One of the most important concepts of the digital world is aggregation. The Internet gives us access to far more information and services than we can handle. We have to choose what we access, unless there is a way of bringing together relevant sources into one place. In this vein, Lycos has recently released a dating seach aggregator, which allows users to search for potential partners across iMatchup, loveaccess, Matchmaker, and True. One point provides access to all of the people across these sites. A company currently getting a lot of attention, Oodle, searches and aggregates classifieds listings across eBay, Craigslist and many more sites. Why go to the individual sites when an aggregator can give you access to them all? The increasingly open nature of the Internet, based on web services, published APIs (application programming interfaces), and other tools to integrate digital flows, means that aggregation is far easier to implement than in the dot-com days. Expect many more innovative plays in this space.
Nasscom, the premier technology commerce body in India, has just released a report saying that 35,000 legal jobs will move overseas from the US by 2010, while Forrester Research says that 12,000 legal jobs had already gone overseas by last year. A wide variety of US and UK law firms in particular have gone down the route of outsourcing not just back office work, but also professional work. Last year Hildebrandt – a high-end legal consultancy – and Office Tiger – an Indian outsourcing company – launched a service offering business process outsourcing to law firms, helping make this a mainstream strategy. One of the seven drivers of professional services I described in Developing Knowledge-Based Client Relationships is Modularization. This describes how technologies such as web services enable business processes to be broken down into smaller modules, each of which can be performed inside or outside the firm. Professional firms must have more standardized work done by cheaper providers, or they simply will not be competitive. It will take some years, but starting from now low to medium-level professional work will increasingly be done outside professional firms, and often across national boundaries. The shift has begun.
Money is information. It would make sense that as we rapidly become hyper-connected, financial services will be transformed. Yet the pace of change – so far – has been slow. We still use notes, coins, and credit cards for most transactions. Certainly Internet banking and bill-paying is standard fare, however the promise of e-money and smart cards is yet to be fulfilled. So what is the future of money? I gave the keynote address at a recent industry forum, organized by Online Banking Review to address this topic. The conference summary provides an overview of what the participants – including myself, Richard Watson of What’s Next, and senior executives from a range of global and national financial institutions – discussed at the event. Competition is at the heart of the matter, with a swathe of financial services entrants from sectors including retail, telcos, utilities, technology and more now more able than ever to move into the most valuable elements of the customer offering. Trust, distribution channels, and pricing were the other key themes of the forum. I’ll explore some of these themes in more detail on this blog over time.
The world of measuring intellectual capital has gone through some highs and lows over the last decade. Coming from a capital markets background, I was excited when in the mid-1990s significant attention began to be paid to the valuation of intangible assets, and I was involved in a number of initiatives of institutional investors to value intellectual capital. In a knowledge-based economy, the tangible assets of a company – which is all an accountant can assess – have little correlation to the worth of the firm. However I soon realized that a couple of decades of hard work would be required to get traction on the issues, and I was happy to leave that slog to others. Now some of the hard work is really starting to pay fruit. The GAP Congress on Knowledge Capital in Melbourne, Australia in early November has high-level government support, and will establish a “Melbourne Protocol” on developing and implementing intellectual capital reporting. The background reading provided for the conference provides a good overview of the current state of intellectual capital reporting. The current poster-child is Denmark, whose Ministry of Science, Technology, and Innovation provides guidelines to companies on how to implement intellectual capital reports, and where a broad array of companies provide supplements to their annual reports. Intellectual capital supplements will be where the real action will take place over the next years. The question is which of the major players in the reporting space: listed companies, investors, regulators, and third-parties (e.g. auditors), will drive the uptake?
The amazing eMachineShop represents a turning point in personal manufacturing. The company enables anyone to create machine-shopped pieces using a vast arrray of techniques including milling, extruding, thermoforming, water jet cutting and far more, on any choice of materials, to create whatever they want. The company provides free, extremely easy-to-use 3D CAD (computer aided design) software which automatically inputs into their systems, so you can, within an hour of having logged onto their site, sent off a design to be created. The applications are vast – in essence you can make for yourself anything you want, at a low cost. No more unavailable car parts or overpriced spare parts for machinery, and sculptors can simply imagine their sculptures rather than work for years to acquire mechanical skills. The next phase from here is the rise of “fab labs“, where the creation of the piece is done in your own office or home rather than having to be sent away. This truly is about power to the people. What will be unleashed by the power of these tools, available to anyone?
