UPS Carves a Niche in Health Care - WSJ.com -
LOUISVILLE, Ky.—United Parcel Service Inc. UPS +0.21% is well known for its army of brown-uniformed delivery drivers. Less known is that the package-delivery giant has its own team of pharmacists.
At UPS’s headquarters here, company pharmacists fill 4,000 orders a day for insulin pumps and other supplies from customers of Medtronic Inc., MDT -0.46% the Minneapolis-based medical-device company. UPS pharmacists in Louisville log into Medtronic’s system, fill the orders with devices stocked on site, and ship them to patients, via UPS, of course.
It is one part of the growing reach by UPS—along with rivals FedEx Corp. FDX +1.47% and Deutsche Post AG’s DPW.XE +0.52% shipping division DHL—into the business of running supply chains for pharmaceutical and medical-device companies.
Medtronic and other health-care companies are increasingly outsourcing logistics as competition from makers of generic medicines grows and they look for ways to cut costs from backroom operations and focus on product development instead. UPS’s service has allowed Medtronic to close its own distribution warehouse and see a “significant reduction” in the costs of processing each order, said Jeff Hubauer, general manager of the company’s insulin-delivery business.
Supply chains are also becoming more complicated, with vaccinations and medications increasingly being sent to emerging markets—like a recent shipment of flu vaccine to Laos from Louisville. Security and regulatory requirements to get products across borders also have tightened in recent years.
"If you’re a medical company, logistics isn’t your core expertise," said Kevin Sterling, a freight-transportation analyst with BB&T Capital Markets. "They’re saying, ‘Let someone else deal with those headaches.’ "
Parcel companies, meanwhile, are looking for new sources of revenue to bolster their traditional shipping businesses as the global economic slowdown stifles package volume growth, and as many consumers choose slower, less costly shipping methods. Pharmaceutical companies tend to use air freight, the priciest method of shipping.
Demand for cold-chain services is expected to rise 16.9% to $7.6 billion in revenues in 2013 from $6.5 billion in 2010, according to Pharmaceutical Commerce, an industry publication.
There are risks to getting into handling highly regulated and sensitive freight, said BB&T’s Mr. Sterling. If a medicine winds up being spoiled or mishandled, a pharmaceutical company could “point a finger” at the logistics provider, he said.
UPS’s “engineering makeup and tight operation naturally makes it a good fit for health care,” and the company has its own in-house quality-control and regulatory-assurance group, said spokeswoman Karen Cole.
The parcel-delivery companies are investing in megawarehouses that service multiple pharmaceutical companies at once, with freezers for medicines and high-security vaults for controlled substances. They are betting that the investments will be offset by clients willing to pay a premium for specialized handling of sensitive products.
UPS doesn’t break out costs and revenue for its health-care logistics business, but in an April earnings report, the company credited “demand for UPS health care solutions” with driving a 19% boost in first-quarter profit over last year in its Supply Chain & Freight unit. UPS said profit margins increased in that division “despite the impact of continued investment in the health care network.”
This spring, DHL, which is based in Germany, opened life sciences and health care logistics centers—filled with cold storage units—in Miami and Atlanta for quick shipping to North and South America.
FedEx HealthCare Solutions, which offers temperature-controlled shipping and supply-chain management for health-related companies, has seen double-digit growth in revenue since starting in 2010, said spokeswoman Jenny Robertson.
UPS got into health-care logistics in 2006 and the business has grown rapidly, with 33 health-care logistics facilities around the world, including a plant in Brazil opened last year specifically to handle the supply chain in that country for Merck MRK -0.24% & Co. Expanding health-care logistics globally is a “top strategy for UPS for the next five years,” said William Hook, head of global strategy for UPS Healthcare Logistics.
Some of that expansion is coming through acquisitions, including a $6.8 billion March deal for Dutch delivery service TNT Express, which had launched a temperature-controlled pharmaceuticals shipping service.
Walgreen Co. WAG +0.35% chose UPS to transport $9 million of donated flu vaccine—375,000 doses, to Laos in March. Fifty UPS “health care logisticians” coordinated the complicated journey.
The flu vaccine was already being stored for Walgreen at between 2 degrees and 8 degrees Celsius in a UPS freezer in Louisville. The challenge would be to keep it at the same temperature as it made its way halfway around the world.
The vaccines were loaded into two refrigerated airfreight containers with temperature sensors monitored by UPS control towers.
The 8,500-mile flight took five days and included four stops: Anchorage, Alaska; Incheon, South Korea; Shenzhen, China; and finally Bangkok, Thailand, where the containers were loaded onto a truck for Vientiane, Laos, and met at the city by the Laos Ministry of Health, which then took the containers to a refrigerated warehouse.
IBM's potential x86 server sale to Lenovo highlights oncoming train | ZDNet -
Wow! Interesting analysis - and crazy implications.
IBM is reportedly talking to Lenovo about selling its x86-based server business to Lenovo and the move would make a lot of sense.
If the talks, flagged in the Wall Street Journal and CRN, sound familiar that’s because Big Blue famously unloaded its PC business to Lenovo in a win-win deal. Lenovo went on to be one of the premier PC makers and IBM focused on software and services and got ahead of trends such as analytics.
