Facebook and LinkedIn tackle the enterprise – what are the implications for the Future of Work?

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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In not really surprising lockstep social network giants Facebook and LinkedIn announced enterprise offerings. For Facebook it is ‘Facebook at Work’ – bringing all the social tools of feeds, posts, messages etc. to the world of the enterprise, limited to the employees of the same enterprise. For LinkedIn it is initially about allowing employees of the same enterprise to send InMails to each other, and then create enterprise level groups to foster content sharing.

 

Implications, Implications…

• Social in the enterprises goes in round 2 – The first round and hype of social in the enterprise is over. The aftermath of the first round has left users and vendors exhausted. Good to see a new spark into this key area of productivity. The way how business users interact, share content, collaborate is ironically more fragmented and likely broken that in the world of a consumer. A Facebook user, a Skype user has likely better communication and collaboration options at their disposal than the enterprise user. Ironic and time to change that.

• Consumerization of Enterprise software finds the next gear – If Facebook and LinkedIn are serious to put their muscle behind this, it will rev up the level of ease of use for enterprise users. Good news certainly, as despite all the talk, most enterprise solutions have not (yet) reached the same level of usability as consumer grade applications. 

• Users may win – Especially the Facebook offering will be a big win for users. The 1B+ Facebook users are ‘suddenly’ familiar with their enterprise communication and collaboration tool. Adoption, comfort levels could reach a new height for enterprise users. 

• Practitioners face challenges – For the HR practitioner this will be initial headaches, as another system will have to be maintained, updated and monitored. And the blur of private and professional – with all its pros – has some chunky cons, too. 

• Established vendors need to step up – Assuming both Facebook and LinkedIn will not focus elsewhere soon – then ease of use and pricing of established vendors will be under pressure. While Facebook and LinkedIn ultimately need to find monetization alleys for this offering – they can take a more relaxed approach than the established vendors. 

• Partnerships on the horizon – There should be no surprise of some smaller enterprise vendors and adjacent vendors (e.g. in Content Management) will gladly defer and partner with LinkedIn and Facebook as their core communication and collaboration vendor. This will help them to focus R&D investments and Facebook and LinkedIn get a step up into enterprise and open new revenue alleys. 

MyPOV

The real question is – what took Facebook and LinkedIn so long? One can argue they had to solidify their leadership position with consumers, but that as not really anymore a contest for Facebook overall and for LinkedIn for business consumers. As I have blogged earlier, LinkedIn is de-facto probably the number #2 or #3 HCM vendor already – through its personal and recruiting subscription revenues – but did not act like a HCM vendor.

Overall I see this as a good change for the Future of Work, as it will spark new life into both usability, adoption and the overall a little sleepy social market for enterprise. It also will start a new conversation on identity, something that the traditional enterprise vendors with the notable exception of Salesforce.com (Identity Connect) have largely ignored. But in the short term it creates new headache for HCM practitioners, who have another network and user setup to manage. If Facebook and LinkedIn will leave it with the personal productivity, communication functions will remain to be seen. Exciting times ahead.

My colleague Alan Lepofsky has a great take on Facebook's new offering, too - please visit his blog post here.

What is your POV? Please share!

Internet of Things; what happens when ‘sense’ needs the ‘respond’ to come from an existing ‘legacy’ enterprise application?

Andy Mulholland

Vice President and Principal Analyst, Constellation Research
Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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There seems to be a belief that the value lies in the data, the information as to what has changed or is happening, and that may be so, but surely the ‘sense’ part will only provide business value if coupled with a ‘respond’? It’s likely that this requires the IoT data to assessed, and then used as an input to start an existing internal, or Back Office, enterprise application set of processes.

Research report now available: The Foundational Elements for the Internet of Things (IoT)

The whole point of IoT is to create new, additional value to a business, and its operations, a point made in the previous blog entitled ‘Internet of Things; Enterprise Value = Integration, Automation and Scale’. The opening observation I this blog stated “Standalone IOT reporting Services have the same challenge as standalone online Web based ecommerce systems a few years back. Great for pilots and proof of concepts, but sooner, or later a victim of their own success and requiring proper integration into existing order systems”.

This blog then drew attention to the Salesforce approach to IoT integration as a ‘Front Office’ activity, best delivered within the integrated Front Office ‘services’ environment using Salesforce products and methods to ensure optimum Business alignment.

It’s an approach that makes perfect sense, certainly for a Service based industry sector where their own product will probably also be a ‘Service’. However that’s not right for every business as SAP were quick to point out in their pre Christmas briefing on the SAP approach with its focuses on a different set of industry sectors and business models.

SAP point out that there are a lot of Industry sectors with Business models that require the ‘respond’ to a fulfillment provided by a complex set of internal Enterprise processes; think of Manufacturing, Mining, or even compliance centric activities such as Insurance.

