Blogging Break

I must apologise for the lack of content in the past few weeks. I am currently working on a number of new posts and hope to upload them soon.

Coming soon:
Open Source Education
Thin Clients On The Move
Wouldn’t It Be Cool

If you have a problem, if no one else can help, and if you can find them, maybe you can hire…

What happens when the business turns bad? When they have a technology problem and no matter how much effort and unblocking they throw at it, their own IT function has neither the skill nor expertise to fix it? Why they create their own special A-Team.

 

I scan the horizon for technology trends all day so find it interesting when I start to see a new industry behaviour develop. An industry of mercenaries / consultants that will work around policy, people and procedure to execute on behalf of their customers fast. The difference is these IT mercenaries are employed by the business directly rather than the IT function itself.

 

Today things are moving this way but are not quite there. Say hypothetically I am a function of the business and decide I want telepresence. I engage my IT Rep, get the relevant staff to draft my requirements but am told by IT that it is not possible. All I get is a no, with some technowibble reason why not. I am wishing my IT function had some yes men but alas one of these new external mercenaries / consultants manages to bag some diary time.

 

Within a week there is a proposed solution to my problem. Not only can I have telepresence but my own mini data centre in the cloud. I have consumer grade broadband lines plugged into my building that no one in IT knows about and servers / hardware that also no one in IT knows about. 60 days later and having paid 3 x what I should have for the hardware and consultancy, the solution is in place. I don’t know I am paying 3 times what I should have for the hardware but as an end user the product appears to work and I am happy. The business is happy but what about the shareholders?

 

Shareholders are paying twice for IT. Once for the legacy thinkers who could not deliver and once for the external mercenaries who will do work on behalf of the business without IT. Actually they will end up paying four times for IT as the mercenaries will charge 3 x the market rate for their work and any hardware purchased. Oh yeah probably once more again when the business want to collaborate with another area of the business outside of their new homebrew IT environment. Both IT and the Mercenaries have failed in creating an IT Nirvana where everything just works at a competitive price. What is worse is that on so many occasions a corporation already has the talent internally to pull off this and much more complex projects. Yet they are stifled by hierarchy, policy and legacy thinkers within IT.

 

The fact that the democratisation of IT will kill the traditional IT function of a business is now an old concept. The business is increasingly voting with pounds for their own IT solutions through frustration.

 

What I see developing is that business areas will pick apart the old IT functions, taking the best talent for themselves to create their own A Teams. They will be set free of hierarchy, policy and legacy thinkers to collaborate and execute.  They will deliver; both the business and their A-Teams will be saying silently as not to gloat…

 

I love it when a plan comes together…

 

The best teams will be in high demand, merging between business units as projects are delivered. Although before my time I guess this is close to what the landscape looked like in my industry when many core banking systems were first implemented. The policy came later to protect the infrastructure but in time has stifled both execution and Innovation. Those who can circumvent it successfully will be successful, IT is not dead but I believe the slow mammoth it has become at many large corporations is soon to be extinct. IT will become interesting again and the best staff will flourish.

Packaged irrelevance; why do consumers still not get EXACTLY what they want?

Mass customisation has been on the horizon as long as marketing textbooks have existed (In my lifetime anyway). The problem is that apart from selecting the colours of, and getting my initials stitched into my latest pair of Nike’s I just don’t currently see it happening on a big scale; and I want it.

Let me start with education — A computer science degree if you will – There are always a number of modules that always seem to include the words history, introduction and fundamentals. Areas in which sign ups will most probably already know. They are charged in the region of £3,000 a year for this filler, and then as a nation we expect innovation, and the future of our country. Out of all industries I hope education changes first, and I do believe education in the UK is an industry that in too many cases pushes students along like a Model T on a production line.

Mass does not work any more – I would have liked to learn C#, Ruby, new product development, a little bit of an MBA and some public speaking thrown in for good measure. Now that would line me up well for a job in industry…. Today’s cost for my choice educational elements; £51k for tuition alone. (Circa £9k for Bsc + £40k for an MBA + £2k or so for a public speaking course) No student should have to do a module they are not interested in and pay for it to get letters after their name. As a customer they should pay for the study they want – exactly what they want..