To say the IBM’s PC situation then and today’s server state of affairs rhyme would be an understatement. You could argue the situations are the same thing. When IBM offloaded its PC unit, no one saw tablets coming. All IBM knew is that the margins stunk and it wanted higher value wares. The post-PC era was years away.
Fast forward to the server market, which is ripe for disruption. Server sales are doing ok. Companies will have to buy servers right? Of course they will—-for about another three to five years. The reality is servers are going in the following directions:
Specialization by workload. Think IBM’s PureSystems and Oracle’s Exadata efforts.
- Commodity-ville on the x86 front. You can’t ignore that companies like Google and Facebook go right to white box makers for servers. That reality isn’t so hot for HP, Dell and IBM.
- You need to own the silicon and intellectual property to really work the server business. IBM’s Power systems won’t go anywhere. Oracle has SPARC. Hewlett-Packard is going processor agnostic with Moonshot, a server line that appears to be innovative.
- Fewer server buyers. As companies move to the cloud, demand for compute will only increase. The problem. Server makers will be selling in bulk to fewer customers and cloud computing farms. There will only be so many cloud providers. Enterprises large enough to roll their own data centers will be few and far between.
Now let’s talk timing here. The server market won’t unravel tomorrow. It won’t unravel in a few years. But Armageddon will occur and the clock starts ticking right about now.
Why? An enterprise that buys a server right now will start a tax depreciation clock that will run about three years. Once those three years are up and those assets depreciate, the CXO in charge will weigh the costs and benefits of the cloud vs. running a data center, server cluster or whatever. I’ll bet that in three years the cloud will win by a wide margin. Let’s face it—-the cloud is already starting to win and all you have to do is show up at one of Amazon Web Services’ customer powwows to know the writing is on the server rack.
On Thursday, I caught up with Cycle Computing CEO Jason Stowe. There’s a lot to like about Cycle Computing. First, the company is bootstrapped so there’s instant respect. Second, Cycle Computing is at the forefront of making high performance computing clusters for the masses. And third, Cycle Computing has top insurance and pharmaceutical companies as customers. Cycle Computing had massive customers from day one. In other words, Cycle Computing is the real deal, hooked up with Amazon Web Services and will enable a lot of science to happen just by democratizing HPC for smaller companies.
Stowe noted that Cycle Computing is starting to land manufacturing and engineering customers now for its HPC management software and cloud connections. In other words, this HPC for the masses is catching on. If you play this out, there will be fewer servers sold because folks will be using Rackspace, AWS or some other former hardware focused vendor.
Today, it’s big data and research compute driving Cycle Computing demand. Tomorrow every company will have the mathematic models and horsepower to simulate just about anything. You won’t buy your own servers for that computing power.
Stowe said servers will become like wheat fields not things you name. “Today servers are hugged, named and managers know their quirks. There’s an attachment. In the future server clusters will be more like wheat fields. You grow the wheat, reap and sow, eat and replant the seeds. There’s no attachment to the wheat,” said Stowe.
In other words, Stowe’s excellent analogy on servers and meeting compute demand translates into cloud farms and fields. Most companies are going to hit the brakes on new server buying as soon as the depreciation ends and new compute demand has to be met. Play this out and the profit margins on servers aren’t going to look so hot.
IBM sees all of the servergeddon scenarios developing and that’s why it’s ditching its commodity server business now. Let Lenovo, which has the scale and ambition to do the commodity server game, carry the ball from here and duke it out with HP and Dell.
Oracle Is Bleeding At The Hands Of Database Rivals | TechCrunch -
Alternative database technologies - including NoSQL - are beginning to cut into Oracle’s revenues.
Something is seriously wrong in Larry Land. Oracle does not command absolute control like it once did. You can see this clearly with the earnings the company posted last week and the growth that startups like Datastax are witnessing as more customers seek alternative databases for online applications.
Until this past week, the extent of Oracle’s problems were not known. But there is a cut, a slight bleeding that’s now visible. But how deep is the cut? How much is Oracle really bleeding? That’s exactly the question analysts asked in a Reuters story after the earnings results:
“Data base revenue, which has been the cash machine of the company, has changed. There are now alternative databases, as well as the cloud,” said Mark Moerdler, an analyst at Bernstein Research. “That pressure is still a tiny bleed, but it is out there and the question is – is it bigger than we think it is?”
We know this much. Oracle reported this week that new software licenses are down two percent. And that decline is in part reflected by the adoption of NoSQL databases offered by Datastax and a variety of other services that use in-memory technology and new SQL offerings at the database layer. Update: Of course, there are competitive forces at play with enterprise giants such as SAP, IBM and Microsoft playing their part. But it’s the startups that represent the core of the innovation.
The reason for the drop has more to do with the enterprise acceptance of online applications more than anything else, said Datatastax CEO Billy Bosworth in an interview last week.
That’s the truth. NEA Ventures Scott Sandell said to me at SXSW that CIOs are convinced to move their workloads but cloud security is still an issue.
That’s where companies like Datastax enter the picture. Datastax is built on Cassandra, a high performance, fault tolerant Apache open-source database technology.
Datastax, founded in April 2010, finished its first year with 26 employees. It ended 2012 with 100 employees. Bosworth expects to have 160 people on staff by the end of this year.