Again it’s an approach that makes perfect sense providing, as indeed does the Salesforce approach, because each offers something very different to cater for a very different business model. What this does show is just how careful an assessment is required of exactly what your business model is, and does requires in terms of functions, before considering the technology capabilities required.

This is most decidedly not making the case for everything to continue ‘as is’ with Business requirement management by IT in the familiar manner. But it is making the case for a more thoughtful approach to where and how an  Enterprise IoT strategy will add value to the business model.

The topic of rethinking enterprise wide business functions in a genuine Digital Business model is a separate issue dealt with in the blog series; ‘Understanding your Digital Business Model by its Business Functional Requirements for Operational Technology’. In this blog the focus remains on out lining the SAP approach to IOT integration with Enterprise Applications, and of course ERP.

The opening statement reflected on the value of data coming from IoT sensing, and that for SAP means HANA, but it means more than the role of HANA as the classic provider of Big Data Business Intelligence.

In the mass of data that IoT sensors will pour into the enterprise lies a ‘real time’ challenge to process and sort out the ‘wheat from the chaff’, i.e. the valuable grain from the mass of straw.

SAP say that this is exactly what HANA is designed to excel in providing with its exceptional processing rates. In the IoT and Digital Business front office environment the goal for HANA is deliver ‘Smart Data’ meaning small highly valuable easily understood ‘triggers’ to people, or processes. The SAP integration model makes use of these smart data ‘triggers’ to both assess what applications and processes should be launched, as well as providing the data as the input to start the process.  Now the existing internal ERP, or other applications can provide the enterprise ‘respond’ capabilities from the existing optimized capabilities.

SAP has some excellent case studies to show how their approach works when the requirement requires fulfillment from the enterprise ERP. Two excellent examples are; Real time operations management through integrating IoT to Back Office ERP integration at Hamburg Port Authority, or HPA, and transformation of manufacturing at Harley Davidson.

HPA use IoT to sense more than 400 critical points in their port operations, which are connected to their SAP Connected Logistics enterprise ERP package. The resulting understanding of exactly what is happening ‘on the ground’ around the port has resulted in significant gains in the through put time taken to handle containers passing through the port. The result is the ability to handle more revenue-producing container through put with the same port faculties.

But the real case study that should make any senior executive realize how a well-integrated Digital Business is transformed in both its competitive capability, as well as its output, is Harley Davidson. An iconic brand that is driven by purchasers wanting their customized dream motor bike.

Harley Davidson claims to be manufacturing 25% more Motorbikes with delivery times for custom builds down from 21 days to 6 hours by integrating IoT sensing of critical points with their SAP Connected Manufacturing application.

These SAP case studies, like those of Salesforce, illustrate the huge importance that IoT to making Digital Business a reality in terms of creating a genuinely new competitive landscape. They show IoT being applied in different industry sectors, in different businesses, and in different ways, but what they all have in common is a deep understanding of the role IoT with the other new technologies can play to transform competitive, or operational, capabilities.

Today there are a selection of Case studies available that reveal much about the need to fully understand what is meant by the Digital Business transformation, and its more, much more, than just adding a set of new offerings either ‘bolted on’ to the current ‘Back Office’ IT systems, or even as a standalone ‘digital’ business operation. 

Research report now available: The Foundational Elements for the Internet of Things (IoT)

Ben & Jerry’s: Aggressive Customer Acquisition During “Low Season”

Partner, Sensei Marketing
Partner, Sensei Marketing

Sales & marketing veteran with almost 30 years’ experience and now 1800 digital projects to his credit for clients including Morgan Stanley, AOL, Hyatt Gaming Management, Snyder's of Hanover, Hitachi, the Home Depot, Kraft Foods, Drees Homes, American Idol, and hundreds more, including leading agencies around the North America.     ...

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You think your business has customer acquisition issues? Consider the plight of ice cream manufacturers and retailers during the winter months!  Eating ice cream – let alone buying it – during the cold winter months is about as counterintuitive as buying sunglasses in London, England, where clouds and rain are permanent symbols on the weather forecast.  Yet January to March is an important time of the year for supermarkets selling ice cream and even more so for manufacturers.

Supermarkets and manufacturers like to keep freezer shelves stocked with ice cream during the winter months as a form of advertising; the consistency of seeing the ice cream labels during low season increases product desire when the weather heats up.

It’s Hot to be Cold

Many manufacturers lay low and cut costs during the low season. Toy makers, for example, hold most (if not all) of their marketing budgets for the Thanksgiving to Christmas time period. The “strike when the iron’s hot” strategy seems to work for them. However, what  revenue or opportunity is left on the table by not actively attempting to acquire new customers during the rest of the year?

For manufacturers like Ben & Jerry’s, the low season of January to March is seen as the perfect time to acquire new customers.  Where many firms use the low season to cut costs by decreasing activity, Ben & Jerry’s becomes more aggressive. Each year it introduces new specialty flavors during the winter months to entice reticent consumers to purchase their cold treats.