Now that I have bored you all with my views re education I can move on to the main subject of my blog; banking. The bank I work for is currently making money through what we call the AVA or added value account, they go somewhat like this:

Not bad account: £10 per month inc phone insurance, car breakdown cover etc…
Slightly better account: £15 per month inc international phone insurance, international car breakdown, hol insurance and airport lounge access thrown in for good measure.

And what if I don’t have a car but actually like everything else on offer?? Don’t get me wrong, if the customer actually needs everything that is bundled with an AVA they can be great value. We bundle industry leading products at a discount to the customer while making a profit – Win/Win you may say, just not for me.

I wish I could offer my customers banking pick n mix / mass financial customisation along the lines of:

Current account, Amex, MasterCard, airport lounge access, 5 shirts ironed a week, virtual assistant, gym membership and a new iPOD every time the product range is updated. Now I’d definitely pay for that if I could get it as a package cheaper than buying each component separately. In essence I would be redirecting my purchase of recurring services through the bank for a discount. The killer app is being able to chooses exactly what I want from everything I would have purchased anyway, not pre-set AVA packages.

Actually I do this already through Quidco. The process is not as streamlined but allows me to purchase what I would have anyway at a discount for redirecting my shop through them, yet still allowing me to use the retailers I wish. These portal owners are redefining the way young people shop on the Internet. The UK has some of the most sophisticated affiliate infrastructure in the world to allow these relationships to take place. All that is required is for a bank to notice, capitalise on the size of their customer base and create a real win / win situation. Mass customisation at its simplest……..

Banking, the long tail, Gen C and the financial crisis

Disruptive technology, products and competitors appear in all sectors of commerce. It is how we take advantage of these that defines our customer proposition and competitive stance for the future. When ignored and magnified by social trends they can have devastating affects for soon to be past industry leaders and their shareholders.

In a recent interview Blockbuster CEO Jim Keyes states:

“I’ve been frankly confused by this fascination that everybody has with Netflix.”

 “I don’t care how many movies are available to me. As my personal taste as a customer, I want to watch the new stuff so whether we have 10,000 movies or 200 movies doesn’t matter.’’

In the Blockbuster Vs Netflix case market cap over the last few years puts this into perspective.

The product (DVD to rent) and the customers (people who want to rent DVD’s) are the same. All Netflix does is take a market where the customer proposition is acceptable and offers one that is good. More choice, flat fees, no late charges and no dragging yourself to a store in the rain. In addition they have leveraged web 2.0 technology providing customer reviews, user generated content and personalised recommendations. The killer app though is more choice, allowing Netflix to generate significant profit renting small volumes of older / niche / hard-to-find films to a much larger customer base than Blockbuster. This is a fundamental of Long tail marketing. In his book The Long Tail, Chris Anderson argues that the future of business does not lie in hits (the high-volume end of a traditional demand curve) but in what used to be regarded as misses (the endlessly long tail of that same curve).

In the Financial services industry there are a number of disruptive companies / products slowly attempting to increase their customer base; Paypal, social lending, mobile payments et al. Is social lending going to damage traditional banking – I don’t think so, the margins are just not large enough compared to the risk and inconvenience. However could a new product in the future significantly erode the market share of financial services providers? Most definitely.

If we look at how younger generations use technology we can see that if a product does not have a feature or function they will build it themselves and then rapidly share it with others. This can be observed with open sites such as Facebook and new devices such as the iPhone (Still no killer financial app). At the same time I observe communities eschewing traditional financial products for their own products that they themselves have created such as Chit funds within Asian communities.

I see the opportunity for and look forward to innovation and user generated financial products. I believe the opportunity is even greater in our current financial climate; consumers are in a panic, with no idea what to do with their assets. Property, stocks and oil are all in decline. Traditionally investors have liquidised these assets to cash or purchased metals. Palladium is falling in value, there is uncertainty over gold. In addition to this confidence in the UK banking system is weakening. The Financial Services Compensation Scheme (FSCS) only guarantees up to £35,000 of savings per financial institution. Where do medium to high net worth customers invest?

Art, until Gen C mavericks start developing killer financial products it would seem:

Against the current backdrop of financial carnage Damien Hurst has recently sold a selection of his work for over £95m at Sotheby’s, significantly above all estimates for the day. Proof enough for me that consumers are still willing to invest, they do however need new products that meet their needs and safeguard their investments.

Coming soon…

If you’re not going to do it, let someone else aggregate MY DATA; NOW ——– Allow them to do it securely and endorse the solution while your at it so we can all move on….

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