Customer growth has increased significantly. By the end of 2011, Datstax had 27 customers. One year later it had 270, with 20 from the Fortune 100.
Several dozen of those customers have moved either all or parts of their application off relational technology such as what Oracle provides.
When companies come to Datastax, they say the number one thing they need is security, Bosworth said. They are building from day one to avoid disaster scenarios.
Datastax, like other NoSQL providers, spans its database technology in a fully distributed way, across private data centers and the cloud.
Datastax differentiates by offering high performance at scale but without complexity.
How customers use Cassandra reflects on why Oracle growth has begun to stall. Often, customers will continue to use Oracle databases but will put it deeper in the backend. They will take another piece of the app and put it on Datastax.
Customers will build in a middle layer of services components that allows the app to decide which database to use for which workload.
Lighter Oracle workloads means less revenues, which we see reflected in the company’s earnings.
To counter this swarming hive of distributed systems, Oracle has taken the opposite approach, building out engineered solutions with their software running on big, new age mainframes. That strategy does not seem to be working very well. Oracle bought Sun Microsystems with plans to sell the hardware with its software.
Analysts tend to agree:
“The problem is, the growth of SaaS (software as a service) applications is undermining that strategy. When you subscribe to salesforce.com, you don’t need to buy a database, middleware or hardware,” said Patrick Walravens, an analyst at JMP Securities in a Reuters story last week.
Oracle has lost money every quarter since it acquired Sun for $5.6 billion. And there is little proof that companies are going to start using one company like Oracle for all their hardware and software needs. Instead, they will mix Oracle software on commodity systems. Or they may even go with the new open-source server technology coming out of Open Compute. They have plenty of other options, too. OpenStack, the open cloud effort, is growing fast, as is Cloudstack, the open-source cloud service now part of the Apache Foundation.
Datastax has its own challenges. It competes with Amazon Web Services and all the other NoSQL providers such as 10gen. The ecosystem is still quite young. Finding qualified people is a challenge. Developers need more education, a change in thinking for the new cloud approach.
But overall, it’s clear that Oracle really is starting to show the pains of being an aging innovator. The earnings show a slight cut. The question is how deep the cut is and how Oracle will respond to challengers like Datastax.
IT Departments Have Become Completely Useless - Business Insider -
Another article on Chief Digital Officers —
The role of the CIO, the Chief Information Officer, has been debated about as long as the term in itself exists. Rarely before has there been such a misleading description, because in many companies the person assuming the position of CIO was rarely seen as the chief ‘Information' Officer. People mostly perceived him as “Top Dog of the Nerd Herd and Boss of all things Bits and Bytes”.
I’m paraphrasing here, but that seems to be the general gist of the sentiments that I’m getting from the business community. I teach a course at London Business School for the Senior Executive Program. Top executives from all over the world spend three weeks in London to learn about the latest findings in the exciting fields of Strategy, Finance, Marketing, Innovation and Leadership. Oh, and in technology. That’s where I come in.
When I enter the class room on the first day of my ‘Information Technology’ course, more often than not, I am greeted in an understated – maybe even proactively bored – manner. Remember, these are top execs leading some of the largest companies in the world. The first thing on my teaching menu is to have them do a simple word association on their feelings about ‘IT’. The responses tend to be crude: ‘boring’, ‘complex’, ‘costly’, ‘always too late’, ‘annoying’ are some of the kinder ones. And when I mention ‘IT departments’ I get wonderfully colorful comments such as ‘arrogant’, ‘out of touch with reality’, ‘language of their own’ and - increasingly often - ‘hopelessly out of date’.
CIO’s have lost the edge
The tension between ‘business’ and IT has been around forever, but instead of getting better, it has gotten worse in the last couple of years. The reason is that digital has become ’normality’, and almost everyone now feels at ease with digital technology. In other words, the natural knowledge advantage of the IT department has eroded. To put it bluntly, since everyone and their dog started carrying around iPads, the IT department really lost their advantage on the ‘frontier of technology’.
I think the CIO is greatly to blame for this. In many companies the CIOs never fulfilled their roles as such and rather persisted in performing the more comfortable job of Chief Technology Officer (CTO). The reason being that the most of these people had been running IT before it was even called IT. The origins of IT date from the ‘Electronic Data Processing’ age when companies had units processing vast amounts of (financial) data. Many IT departments seem stuck in their role as ‘suppliers of technology’. Very few have really stepped up to what the CIO job description is really all about: having a solid impact on how companies are dealing with information.
Many so-called CIO’s limited themselves to supplying their colleagues with copies of Microsoft Office on laptops, and ever so kindly offered them SharePoint servers to store their documents. But very few had a solid influence on how companies deal with content, build up knowledge, and how they could innovate with information. Many CIO’s provided their employees with cell-phones, then Blackberries, and - when it became impossible to postpone the inevitable - with iPhones and other Smartphones. They gave the gift of nomad hardware and software – secured it - and that was it, basically. Making sure that their organizations could benefit from the endless possibilities of the mobile revolution seemed one bridge to far for most.