Today, Ben & Jerry’s announced the launch of three new flavors, which join the brand’s existing “core” lineup of ice creams that have such fillings as fudge, caramel, and raspberry jam. The new products are Boom Chocolatta! Cookie Core, Peanut Buttah Cookie Core, and Spectacular Speculoos Cookie Core. The center of the ice cream has a texture that’s kind of like cookie dough, but crunchier, says John Henry Siedlecki, senior brand manager at Ben & Jerry’s.

Buy When the Market is Down

Real estate and financial moguls will tell you that the secret to success is  buying or investing when the market is poor, not when the market is booming.  For manufacturers, those moments when the competition is lying low or periods when a product or service is less convenient might be the optimal time to be more aggressive with customer acquisition budgets and strategies.

Low season is also a good time to experiment with new products or service offerings, which can help differentiate the brand.  At a minimum, the strategy will help maintain an ongoing dialogue with customers, just when their attention would otherwise be diverted elsewhere. When the product is back in season, the brand is top of mind.

Sensei Debates

Marketing in low season is too expensive and too risky for the possible rewards. Agree/ Disagree? Why?
Join the conversation in the comments below.

A Radical Manifesto for Tech Pioneers: Peter Thiel's Zero To One is Thomas Paine's Common Sense

Constellation Orbits
Marketer & Storyteller

Anurag Wadehra has led marketing at several private and public software companies in the technology areas of mobile, eCommerce, advertising and data management: such as at LivePerson (LPSN) and Siperian (acquired by Informatica INFA) among others. Prior to that, Anurag was CEO & Co-founder of Chingari, a software company designed to help businesses improve success rates of new product launches. Additionally, he served in senior marketing positions at Kraft Foods and Procter & Gamble. Anurag has an MBA from the University of Chicago and B.Tech in Electrical Engineering from the Indian Institute of Technology. He is a lead mentor at Stanford's accelerator StartX and an avid film buff. ...

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Building a new world order from technology requires covert operations of today’s revolutionaries. 

In his provocative book, Zero To One, Peter Thiel offers a view of entrepreneurship that is radical, in the original sense of the word. That is, it goes to the root of entrepreneurship: how to take bold risks to create a better future. Thiel believes that an entrepreneur should build a lasting company, not merely a successful one. One that is, by his definition, a defensible and durable monopoly and generates significant future cash flow. In this context, monopoly is not a pejorative term but a definition of sustainable business advantage over time. And what kind of entrepreneurs are needed to build such companies? Those who have a revolutionary zeal to pursue their goals matched with the ability to bend nature and consumers to their will. This is not a hand book for building a run-of-the-mill company to cash in on the latest tech trend. It is a pamphlet for tech founders who aim to pioneer new industries and conquer new worlds in some cases literally as in Elon Musk’s ambition to colonize Mars.

 

And as pamphlets go, Thiel’s Zero To One has a few elements in common to the Thomas Paine’s Common Sense. Once you get past the obvious differences in form, content and style between the two pamphlets, you notice a common purpose: to persuade the reader to question the conventions of current rulers, to come down from the fence and embrace a new, radical order. For Paine, the purpose of his pamphlet was to rid monarchy and gain support for constitutional democracy based on liberty. He crafted his message to appeal to the commoners of his era. Similarly, Zero To One has the polemical style designed to appeal to today’s revolutionaries: the entrepreneurs. Thiel rails against the culture of risk aversion and the current obsession among founders with incremental innovations (“We wanted flying cars, instead we got 140 characters”). He asks for a bold future in which technology pioneers run global, monopolistic companies to improve and extend human life. Like Paine, Thiel offers a recipe on how to achieve this future.  

 

In brief, here is Thiel's manifesto, as I interpret it, for the tech pioneers of today. 

 

Begin with an secret

Thiel begins with an insight on how to identify the kind of company nobody else is building.  Unlike most investors who ask founders to start with a vision, he asks them to be begin with a secret. He is right in that a vision is a dangerously vacuous endeavor. When asked to espouse one, most founders are prone to hyperbole of market trends ("social meets cloud meets internet of things, kind of like Uber for mono-cyclists)”.  Others simply extrapolate their product into the future.  In most cases, the founder's vision is simply an imagined set of uses of inflated product features targeted at all and sundry.

 

However, Thiel defines a secret in more precise terms. A secret is as an insight shared by the founder about the state of the future which is not generally accepted by others, and often contrary to popular beliefs prevailing in the market. There are of two kinds of secrets uncovered by an entrepreneur: those of nature (e.g. Shockley et al invented transistor) and those of people (e.g. Zuckerberg perfected how humans share photos online).  So, the founder must invent or discover a secret, as the first step; then develop a definitive view of how the secret shall affect the future. Not surprisingly, most entrepreneurs fall short here since they are not pioneers. They would rather build a product than an industry.  

