The Information Technology industry is changing and I am not sure that our biggest PC players have really noticed yet. Change is a normal occurrence for this business, so what is different now?
Every now and then a small company starts a tidal wave, which helps non-IT users get more benefit from technological advances. The last big change was the growth of the Internet and web applications; before that it was PCs; before that Distributed Processes, Mini Computers, Mainframes, etc. Now we have the move towards Software as a Service (SaaS) or the On Demand hosted applications model. Sceptics will view this as an evolution in the older ASP environment and say it has been done before. This time the fundamental changes could go much deeper and provide greater benefits for users who are still struggling (even now) with setting up PCs and Networks.
UK industry is still dominated by Small and Medium size companies (99.8% of UK Enterprises are SMEs), who are not able to spend the large sums needed to develop a fully functional operation in house, similar to those in existence within FTSE 100 companies. Their needs, however, are similar and productivity gains in the UK economy cannot be achieved without these systems – current productivity gains are lagging behind the USA and Germany by 15%. They cannot afford to call in major consultancy companies like Cap Gemini to develop their solutions or outsource with them. The latest news from Intel is that they believe future productivity and economic growth can even be effected by the lack of computer skills in the over 50 year olds, showing that IT is at the core of our society today and needs to be aligned with the abilities and skills of all workers.
The new era: large scale solutions even for small scale enterprises
The On Demand application environment enables smaller enterprises to gain access to large scale IT solutions for relatively low predictable annual user costs. As the application base grows in this environment the accessible capability will mushroom and all size companies can easily implement customer focused, financial and operational systems outside of their walls, in the ‘virtual world’.
All of the information held and large systems solutions will be someone else’s problem covered through an ‘insurance policy’ contract. The providers of these solutions will only survive if their customer’s information is accessible 24x7 and secure, so they are inextricably linked. This business process outsourcing has been a growing requirement in the larger companies for some time now, although not quite in the same way. Just think, no more software upgrades, difficult PC application integrations, server hard disk failures, backups and secure backups, virus attacks, SPAM etc. – well, I am not sure we will ever get rid of SPAM!
Eventually companies will not need offices full of PCs and Servers or even have the need for set office space. Employees will be able to log into the full suite of corporate applications from anywhere with a reasonable Internet connection, wired or wireless. They will even be able to connect to the office switchboard in the same way using VoIP applications, so will be carrying their phone extension with them on a laptop or intelligent mobile connections. Managers will be able to communicate via video conferencing and check activity through the logged system usage, plus pull of reports across the web.
This new freedom will allow companies to spread the workforce to locations closer to their clients, improving customer relations as well as reducing costs from not having to ‘collect’ everyone to one place. The employees will be happy to not have to commute and become more efficient as they can access all the information the need to perform their jobs at any time.
Science Fiction and George Orwell? No, this ‘Virtualised Office’ revolution is on the way right now. The long-heralded prospect of the number of home workers reaching a critical mass could become a reality, with the related benefits to our over-congested transport network and our work-life balance.
Winners and losers
Companies like Microsoft and the major PC manufacturers, like Dell, will need to watch very closely and be prepared to act fast as the wave grows. Microsoft could suffer in the same way as IBM did when the mainframes disappeared in wake of the growth of PCs. Microsoft could also suffer as companies move away from software ‘on premises’ licensing to SaaS models, since they have grown into the potentially large ‘slow changing’ company that IBM once was. Companies will not need Microsoft applications running on their PCs and could even go to ‘free’ PC windows operating solutions and web browser similar to Linux, or run their web through the new Apple Multimedia Home iPod system. At some point the On Demand suppliers will have their own ‘open source’ solutions to help the customers get started and to improve performance.
Such is the irony of the computer industry in that IBM is turning up as one of the winners in this new world by providing the major system platforms for the On Demand application providers... are we not now heading back to dumb terminals and a network around a large mainframe; only this time on a global scale!! Was this all part of the IBM strategic plan in the first place and they have just been waiting patiently in the wings, whilst all of their original large system competitors faded away?
How will it work in practice?
Two scenarios show how small companies could benefit from the new era.
1. SME Heaven
Imagine a small company that sells products both in store and online. They want to provide the same level of service to their customers and keep costs down.
The PCs used in store are connected to an On Demand ERP solution like Netsuite and the online order entry comes through the same application for processing. Back up stock is held in a warehouse or at the supplier with an agreed short delivery and refresh agreement. Any staff other than the shop assistants work at home. All of them are connected through broadband and a VoIP ‘switchboard to reduce costs and increase performance. As the product is scanned or ordered online it is instantly recorded in the same system and automatic stock levels processed and accounting systems are updated.
The data for the transaction is stored safely offsite through the system and ‘backroom’ staff working at home can check on any issues alerted to them or changes required. The PCs and connections can even be supported remotely through a variety of vendors including BT.
In this scenario the SME gets a very sophisticated solution for a reasonable annual fee, safe data storage, lower on site costs and part time ‘backoffice’ costs with the only software and hardware needed on site being the payment register and bar code scanning and receipt printing systems, with a broadband connected network of course. Even the video security systems can be run to an external system and recorded safely offsite with any remote staff able to raise the alarm by being provided monitor access alongside their other duties.
2. Professional services power up
Let’s look at an office services environment like an accountant or lawyer. They both need a safe storage of information and would have major business problems if their offices were burnt down. Another key is their historical business with clients and being able to meet with them or talk to them regularly. Typically admin and office costs are high for them as they need to be accessible to clients and generate mountains of paperwork.
They would benefit from connecting all of the staff to an On Demand CRM solution, like Salesforce.com, with specially designed connections to the specific industry solutions they would require e.g. legal accounts and research systems. They would only have a handful of appointment-driven people in the office to reduce space costs at any one time. Admin staff would all work from home. The connection between the rotational office based staff and admin would be through high speed broadband and VoIP with all of them using the CRM interactively. Any meetings would be recorded and used for paperwork generation later or minutes taken through voice conferencing. Research would all be done from home and the results stored against the client’s profile in the CRM system along with any meeting notes, minutes or any other documents. All other documents would be stored using scanning if they arrived in physical format using offsite technology and all emails would automatically be stored against the client file.
By having all of the connections required in a laptop and all of the information stored safely offsite it is even possible to move the business closer to the client using mobile connections. The staff could go to clients, using online mapping and booking systems to assist them and record their activities through the CRM, instead of them both coming to an office. On arrival they would connect their system to the network, storing the conversation and notes – safe in the knowledge that they are not carrying valuable client files, either physically or on a laptop and the admin staff can be working on the case immediately. The laptop would only have simple connection systems for VoIP and broadband on them and could therefore be ‘cheaper’ and lighter systems, maybe even PDAs with 3G and voice conferencing capability. For staff security they could even track their locations through their mobiles and they could photograph clients or documents etc. and send them back to ‘instantly’ store on file.
To ensure documents will be available in the event of an online connection failure, backup solutions could be put on the laptop and a USB memory card to temporarily download essential information and record the meeting for a future automate online update - most On Demand CRMs can have a ‘briefcase’ setup.
All staff would be happier not having to commute continually and clients would get a higher level of service at potentially no extra cost, because the overheads are reduced enabling this high level of customer service.