That’s why the CIO rarely had a real seat at the executive management table. And why most still reported to other more powerful executives, often the CFO. Chris Anderson, the chief editor of Wired, once said that ‘CIO’s have become the dead weight in an organization that keeps the real (technology) innovators from taking matters into their own hands’. Ouch.
The rise of the Chief Digital Officer
But recently, we’ve seen the rise of a new breed of CXO: the ‘CDO’ or Chief Digital Officer. Who is that dashing corporate person that deals with all things digital and social ? Why, it’s the CDO ! Who is that person that tackles the strategic questions on Big Data and Analytics Innovation? Why, it’s the CDO ! This next gen IT hero is the one who really understands digital as a means of innovating the company. His daring mission is to transform the business model of the company. The CDO does not implement technology, no, he implements technology enabled innovation.
This brings a fundamental question to mind: are the CIO, the CTO and the CDO the same person, or are they profoundly different? Are we talking Clark Kent/Superman here?
Over the last five years, I’ve collaborated with hundreds of CIO’s all around the world, understanding where they are heading and what they are focusing on. The general sentiment seems to be that many CIO’s today absolutely want to take up that new corporate superstar function of Chief Digital Officer. Unfortunately, most have two humongous obstacles in front of them.
The challenges for the CIO
The first is that many CIO’s today lack the right talent in their IT departments to boost their relevance in the digital space. Sure, their divisions are swarming with people who understand infrastructure, servers, and neat systems such as Exchange or SAP. But rarely do they have the digital skills on board that matter today: social networking skills, Big Data analytics experience, digital communications knowledge, conversation management savvy-ness, etc.
The second issue for CIOs wanting to become CDOs is that they are rarely perceived by their business counterparts as ‘credible’. The reason is that many of the digital opportunities require a deep insight into the business challenges and the CIO’s environment often doubts if they have the goods to back this up. That’s partly because CIOs are still struggling with past ‘criminal’ records’ starring complex and very painful ‘IT projects from hell’. Safe to say that their reputations are often dented and reliability and respect are not the first things that come to mind when thinking about them.
Therefore, we see that many Chief Digital Officers in companies do NOT have an IT background. They come from such well-reputed corporate regions as marketing, business development, or sales. From anywhere but IT, actually.
Batman or Robin ?
And there you have it: many organizations now have an IT department filled with ‘digital skills from the olden days’ run by the CIO as well as a ‘digital’ division with ‘new digital’ talent lead by the CDOs. Who are often more than two decades younger than the CIOs.
I honestly believe that clever organizations will find a way to reconcile the two. Because what happens in the ‘new’ digital field in terms of customer innovation will have to be connected and integrated at one point with the ‘old’ digital back-office of the company.
However, the CIO will need to undergo a huge shift in responsibility to assume that role. Time for the CIO to decide if they want to be Batman or Robin. This is the time to separate the boys from the men. I also believe it will require a complete makeover of the IT department to make this work. And it will finally mean that the CIO will have to step up to the plate and at long last truly assume the role of Chief ‘Information’ Officer.
A CMO, a CIO, and a chief digital officer walk into a bar... - Chief Marketing Technologist -
The birth of a new role — very interesting.
There’s been a resurgence of popularity for the role of a Chief Digital Officer (CDO) lately. Last fall, Gartner made the prediction that 25% of organizations will have a CDO by 2015. And that’s shaking up the corporate technology power structure in uncomfortable ways for many CIOs — and I suspect for some CMOs too.
“The Chief Digital Officer will prove to be the most exciting strategic role in the decade ahead,” predicts Gartner VP David Willis. “The Chief Digital Officer plays in the place where the enterprise meets the customer, where the revenue is generated, and the mission accomplished. They’re in charge of digital business strategy.”
In some firms, the CDO is essentially in charge of the online business unit, the e-commerce portion of the business. Russell Reynolds Associates, in their epic article on The Rise of the Chief Digital Officer, notes that in retail and leisure sectors, such digital businesses are the fastest growing revenue stream. At media companies, struggling to survive in a world that has redefined media, CDOs are the star-crossed warriors charged with building the digital properties and supporting business models on which their future depends.
These scenarios make a lot of sense as business units.
But the role and reach of the CDO seems to be evolving as rapidly as everything else related to the digital sphere — it’s actually quite hard to find something that isn’t related to digital in some way these days. CDOs are appearing in companies, not as explicit business unit owners, but as hybrid marketing-technology change agents at the right hand of the CEO.
For instance, that Russell Reynolds article actually begins by stating (emphasis added is mine): “The challenges and opportunities for businesses in this digital age are enormous. Companies need to be fleet-footed to keep pace with changing technology and consumer behavior. Business strategies now must be seamlessly interwoven with ever-expanding digital strategies that address not only the web but also mobile, social, local and whatever innovation there may be around the corner.”
That kind of sounds like, well, everything. Except maybe janitorial services?
The CIO is feeling the heat
Because all things digital are powered under the hood by technology, the executive who has perhaps felt the most immediate pressure from the rise of the CDO is the CIO.
Peter Hinssen captured the situation quite viscerally in his provocative — provocative in the way one might provoke a tiger with a sharp stick — article on Business Insider earlier this month, IT Departments Have Become Completely Useless. (Don’t pull any punches, Peter.)