 

Build a cabal 

For the pioneer with a newly minted secret, the next step is to attract others who agree with the truth of the secret. According to Thiel, “a startup is the largest group of people you can convince of a plan to build a different future.” This shared view of a different future is what animates the cabal of early employees, investors and customers. It is the unique way the startup solves the problem that offers the basis of building a long-term monopoly - and a happy company. Happy as in successful: well payed employees, richly rewarded investors and satisfied customers. Again, think Google, Facebook and Tesla. The mantra is: "All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.” But how exactly does a startup engineer a monopoly? 

 

Run a covert operation

Thiel lists four characteristics of a technology-based company that can create a monopoly position. Of course, the foundation should be the technology; it must be an order of magnitude better than available alternatives - and it must be proprietary. To be ten times better is a good rule of thumb in most industries. The second factor is to generate network effect; that is, the technology should be adopted rapidly among consumers through word of mouth and social recommendations, or in case of business, through enterprise endorsements and references. Ultimately, the evidence of network effect is that the value of technology increases with adoption of its usage by every new member. But to achieve this effect, Thiel suggests that founders should bootstrap companies in a niche. They should fine-tune, prove and build the positive effect of networks in a niche market for which the technology is ideally suited before casting it wider to broader but less suitable audiences. This shall keep the company under the radar, away from competitive attention. Third, once the technology and its adoption is underway, the company should build the economy of scale - that is, expand with lowest cost curve - with the goal to deepen its competitive moat. And, finally, the company should build and defend its brand to become the de facto standard for the category. While Thiel doesn’t state this, it is clear that the order of things matter. Building a brand comes last, building a 10X technology comes first. The main idea is that the company builds these operations covertly to create a monopoly position while staying away from limelight as long as possible. 

Stay in the shadows

Thiel suggests that a company hide in plain sight. Its secret should attract only the few who believe in it; its operations must run lean until it is ready to draw attention. And, as an interesting corollary, it must ignore competition and not use large established companies as foil. “The act of creation is far more important than the old industries that might not like what you create,” he writes. He observes an interesting use of signaling theory where in "monopolies disguise their monopoly by framing their market as union of several large markets” in order to appear smaller in scale and influence. As evidence, Microsoft and Google in every antitrust suit define their respective markets much more broadly to show their share of it as low as possible. Also, burgeoning monopolies don’t toot their horn and are secretive about their plans.  Incidentally, the opposite is true as well: "non-monopolist exaggerate their distinction by defining their market as the intersection of various smaller markets,” to inflate their influence in them.  They chase the sizzle, make noise in advance of success and often claim “we’re in a league of our own”.  

Aim for a new world order

Finally, Thiel’s advice for those seeking to build a new future is to keep an eye on the prize: the end game. He quotes grandmaster Jose Raul Casablanca: "to succeed, you must study the end game before anything else”.  A pioneer should aim not to be the first in the market but to be the last one standing when the game finishes, and the new order has emerged. This means understanding not just the technology innovation, but the entire ecosystem of partners who come to complement the innovation.

 

In summary, Thiel’s Zero To One is nothing short of a blueprint to build a hegemony of technology titans. Like any call to arms, most entrepreneurs - and their companies - shall never fit the bill since most innovations are derivative in nature. But for the few radical technology pioneers who wish to emblazon a bold future, this is the essential playbook. 
 

 

2014 Logo Hits and Fails; How Important is a Logo to Your Business?

Partner, Sensei Marketing
Partner, Sensei Marketing

Sales & marketing veteran with almost 30 years’ experience and now 1800 digital projects to his credit for clients including Morgan Stanley, AOL, Hyatt Gaming Management, Snyder's of Hanover, Hitachi, the Home Depot, Kraft Foods, Drees Homes, American Idol, and hundreds more, including leading agencies around the North America.     ...

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Sensei introduced a brand and logo refresh this week to usher in a new era of service based on its new Customer Insight Analysis (CIA) platform.  The goal in redesigning our logo was to provide a visual aid that better represented the business’s unique differentiator in a crowded marketplace. The response has been overwhelmingly positive yet it begs the question: What effect will this change have on our business’s bottom line in 2015?

That question encouraged me to look back at businesses that changed their logos in 2014 and what effect it had. Do logos actually have a significant effect on customer acquisition or customer development? In fact, is a logo simply a “nice to have” element of the brand or a critical element in driving or sustaining business?

Here’s a few of the businesses that changed their logos with mixed reviews in 2014.

Airbnb

One of the most talked about logo changes of the year was Airbnb, the popular accommodation marketplace. The change was met with overwhelming negativity and ridicule.

The new logo was intended to represent “a sense of belonging and connectivity” among community members, yet most people could not get past the sexual innuendo the logo seems to elicit. Putting the “Did they or did they not purposely choose a salacious symbol?” argument aside, one of the key aspects of the change was to add an icon to the wordmark (which was also updated) in hopes that it would become an easily recognizable symbol. The question is: What impact will the logo have on the business, which was already experiencing positive growth, unprecedented media attention, an estimated worth of $13 billion, and is heading for an IPO?

