective purchasing or to
  manage risk.
• Suppliers agents to generate critical mass from
  a large number of small companies

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Co-operatives acting for small businesses...
Source http//www.agriculture.com
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We are seeing a wave of new intermediaries
Whilst existing intermediaries (physical
realtors, travel agents, financial advisers,)
may see their traditional roles severely
threatened, many new opportunities are created.
Infomediaries are an example. They

• can resolve the privacy dilemma between the
  consumers desire for privacy and the industries
  need for information...

• support confidence building services such as
  holding payments in escrow against fulfilment

• give new opportunities for the resolution of
  taxation challenges

• add real value for the consumer.

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Commitment - ensuring fulfilment works...

• In a gold rush those who are really smart get
  there fast and sell shovels.
• Enhanced safety and stability in the fulfilment
  backend rather than the dot com front end.

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Charging - linking directly to value created

• Many business are threatened not because they no
  longer add value but because e-commerce
  undermines their existing ways of charging for
  that value.

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Travel Agents inherent cross-subsidy is lost
It is now very difficult to book seats on
budget airlines other than on the Internet
Even traditional carriers offer e-ticket
discounts
Source http//www.thomascook.com
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Competition - leveraging brand into new markets

• Using brand to transfer trust into adjacent
  market segments without building new businesses

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WALMART carries ten times more lines on its
Website than in its largest store...
Online sales via Walmart.com reached 1.17Bn in
2005, a 50 increase on 2004
Source http//www.walmart.com
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Culture - keeping the team onside

• Valuing creativity
• Giving people genuine authority
• Developing the best blend of systems and people
• Avoiding attrition

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Leadership of ICT enabled business change must be
at Board level
Source IoD Business Opinion Survey researched
May 2006
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Sectors vary on the degree of Board-level
leadership of major change
Source IoD Business Opinion Survey researched
May 2006
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What is the typical budget split between
technology spend people spend in major business
change?
People spend includes business process
re-engineering, internal communications,
training, changes to performance measurement,
reward,
Source IoD Business Opinion Survey researched
May 2006
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There are significant regional differences in the
people - technology split
Source IoD Business Opinion Survey researched
May 2006
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Cost - driving it down through new approaches

• Pushing stock holding elsewhere in the supply
  chain.
• Increasing competition among sub-contractors
• Enhancing logistics
• Gaining cash flow at the expense of suppliers

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The chemicals sector as an example...

• Bulknet.com Bulk
  chemicals distribution logistics centre.
• CheMatch.com Commodity chemicals
  exchange
• ChemConnect.com Auction site
• Chemdeals.com Trades off excess
  inventory
• Chemdex.com Trades laboratory
  chemicals

• Chem-etrade.com Speciality chemicals
  marketplace
• ChemSource.com Index site
• GlobalBA.com Site that includes
  distributors
• Lotsofplastics.com Trades surplus raw
  plastics
• Chemmerce.com Chinese chemicals marketplace

A darwinian process - all these sites were
operating six years ago. Those in red italic are
now gone or merged.
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Evolution in B2B exchanges (1)
In the B2B space, infomediaries in the guise of
the next generation of trade exchanges will

• change the balance of power in entire sectors by
  aggregating the purchasing and selling power of
  large numbers of small companies
• foster (rather than destroy) supply chain
  relationships for collaborative development,
  innovation and the creation of competitive
  edge
• offer options to manage the risk associated with
  just in time approaches to inventory management

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Covisint represented a key test case
E-business is not about incremental improvement
e-business is a fundamental redesign of the
enterprise. Web sites that offer incremental
solutions for isolated aspects of your business
do not enable you to reap the full benefits.
Covisint will address your entire business, link
you to the entire industry, and provide a
foundation to accelerate you into operating at
Internet speed.
Source www.covisint.com
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Evolution in B2B exchanges (2)
In the B2B space, infomediaries in the guise of
the next generation of trade exchanges will
also

• maintain online registers for the location of
  scarce resources or high value spare parts
• support escrow accounts as part of a payment
  offer in order to transfer payment upon agreed
  fulfilment
• develop anonymised and accurate market
  intelligence based on aggregated actual
  purchasing behaviour
• help to manage exchange rate risks and
• provide real-time on-line credit search for
  accreditation of third parties

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Issues to be covered

• Exponential growth in ICT price/performance.
• The rise of wireless
• The business context for ICT - 8 Cs.
• Customers
• Creativity
• Co-operation
• Commitment
• Final thoughts.

• Charging
• Competition
• Culture
• Cost

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HG Wells prophetic vision of the future, The
Shape of Things to Come, 1933

• It is remarkable to note how long mankind was
  able to carry on without any knowledge
  organisation whatever. Nor was there any
  conception of the need of a permanent system of
  ordered knowledge, continually revised, until the
  20th century was nearing its end. To those of
  an earlier age our Fundamental Knowledge System
  with its special stations everywhere would
  have seemed incredibly vast.

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We are drowning in data.
Where is the life we have lost in living? Where
is the wisdom we have lost in knowledge? Where is
the knowledge we have lost in information? T S
Eliot, Choruses from The Rock, 1934
And a codicil for the 21st century Where is the
information we have lost in data?
The World produces more than 2 Exabytes (2
Billion Gigabytes) of unique information per
year, more than 250 Megabytes for every man,
woman and child on earth
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A scenario for communications in 2010
Handheld (thin client) network processors will be
displacing PCs, laptops, mobile phones High
Altitude Platforms will start to address the
broadband access divide. Wireless PANs, LANs,
MANs will be ubiquitous. Key technology/market
characteristics

• long duration micro fuel cells for portable
  devices
• separate screens based on flexible amorphous
  semiconductors
• continuous speech voice recognition displaces
  full keyboards
• multi-level biometric personal authentication
• Virtual Network Operators (VNOs) providing single
  sign on and unified billing across multiple
  physical networks and
• bulk processing and storage sucked back into the
  networks behind a professionally managed security
  perimeter.

By 2010, the idea of being tethered by cable to
any kind of physical infrastructure will seem
remarkably quaint
Source Jim Norton - Broadband Futures paper
published March 04
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Some final thoughts.

• We have seen exponential growth in the
  performance per unit price of the key ICT
  technologies. This will continue. Total
  mobility and web based applications are the next
  steps
• It is essential to plan around business pull
  and not technology push
• Getting people and process correct is far more
  challenging than simply implementing the right
  technology.
• Exploiting ICT is now an integral part of success
  in traditional business, bringing major cost
  savings, service enhancements and new business
  opportunities.

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Questions Answers
Slides available to download from http//www.prof
jimnorton.com/iodyf1.pdf