“Who is that dashing corporate person that deals with all things digital and social?” he writes breathlessly. “Why, it’s the CDO! Who is that person who tackles the strategic questions on big data and analytics innovation? Why, it’s the CDO! This next-gen IT hero is the one who really understands digital as a means of innovating the company.”
Some believe that the CIO will morph into the CDO. But according to Peter Hinssen, “Many Chief Digital Officers in companies do NOT have an IT background. They come from such well-reputed corporate regions as marketing, business development, or sales. From anywhere but IT, actually.”
The barriers are two-fold.
First, the kinds of technology that CIOs have had the most expertise with are generally back-office in nature. In many companies, they’ve been ill-positioned to champion more front-office technical innovations, either due to cost or security concerns or because it fell outside their comfort zone or the capabilities of their staff. As I wrote in an article some time ago — why marketing and IT are diametrically opposed — a significant part of this barrier is the structural incentives around which IT was intentionally chartered.
Second, a number of CIOs seem to be pigeonholed by the C-suite more as technical leaders than general business leaders. And now that CEOs are seeking a change agent to transform their enterprises into the digital age — in many circumstances, a “turnaround” kind of mission — the CIO may not be viewed as the right kind of leader for that job.
CIO.com recently published an article Do Chief Digitial Officers Spell Trouble for CIOs? Their short answer was yes. In many cases, “the CDO is an executive from outside the company — and outside IT — who parachutes in at the behest of a CEO who is adamant about corporate transformation. Usually reporting to the CEO, the CDO gets the authority to rearrange staff and request funding to launch big plans.”
Dave Aron of Gartner calls that a “vote of no confidence” in the CIO.
To be sure, many CIOs would like the CDO job. Gartner estimates that about 20% of CIOs have already taken on those responsibilities. And they sound quite optimistic about the opportunities for CIOs who step up to the challenge. But CIOs are Gartner’s bread-and-butter customers. Peter’s candid editorial suggests that may be a hard step to climb.
But what about the CMO?
Yet surprisingly, I haven’t heard as many concerns raised by the CMO community: how does a CDO who reports to the CEO, and the not the CMO, affect their position in the enterprise leadership Pantheon?
Sure, the CDO is independently wielding technology to accomplish his or her mission — what makes the CIO nervous. But that’s merely a means to an end. The mission of the CDO is to understand and connect with the organization’s modern customer and to take charge of crafting the experience those customers receive. This is especially true in organizations where the CDO role is broader than a specific business unit.
Where does that leave the CMO? Overseeing the sundowning of traditional marketing channels to a winnowing number of non-digital customers? Doing “branding” — not the modern kind of brand-as-experience, but old school logos and taglines validated by focus groups? Handling “PR” — not the modern kind of everything-social-is-PR (and pretty much everything is social), but old school news releases and press conferences?
I’m exaggerating to make a point, but in a C-suite that has a strong CDO and a digitally inexperienced CMO, that may not be too far off the mark. The CMO might start to feel like that poor wretch in Office Space who keeps having his desk moved to smaller cubicles in darker corners of the building. Next to go is his stapler.
What is marketing’s purpose if not to understand and connect with the customer?
I fully appreciate that understanding and connecting with modern customers is more complex than ever and requires enormous changes to what we’ve called “marketing” in the past. I sympathize with more traditional marketing leaders who have had a veritable tidal wave of changes crash upon them with a velocity that is nothing short of dizzying. This is an epic challenge.
But that doesn’t change marketing’s responsibility. If you carve out all things digital from marketing — in a world that is asymptotically approaching all things being digital — and give it to a CDO who’s independent of the CMO, then the CMO has lost that responsibility. And with great responsibility goes great power.
If I were a CMO, I would be as nervous about a direct-to-the-CEO CDO as the CIO. (On the bright side, previously distant CMOs and CIOs might finally have something in common — and more reason than ever to go get a beer together.)
Is there a better solution?
Yes! Marketing should own digital. Because digital is inherent in understanding and connecting with the modern customer. And regardless of whatever C-level role wins this responsibility, understanding and connecting with the modern customer is marketing.
The ideal scenario, I believe, is for the CMO to preempt a digital coup and hire a CDO as his or her right hand with the urgent mission of collaboratively absorbing all things digital into the very definition of a unified modern marketing department. This role may be more like a chief marketing technologist — or the CDO may have a chief marketing technologist as their right hand for the more technical facets of that transformation.
But the technology is simply a means to an end. The vision is that understanding and connecting with customers is fully unified under marketing’s umbrella.
After all, there still are non-digital aspects of understanding and connecting with customers in most businesses. But to customers, the lines between digital and non-digital are nearly invisible. They simply expect continuity in their experience with you.
Only a truly unified marketing department can deliver that experience.
Change agents, team players, and the post-digital era
Of course, ideal scenarios and reality don’t always match.
It may be that in entrenched, large-scale organizations, the overhaul of marketing from within may be too hard to execute in the timeframe that the market is demanding digital mastery. It may be that the CMO — as brilliant as he or she is in their own ways — is just not up for the challenge of having to lead that transformation and to hire and deftly manage a powerhouse CDO (or multiple digital and marketing technology leaders).
In which case, if I were the CEO, I’d hire a CDO and make them my agent of change.