Hershey

Where Airbnb sought to create an iconic logo, The Hershey Company already had one. The logo was so iconic in fact that many called the change “un-American.”

The logo change went far beyond a design change; the company hid a corporate name change in the re-launch by removing the ‘S from the name. What effect, if any, will this logo change have on the business when in reality most will continue to refer to it as “Hershey’s?”

Foursquare

Foursquare finally understood what marketers were saying for years: The check-in app would only hold the public’s attention for only so long and there’s no way it could compete with Facebook when it too added a check-in functionality.

The change, which included a flag-like pin icon, successfully represents the business’s shift from check-in app to local business reviews and suggestion app. However, will the new icon/logo have any effect on its success in tackling Yelp! and other existing businesses in this space?

Southwest Airlines

Unlike Foursquare, Southwest’s logo change seems to be contrary to the business’s operations.

Southwest built its success on low fares, not superior service. The new logo, with a heart at the center of traditional flight wings, is intended to portray a brand “with heart” that puts customer experience first. Will this new icon replace less service for lower costs with a warm a fuzzy feeling in the minds of customers?

Sensei

While we’re at it, , let’s throw Sensei Marketing’s logo change into the mix.

The new icon was crafted to merge the inner Yin-Yang symbol that represents the interdependent customer acquisition and customer development disciplines of business growth, with the outer circle that represents the stages of the customer lifecycle that interface with both spheres. It certainly represents the core services that Sensei Marketing offers; however will the change inspire a change in our business?

Sensei Debates

Can a logo change, augment or reverse the fortunes of an existing business?

Sam Fiorella
Feed Your Community, Not Your Ego

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Consumerization of Authentication

Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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For the second year running, the FIDO Alliance hosted a consumer authentication showcase at CES, the gigantic Consumer Electronics Show in Las Vegas, this year featuring four FIDO Alliance members.

This is a watershed in Internet security and privacy - never before has authentication been a headline consumer issue.

Sure we've all talked about the password problem for ten years or more, but now FIDO Alliance members are doing something about it, with easy-to-use solutions designed specifically for mass adoption.

The FIDO Alliance is designing the authentication plumbing for everything online. They are creating new standards and technical protocols allowing secure personal devices (phones, personal smart keys, wearables, and soon a range of regular appliances) to securely transmit authentication data to cloud services and other devices, in some cases eliminating passwords altogether.

See also my ongoing FIDO Alliance research at Constellation.

We cannot pigeon-hole risk

Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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One approach is to categorise different classes of IdP, matched to different transaction types. "Levels of Assurance" (LOAs) have been loosely standardised by many governments and in some federated identity frameworks, like the Kantara Initiative. The US Authentication Guideline NIST SP 800-63 is one of the preeminent de facto standards, adopted by the National Strategy for Trusted Identities in Cyberspace (NSTIC). But over the years, adoption of SP 800-63 in business has been disappointing, and now NIST has announced a review.

One of my problem with LOAs is simply stated: I don't believe it's possible to pigeon-hole risk.

With risk management, the devil is in the detail. Risk Management standards like ISO 31000 require organisations to start by analysing the threats that are peculiar to their environment. It's folly to take short cuts here, and it's also well recognised that you cann't "outsource" liability.

To my mind, the LOA philosophy goes against risk management fundamentals. To come up with an LOA rating is an intermediate step that takes an RP's risk analysis, squeezes it into a bin (losing lots of information as a result), which is then used to shortlist candidate IdPs, before going into detailed due diligence where all those risk details need to be put back on the table.

I think we all know by now of cases where RPs have looked at candidate IdPs at a given LOA, been less than satisfied with the available offerings, and have felt the need for an intermediate level, something like "LOA two and a half" (this problem was mentioned at CIS 2014 more than once, and I have seen it first hand in the UK IDAP).

Clearly what's going on here is an RP's idea of "LOA 2" differs from a given IdP's idea of the same LOA 2. This is because everyone's risk appetite and threat profile is different. Moreover, the detailed prescription of "LOA 2" must differ from one identity provider to the next. When an RP thinks they need "LOA 2.5" what they're really asking for is a customised identification. If an off-the-shelf "LOA 2" isn't what it seems, then there can't be any hope for an agreed intermediate LOA 2.5. Even if an IdP and an RP agree in one instance, soon enough we will get a fresh call for "LOA 2.75 please".

We cannot pigeonhole risk. Attaching chunky one dimensional Levels of Assurance is misleading. There is no getting away from the need to do detailed analysis of the threats and therefore the authentication needs required.