I frequently refer to online services exchanges to illustrate the inexorable drive of globalization and commoditization. These sites, such as Elance.com, Guru.com – both of which cover all personal services – RentaCoder.com specifically for software development, the Europe-based GetaFreelancer.com, and a host of others, allow anyone anywhere to post a job they need done, and to get talented professionals globally to bid their lowest price for the work. Graphic design, web development, marketing, writing, administration, sales – anything that can be done virtually is offered on these exchanges. Elance’s tagline “Everyday Outsourcing” says it all, particularly when 40% of work performed crosses national borders. The exchanges first rose during the dot-com boom, then struggled, with notably eLance changing its model – as many other B2B exchanges – to selling software and corporate processes to complement the actual exchange itself. Now the approach has been validated and increasingly, independent professionals are offering their services online. The most obvious implications are global competition, and that services are becoming commodities. Most professionals who experiment with the sites are shocked at the prices at which some people are prepared to offer their services. Yet some people do make a good living from the business they win on the exchanges. The exchanges bring home the idea of “polarization” that I believe is one of the key aspects of the future of work. Many people around the world will find their work increasingly commoditized in the face of global online competition, with constant pressures on fees and their livelihoods. However those who have deep specialist knowledge, and can create unique insights and value by collaborating with other knowledge specialists – be they colleagues, professionals at other firms, or at their clients – will command an increasing proportion of economic value. These are realities of the network economy. Yet we must guard against the dangers brought about by this polarization.
The New York Times reports on increasing valuations for start-ups, with venture capitalists having to pay more to get into deals such as the recent rounds for the school social networking company Facebook and podcasting platform Odeo. That these companies are so hot is a great illustration of the themes explored by this blog.
On another level, this is one possible early-warning sign of another tech boom. For around four years now the technology sector has been subdued, hardly surprising after the extravagances of the dot-com boom. What’s interesting is that in this decade we have in fact seen many of the wild predictions of the late 90s quietly come to pass. Moving on from the selling-pet-food-over-the-Internet phase of technology commercialization, there is now a swelter of new technologies and – more importantly – applications that are compelling (or at least appear to be). Social networking technologies, pattern recognition, bioinformatics, new generation content production and distribution, location-based services and far more represent some of the new wave of opportunities. I believe it is inevitable that at some point within the next five years we will go through another technology boom, perhaps not dissimilar to that of the turn of the century. Those fateful words: “This time it’s different,” will be heard. So for those that missed out on the first boom, position yourself well!
The news that Google is moving into print advertising has aroused strong interest and commentary across the web. It is buying full page advertisements in technology publications, and slicing them into smaller pieces to sell to existing advertising clients. This is the first time Google has done anything outside the Internet. However advertising accounts for 99% of its revenue, so it’s equally fair to characterize it as an advertising company as an online search engine. One of the key features of the print ads is that Google supplies its own 800 numbers for people to call in, with calls forwarded to the advertisers. In the first instance, this allows direct measurement of results, in the same way as online advertisting offers. Google clients pay for clicks from online advertisements through to their website. Receiving a phone call as a result of an ad is the offline equivalent of this. Om Malik suggests that the 800 numbers could be part of a Voice over IP play for Google, while Gary Stein of Jupiter Research sees a related move by Microsoft as leading to a “pay per call” advertising model. This relates to FreeConferenceCall‘s business model, that offers (surprise!) free conference calls, and makes money on the traffic carried on its infrastructure.
Internet advertising in 2004 rose 33% to $9.6 billion out of $358 billion of global advertising revenue. Not an enormous proportion, but enough to change how advertisers think about reaching their audiences. Google’s model – and the Internet generally – allows completely tailored targetting of advertising messages. This thinking is beginning to go beyond the online domain. How far will it go? Certainly to interactive television and interactive print. Once combined with location-based technologies, tailored advertising will start to become immersive.
In a startling development, the Australian Army is considering sending broadcast SMS for recruitment purposes. Presumably they would meet Australia’s strict Privacy Act, however this is not fully clear from the news release. Particularly as SMS marketing is a relatively new medium, people tend to respond negatively unless they have actively opted-in to receiving messages, rather than having forgotten to tick a box somewhere to avoid getting on a generic list that will be sold to all-comers, the Australian Army included. The Australian government has implemented strong ant-spam legislation, so it is rather disappointing that one of its arms is undermining those messages. Legitimate SMS marketing definitely has a role, but if the medium is abused, there will be a backlash.
The BBC has just announced that its television channels will be available on the internet. “MyBBCplayer” will initially give access to selected programs, then potentially simulcast entire BBC channels. It will also give access to selected television archives. This a significant step towards the internet becoming a true broadcast medium, though that will play out over a quite a few years yet. BBC taking this step will definitely encourage other broadcasters to consider their play in this space.
On another front, video blogging (known as vlogging) is rapidly gaining traction. There aren’t many vlogs yet, however they are growing apace as tools such as Vlog It! become available. What kicked blogs off in the first place were the early tools such as Blogger.com, that meant anyone could create their own personal web presence for free and with no technical expertise. In between the free-format vlogs and online television, you have initiatives such as former Vice President Al Gore’s new cable television network Current TV, which asks for its viewers to submit their own video content, for example on news ignored by mainstream media. The channel still acts as a filter and arbiter, however it gets its content from the community. Perhaps the biggest impact of Current TV, for now, will be to build video production talent in the community. Less than a month after launch, the jury is still out on whether it is, as it claims to be, true community television. Douglas Rushkoff believes it’s a “kind of MTV-News, without the news.”