Now, in practice, I don’t believe that digital has to be a one-chief-to-rule-them-all battle for corporate dominance. In fact, cooperation between all the heads of the business is more necessary than ever in a world where, literally, everything is connected. If there’s a CMO, a CIO, and a CDO, they should — they must — find ways to work together in the best interest of customers and the business. Such collaborations can be not merely congenial, but inspiring and immensely effective.
But in the fluid battlefield of modern markets, there is also great value to having individual leaders with undisputed authority to make swift decisions. If too much of tactical execution requires consensus from a committee, it’s going to be a drag on the firm’s competitiveness. Nimbler competitors will outmaneuver them.
When it comes to understanding and connecting with the modern customer, that leader can be the CMO or the CDO — but it’s harder for it to be both.
Eventually, either the CDO reports to the CMO (probably, I’m afraid, a new CMO by that time) or the CDO becomes the CMO. At which point, the firm will have successfully completed its transformation and entered what David Cooperstein of Forrester calls the post-digital era: digital, business, and marketing are all one in the same.
In fact, if a company doesn’t recombine them, something is seriously wrong.
“I see nothing wrong with hiring a chief digital officer to accelerate growth in the digital space,” said Tarik Sedky, CDO of agency Young & Rubicam from 2007-2010, an an Adweek article from 2011, Chief Digital Officer Title Won’t Die. “I think the real problem is having a chief digital officer for more than three years.”
Where will CDOs go after their positions are assimilated into fully transformed firms?
Some may indeed become the new CMO. For others, the Russell Reynolds article concludes, “CDOs who demonstrate their ability to manage change and transform their businesses almost certainly will lead the way in the rise of the Digital CEO.”
A Dangerous Sign For VMware, PayPal Chooses Rival OpenStack - Business Insider -
Positive press for OpenStack -
PayPal and eBay are yanking VMware software from some 80,000 servers and replacing it with the free and open-source alternative known as OpenStack, Boris Renski, OpenStack Foundation board member told Business Insider.
Renski is also a cofounder of Mirantis, an OpenStack consultant company backed by Dell and Intel. Mirantis worked with PayPal on the project, he says.
PayPal used a set of tools from Mirantis called Fuel, a PayPal spokesperson told us.
Today Mirantis released Fuel for free to the public. (In geek speak: it was released under the open source Apache 2.0 license). It’s a collection of scripts and software that helps companies deploy OpenStack.
Initially, PayPal is replacing VMware on about 10,000 computer servers. Those servers will go live this summer, Renski said. “The grand vision for project is, over time, they will replace all of their virtual infrastructure with OpenStack, not just PayPal, but PayPal and eBay, together,” Renski said. That’s about 80,000 servers across their data centers, he said.
PayPal has been a big supporter of Open Stack for a while. But this project is still dangerous territory for VMware, as PayPal could become an example of how other enterprise can replace VMware with OpenStack, too.
To be sure, enterprises are not dying to get rid of VMware, even to save money on software license fees. Most of them really love VMware’s software because it’s a reliable way to run lots of different applications on the same computer server.
But cloud wars are coming between different so-called “cloud operating” systems: VMware is up against OpenStack (backed by IBM, HP, Rackspace, Red Hat, others) and CloudStack (another open source project, backed by Citrix).
Think of this like the desktop operating system wars: Windows vs. Macs vs. Linux.
The ultimate goal for most enterprises is something called a “hybrid” cloud. This means that a company will run some of its apps in its own data center (a “private cloud”) and some of them in a public cloud. They can easily move apps between the two.
More importantly, they can use multiple public clouds. If one provider has problems, they can quickly switch to another.
Enterprises will have to choose their cloud operating system and the stakes are high. Enterprises will spend $80 billion on cloud computing by 2016, Gartner estimates.
So where does the biggest cloud player, Amazon, fit into all of this? Amazon is the reason for it all. These cloud operating systems rose to compete with it. The idea is to reassure enterprises that they if they choose an alternative to Amazon, they will have lots of cloud computing vendors to choose from, not just one.
Jean-Baptiste Queru - Google - Dizzying but invisible depth You just went to the Google… -
A really interesting take on technology and the complexity that characterizes our modern predicament.
You just went to the Google home page.
Simple, isn’t it?
What just actually happened?
Well, when you know a bit of about how browsers work, it’s not quite that simple. You’ve just put into play HTTP, HTML, CSS, ECMAscript, and more. Those are actually such incredibly complex technologies that they’ll make any engineer dizzy if they think about them too much, and such that no single company can deal with that entire complexity.
You just connected your computer to www.google.com.
Simple, isn’t it?
What just actually happened?
Well, when you know a bit about how networks work, it’s not quite that simple. You’ve just put into play DNS, TCP, UDP, IP, Wifi, Ethernet, DOCSIS, OC, SONET, and more. Those are actually such incredibly complex technologies that they’ll make any engineer dizzy if they think about them too much, and such that no single company can deal with that entire complexity.
You just typed www.google.com in the location bar of your browser.
Simple, isn’t it?
What just actually happened?