Other thoughts on LOAs from over the years:

http://lockstep.com.au/blog/2011/04/08/i-dont-get-loas
http://lockstep.com.au/blog/2012/03/16/ski-runs-and-loas
http://lockstep.com.au/blog/2011/03/11/nstic-and-banking

360 Degree Retailing: Reassessing Brick and Mortar Stores

Partner, Sensei Marketing
Partner, Sensei Marketing

Sales & marketing veteran with almost 30 years’ experience and now 1800 digital projects to his credit for clients including Morgan Stanley, AOL, Hyatt Gaming Management, Snyder's of Hanover, Hitachi, the Home Depot, Kraft Foods, Drees Homes, American Idol, and hundreds more, including leading agencies around the North America.     ...

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There’s no doubt that that Internet has changed the business of retailing. Thanks to consumers’ proclivity for pre-purchase research and the availability of online commerce, retail growth is no longer dependent on brick and mortar expansion. In fact, expanding physical stores can negatively affect a retailer’s bottom line because online sales are eradicating revenues previously used to offset the added expenses associated with expansion.

Adding more retail locations has long been the traditional growth plan for retailers.  Doing more of the same, even if that which was done proved successful in the past, is no longer a recipe for success.  However, transitioning to online sales may not guarantee success either.

More than half of consumers now research their retail purchases online. This means in-store purchase decisions are becoming less frequent as are, thanks to online shopping, physical visits to the store itself.

Is Online Shopping The Solution?  

At first glance, the number of store closings across North America and the UK would suggest that there’s declining value in brick and mortar stores. In the USA, fashion retailer Gap has closed more than 250 locations and retail giant Walmart is opening new, smaller-format stores. In the UK, electronics stores, the darling of the retail world, have seen a 20 to 30 percent reduction in physical footprints.

Fewer stores – or smaller footprints – are enabled by “virtual space,” which is the space required in a physical footprint to generate the sales achieved through online shopping.

There’s no limit to the number of online stores or products that can be made available, which at first may seem to be an opportunity.  The overabundance of virtual space, plus the new ease with which individuals and businesses can build and maintain online stores, has created competition greater than that found in the physical retail world.

Transferring traditional sales operations online has not proven to be a sure-fire profit generator for retailers.

Is There a Role for Brick and Mortar Stores in Today’s Economy?

While the merits of online retailing are being debated, a return to expanding brick and mortar stores may not be the answer.

The answer lies in re-inventing the customer experience across all channels and ensuring that the experience is inclusive across all those channels: Physical store, online store, social media, billing, customer service, product support, content marketing, loyalty programs, etc.

The physical store may no longer be the center of the customer’s experience but it can play a critical role towards fostering greater customer satisfaction and advocacy.

360 Degree Retailing: Reassessing Brick ‘n Mortar Stores

The answer lies not in the store’s size or window dressing but how customers rate the physical transaction and experience towards their overall impression of the brand.  Retailers must ask what role the retail store plays in the customer’s decision-making process. How does the store – or the customer’s experience within the store – affect interactions with the consumers they engage outside the store?

In other words, focus on building a 360 degree customer experience that does not rely on any one channel, but includes them all. Here are few strategies that you may find helpful:

1. Facilitate in-person meetings or experiences for those who purchase online or for customers who engage with other customers in social media.  For example: A craft store may offer in-store workshops specifically for those who transact online; a music store or electronics shop may host live performances for those who are members of the site’s online fan forum; a wine retailer can offer in-house or in-store wine tasting events for those who prefer to purchase online.

2. Create inspirational or educational events within the store that foster stronger relationships with customers, who may choose to purchase online in the future. For example, consider a bike shop that offers bike maintenance lessons each spring.

3. Host events outside the physical store: The Running Room, a popular and growing Canadian retailer of active wear including running shoes, coordinates free local running and walking clubs where customers can train together and sponsors races for customers and non-customers alike.  The local stores become a connection point for offsite social engagement and exercise.

4. Hire and promote an industry expert whose office is located in the physical store. For example, a furniture store may hire and advertise a popular interior designer who is made available exclusively to existing clients or selectively to prospects whom the store engages with in social media. The designer could make house calls, offer “staging services” for those selling their homes, etc. In other words, offer unique value in-store that cannot be effectively delivered online. Such a practice will develop stronger personal relationships with prospects and customers and possibly add additional revenue streams that can only be earned through the physical store.

5. Offer free in-store consultations and support for those who purchase and return products online or for those who need added support.  Giving customers the option to engage with an expert will decrease returns, reduce negative online publicity, and increase loyalty.  Stores like Best Buy and Staples are embracing this tactic well with their “geek squads” that offer in-store technical support or home and office support visits. This added service increases the likelihood of online purchases because it instills confidence in long-term support.

Conversely, transactions and engagements that occur in the physical store or at hosted off-site events should be designed in such as manner as to encourage reciprocal online engagement. For example: The Running Room offers a private online member forum for those participating in its running clubs;  a local restaurant I frequent posts pictures of wine-tasting events on its website, allowing those who attended the opportunity to tag themselves and share the branded photos across their social networks.