Well, when you know a bit about how operating systems work, it’s not quite that simple. You’ve just put into play a kernel, a USB host stack, an input dispatcher, an event handler, a font hinter, a sub-pixel rasterizer, a windowing system, a graphics driver, and more, all of those written in high-level languages that get processed by compilers, linkers, optimizers, interpreters, and more. Those are actually such incredibly complex technologies that they’ll make any engineer dizzy if they think about them too much, and such that no single company can deal with that entire complexity.
You just pressed a key on your keyboard.
Simple, isn’t it?
What just actually happened?
Well, when you know about bit about how input peripherals work, it’s not quite that simple. You’ve just put into play a power regulator, a debouncer, an input multiplexer, a USB device stack, a USB hub stack, all of that implemented in a single chip. That chip is built around thinly sliced wafers of highly purified single-crystal silicon ingot, doped with minute quantities of other atoms that are blasted into the crystal structure, interconnected with multiple layers of aluminum or copper, that are deposited according to patterns of high-energy ultraviolet light that are focused to a precision of a fraction of a micron, connected to the outside world via thin gold wires, all inside a packaging made of a dimensionally and thermally stable resin. The doping patterns and the interconnects implement transistors, which are grouped together to create logic gates. In some parts of the chip, logic gates are combined to create arithmetic and bitwise functions, which are combined to create an ALU. In another part of the chip, logic gates are combined into bistable loops, which are lined up into rows, which are combined with selectors to create a register bank. In another part of the chip, logic gates are combined into bus controllers and instruction decoders and microcode to create an execution scheduler. In another part of the chip, they’re combined into address and data multiplexers and timing circuitry to create a memory controller. There’s even more. Those are actually such incredibly complex technologies that they’ll make any engineer dizzy if they think about them too much, and such that no single company can deal with that entire complexity.
Can we simplify further?
In fact, very scarily, no, we can’t. We can barely comprehend the complexity of a single chip in a computer keyboard, and yet there’s no simpler level. The next step takes us to the software that is used to design the chip’s logic, and that software itself has a level of complexity that requires to go back to the top of the loop.
Today’s computers are so complex that they can only be designed and manufactured with slightly less complex computers. In turn the computers used for the design and manufacture are so complex that they themselves can only be designed and manufactured with slightly less complex computers. You’d have to go through many such loops to get back to a level that could possibly be re-built from scratch.
Once you start to understand how our modern devices work and how they’re created, it’s impossible to not be dizzy about the depth of everything that’s involved, and to not be in awe about the fact that they work at all, when Murphy’s law says that they simply shouldn’t possibly work.
For non-technologists, this is all a black box. That is a great success of technology: all those layers of complexity are entirely hidden and people can use them without even knowing that they exist at all. That is the reason why many people can find computers so frustrating to use: there are so many things that can possibly go wrong that some of them inevitably will, but the complexity goes so deep that it’s impossible for most users to be able to do anything about any error.
That is also why it’s so hard for technologists and non-technologists to communicate together: technologists know too much about too many layers and non-technologists know too little about too few layers to be able to establish effective direct communication. The gap is so large that it’s not even possible any more to have a single person be an intermediate between those two groups, and that’s why e.g. we end up with those convoluted technical support call centers and their multiple tiers. Without such deep support structures, you end up with the frustrating situation that we see when end users have access to a bug database that is directly used by engineers: neither the end users nor the engineers get the information that they need to accomplish their goals.
That is why the mainstream press and the general population has talked so much about Steve Jobs’ death and comparatively so little about Dennis Ritchie’s: Steve’s influence was at a layer that most people could see, while Dennis’ was much deeper. On the one hand, I can imagine where the computing world would be without the work that Jobs did and the people he inspired: probably a bit less shiny, a bit more beige, a bit more square. Deep inside, though, our devices would still work the same way and do the same things. On the other hand, I literally can’t imagine where the computing world would be without the work that Ritchie did and the people he inspired. By the mid 80s, Ritchie’s influence had taken over, and even back then very little remained of the pre-Ritchie world.
Finally, last but not least, that is why our patent system is broken: technology has done such an amazing job at hiding its complexity that the people regulating and running the patent system are barely even aware of the complexity of what they’re regulating and running. That’s the ultimate bikeshedding: just like the proverbial discussions in the town hall about a nuclear power plant end up being about the paint color for the plant’s bike shed, the patent discussions about modern computing systems end up being about screen sizes and icon ordering, because in both cases those are the only aspect that the people involved in the discussion are capable of discussing, even though they are irrelevant to the actual function of the overall system being discussed.
Peter Thiel Talks About the Day Mark Zuckerberg Turned Down Yahoo's $1 Billion | Inc.com -
An interesting corrective to the idea that pure, black-and-white analytics is a panacea. Analytics isn’t a replacement for vision and creativity. The most successful companies have a firm view of a possible future and they align their priorities and decisions around it.
Thiel described the argument Zuckerberg finally came down on like this: ”[Yahoo] had no definitive idea about the future. They did not properly value things that did not yet exist so they were therefore undervaluing the business.”
Thiel told this story to make a larger point about how the most successful entrepreneurs operate. He said that the best entrepreneurs, like Zuckerberg, have a definitive view about the future and plan for it; they don’t willy-nilly chase luck—using statistics, probability, and iterative processes—to stumble upon something, anything that flies.
"All of us have to work toward a definite future…that can motivate and inspire people to change the world," he said. In this scenario, "luck is something for us to overcome as we go along the way, but not something that becomes this absolute dominating force that stops all thought."
Thiel doesn’t subscribe to what he calls the start-up “religion” of a-b testing every tweak (until you run out of money) or incrementally-iterating at every step—to be so systematically chasing some random success that it strips out all conviction and creative ideas about the future.
How an unknown Taiwanese server maker is eating the big guys’ lunch — Tech News and Analysis -
Never heard of Quanta before — but they seem like somebody to watch in the server market.
It all started, Mike Yang says, with a conversation he had with Facebook’s vice president of technical operations in 2007 or 2008. Rather than source servers through a traditional vendor like IBM for its data centers, Facebook turned to Quanta.
Back then, Quanta didn’t sell servers directly to customers, it only built them for traditional server vendors who then put their name on them and sold them to customers. Fast forward a few years, and a majority of Quanta’s server revenue stems from direct deals — 65 percent in 2012, and a forecasted 85 percent this year. Now, it counts other large-scale server buyers such as Rackspace among its customers.
Yang, the man in charge of Quanta’s cloud computing business unit, beamed during an interview on Thursday as he spoke about how the company can directly offer energy-efficient and high-performance products for webscale customers and smaller ones, too. If the Taiwan-based hardware maker’s 85 percent forecast proves out, the company could become a more recognized supplier for cloud computing venues, further threatening old-line server vendors like Hewlett-Packard and Dell.
The company, with U.S. headquarters in Fremont, Calif., didn’t show projections of server revenues in dollars or server shipments in total but said it shipped 1.2 million server motherboards in 2012 and plans to ship at least 10 percent more — 1.32 million motherboards — this year.
Quanta appears to be on a roll with Quanta-brand direct server sales growth. At the same time as it’s doing custom jobs for webscale customers, it’s also promoting direct sales of other gear, including off-the-shelf storage and network appliances, to smaller customers through a subsidiary Quanta established last year, Quanta QCT.
The company has a few strategies in mind for shifting from an original-design manufacturer to a name brand in its own right, at least in servers. It sees full racks of equipment, under the Rackgo name, as a major seller this year. The Rackgo offering, which includes compute, storage and network appliances, can appeal to customers because there’s simply one company to go to when problems arise, Yang said.
And then, of course, there’s the Open Compute Project — the Facebook-led open-source hardware initiative that kicked off Quanta’s evolution as a direct server vendor. Quanta will come out with multiple products based on Open Compute specifications later this year, although exact timelines weren’t immediately available.
Next month, the company will open an office in Seattle in order to be closer to customers. Yang said Quanta has several customers in the area, although he declined to name them. Microsoft, which is building huge data center capacity for Windows Azure and its Live offerings, is a short drive from Seattle, in Redmond, Wash., and Seattle is much closer to Quincy, Wash., a hotbed of data centers, than the Fremont office. Quanta will add more U.S. offices for sales and service this year, Yang said.
Quanta is also opening up to the press, rather than silently working behind the scenes. That campaign started last year.
The company’s business model has undergone a sea change. If the upward trajectory keeps up and the server-market dynamics keep shifting in its favor, Quanta could become one of the stalwart name brands of IT technology.
Cisco Says Its "Internet of Everything" Is Worth $14.4 Trillion. Really? – ReadWrite -
Cisco is starting to put some more robust thought leadership behind their “internet of everything” idea.
Networking giant Cisco predicted Wednesday that as we move into a “fundamentally mobile and video” world, the “Internet of Everything” — which combines the so-called Internet of Things with the Internet used by people and their mobile devices — will create $14.4 trillion in value and boost overall corporate profits by 21%. All by 2022.
Those are some pretty big numbers, shared by Cisco executives at a press event in San Jose on Wednesday. But while the vision makes sense, quantifying the changes to be wrought by growth of the Internet of Everything seems, well, fairly abitrary. To say the least.
Rob Lloyd, Cisco President, Sales and Development, broke down the $14.4 trillion figure this way:
- $2.5 trillion in better asset utilization
- $2.5 trillion in employee productivity
- $2.7 in supply chain logistics
- $3.7 trillion in better customer experience.
- $3 trillion in enabling new innovations.
Those may seem easier to grasp, but when you’re talking in trillions over decade-long time frames, it’s very hard to put much credence in calculations like these.Perhaps we can start by seeing which industries benefit first and most dramatically. According to Lloyd, the top candidates include manufacturing, the public sector, energy and utlities, healthcare, finance/insurance, transportation and wholesale/distribution.
The Internet of Everything combines several trends, including the growth of connected devices, the increasing use of video, cloud computing, Big Data and the increasing importance of mobile apps compared to traditional computing applications.
Lloyd did lay out numbers to support the importance of the trends. But though these are also all giant numbers, connecting them to the $14.4 trillion figure still requires a leap of faith.
In terms of connected devices, he said, we’ve gone from 200 million in 2000 to 10 billion devices today, to a predicted 50 billion by 2020. On the mobile side, Lloyd said, 20 billion mobile apps were downloaded last year alone. By 2017, he added, two-thirds of mobile traffic will be video.