Sensei Debates

Is the value of brick and mortar stores diminished with the rise of online shopping?

NRF15 – Retail’s Big Show, so what will we see?

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Guy Courtin was formerly Vice President and Principal Analyst at Constellation Research covering Matrix Commerce and how the Internet of Things drives the evolution of commerce.  Guy has over 15 years experience in the technology space and specifically in the supply chain space. Most recently he was the Vice President of Research at SCM World. Where he focused on the service providers that empowered supply chains. Prior to SCM World, Guy held numerous senior positions. He was responsible for product marketing at RSi, a retail supply chain solution provider. There managed RSi’s go to market strategy around their leading cloud based supply chain solutions. He also spear headed Progress Software’s supply chain group. Where he was responsible for driving revenue and market share as well…...

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Next week I will be deep in the heart of the Javits Center for the 2015 Retail Big Show, running between meetings and navigating the ever growing maze of companies. Every year I go into these meetings wondering what the “big theme” will be for the show. In the past we have had Big Data, omni-channel retail, store level replenishment, eCommerce to name a few. This year it feels like a continuation of omni-channel and analytics. But the underlying theme I have picked up from the pre-briefings and press releases that have flooded my inbox is the rise of the Internet of Things (IoT) in retail. Good. Well good because we just published a piece on the evolution of IoT within supply chains, retail and CPG being part of that study. Click here to see the report.

One finding from the research is that retail’s readiness for IoT lags behind other industries such as A&D or industrial. In part because these industries have already being practicing IoT for asset management or monitoring of inventory – they just did not have a cool name to label what they were doing. An airplane engine  or locomotive manufactured by GE is a large piece of machinery that warrants having some connectivity, as opposed to a pair of Diesel denim jeans. However, retailers and their supply chains are ripe for adoption of certain uses of IoT. Especially when it comes to the connected home, connected warehouse, connected truck

Any wood behind that arrow?

or even connected store shelf. The question becomes what are the near term business cases for retailers. Where will they be able to create the business cases for IoT that will be funded and return a favorable ROI for their businesses? Retail and CPG supply chains have already tried their hands in what we are calling IoT 0.0 and 1.0 – bar codes and RFID. Will the third time be the charm?

What I will be looking for during my time at NRF is what are the business initiatives for retailers and CPG companies that can leverage the potential influx of new data that IoT will be throwing off. Many retailers and CPG companies I meet with are already speaking of struggling with the data they already have and how to handle it and make it actionable. IoT has the potential of adding another massive amount of data on top of that existing information. We have advocated that companies in any industry need to ask themselves the simple question – why do I need this information and what business aspect will it impact? This is even more important in the retail space, as many have narrow margins and let’s be honest, have been burned by the promises RFID held out but were never achieved.

I am an optimist with regards to IoT  there will, like every technology evolution, be growing pains. I will be keen to learn where retailers are going with their IoT strategies, are they just trying to ride the hype wave or do some have real tangible business initiatives that will put some real wood behind the IoT arrow. Stay tuned!

Will I see you at NRF15?

Tagged: Internet of Things, IOT, Javits Center, New York City, NRF15, Retail, Supply Chain, The Big Show

Understanding your Digital Business Model by its Business Functional Requirements for Operational Technology

Andy Mulholland

Vice President and Principal Analyst, Constellation Research
Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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Part 1; Why your IT Operation can’t run your Digital Business Operations, and in turn, why your Digital Operations can’t run your IT Operations

Just for a moment lets stop thinking about all the pages, and pages, of well thought through comment on recognizing the market opportunities, the pressures to compete in new ways, the transformation challenges for the enterprise, even the new operating skills, and just focus on the Business Functional Requirements for Operational Technology that all of this requires.

That’s not to say any of this is wrong, but it is in danger of masking some basic functional changes that give rise to new core principles in choosing and operating both existing and new technologies in support of an Enterprise that would describe itself as operating a Digital Business model.

Recognizing this and defining by functionality shows your enterprise and its business activities to be clearly split into two halves. To get best business value out of each half means recognizing this point and understanding some very fundamental differences in the business and technology alignments. That’s doesn’t sound too hard to address, but the real challenge is just how different those two halves are; in every way not just in technically but also in business functionality.

One half corresponds to the Back Office where IT has transformed the cost and operational efficiency of operations internally by using large complex integrated enterprise applications. The automation of processes to flow across the enterprise as a set of ‘book to bill’, processes was as big a competitive game changer in its time as Digital Business is becoming today.

The other half, the new and non IT half, is focused on the Front Office of the enterprise, and is frequently defined as ‘Consumer IT’ for the very good reason that the ‘consumers’ of the technology choose what they want to use by their understanding how the business value they can gain.

In this new ‘half’ the focus has shifted towards using technology externally to win new revenues with new products out in the markets. That’s a very different reason for using very different technologies so not surprisingly it’s very different operationally. Digital Business itself is based on these consumer technologies that allow mass and common use across the Internet, if the technology elements were not simple and open, then there would be no Digital Business.

Perhaps we should describe Digital Business as taking advantage of the new opportunities created by common and freely available consumer based technologies? Frankly it makes more sense to think in this manner when considering how the Front Office use of technology should be operated.

The users working in the enterprise Digital Business Front Office are themselves consumers who understand the capabilities delivered and how to apply beneficially. The provisioning and operational complexity of technology has been hidden and simplified inside the ‘services’ model of external Cloud and App suppliers. For these Digital Business natives the agile, dynamic, sense and response environment based on Operational Attributed cost is far removed from the environment of the Back Office where the IT department is the supplier and operator of big capital investments.

However much as we try to define Front Office Digital Business technology as part of the responsibilities of the IT Department, it simply doesn’t fit with their experiences, methodologies or even operational deployment of new business requirements. But, and it’s a big but, the IT department can rightly see the core important issue of enterprise level integration, and wants to make sure that the enterprises Digital Business is going to work with the existing IT.

The IT department is right; whatever enterprises do to win business through Digital Business externally with new technologies, they still have to operate an efficient internal ‘Book to Bill’ set of IT processes in their Back Office.  On this fact Enterprise IT good practice certainly still rules, but IT departments are wrong about their role in operating the technologies of Digital Business!

If we take the right answer from the existing IT point of view, we know that the resulting ‘good practices’ will be so confining to Digital Business initiatives, and operations, as to defeat the requirement for ‘agile’, dynamic, ‘sense’ and ‘respond’ business models. One-size fits all IT methods simply cant be made to work! Wholly new technologies have created wholly new capabilities that in turn have created wholly new business requirements, operated in a wholly different manner!

In the Front Office of a Digital Business everything that makes up the Business model and Technology Operational model is totally different to that of the Back Office and IT. Failing to understand this and ‘muddling’ the two halves together in the business management transformation towards a ‘Digital Business’ model is a serious, but frequent, mistake!

Back Office IT is hugely important for continuing to operate the enterprises internal fulfillment processes at the right cost and level of efficiency. But it’s the Front Office Digital Business that’s going to drive an enterprise’s ability to really identify and win new business externally. It is a wholly different business requirement made possible by the ability to operate in a wholly different manner  using wholly different technology.

Most important of all, Digital Business is external, outside the firewall, relies upon integrating with people who aren’t part of your enterprise and are using their own technologies. Digital Business requires the creation of an entirely new technology environment to support an equally entirely new Business model for the Front Office.

The enterprises Front Office Digital Business doesn’t rely on deep technology skills, or the IT department to be the provider, or even operator, instead it is driven by people who know how to make use of these ‘consumer’ capabilities to win business. To these Business savvy users the technology model is simple and uses the capabilities of external service providers.

No wonder there is conflict between the two technology halves of the enterprise as there is so little in common; pretty obvious why there are challenges as to whether CIOs, (using their current role and methods), are the right people to support the enterprise Digital Business. The introduction of Chief Digital Officers, Chief Marketing Officers, and all the other titles, are just moves to address a need for the enterprise to operate a new and different environment in its Front Office Digital Business.

 By now those working in the Digital Business Front Office are probably saying ‘you are right let us operate our way to suit an entirely new environment’. And those working in Back Office IT are probably saying ‘its madness as this ignores enterprise level integrity and process integration’.

Clearly Digital Business Front Office activities must connect to, and do require, Back Office IT processes in order to provide the fulfillment of their sales!  Designing, building and managing the integration points is a job for IT as an extension of the Back Office good practices. Similarly providing an Enterprise infrastructure for managing Identities, Brokering Services etc. is equally a role for IT with its technology skills. It’s just the Day to Day operations of Digital Business in the Front Office made possible by an entirely new environment of User/Consumer based capabilities that is not the role for IT.

Lets try to make this a little clearer with some diagrams, starting in this case with defining the two halves of the Agile Digital Business Front Office and the Stable Business Fulfillment Back Office. An apology for the complex diagram but it’s a complex subject! Start by just read the boxes in red for the key points!

In a series of following blogs these points will be examined in greater depth, starting next with the splitting out of three primary technology functions in the front office, and four different primary functions in the back office that in turn align with seven different business functionalities. Defining each, with its role, is the first step in understanding what and how to provision and manage to support a business requirement. The true challenge at an enterprise level is to excel in each for its unique element of competitive advantage as well as to seamless operate across the seven different business functions that are enabled by technology. This is the role of the eighth function, the most crucial of all, defining how the Front and Back Office inter-operates and in turn defining the choice of architecture and platform for the Digital Business Front Office.

Transforming to become a Digital Business means moving from ‘good to great’ performance as a fully integrated technology based enterprise, failing to grasp this takes us back to ‘bolt on’ e commerce web sites that took orders online, but relied on internal manual inputs to re enter into the existing order capture system!