Marketing myopia

Tech marketers talk constantly about the need to reach “C-level” executives. But that is such a simplistic view of technology adoption. Sure, the CIO is important, but real technology change almost always begins lower in the organization. CIOs are some of the most risk-averse people on the planet. So why are marketers going to CIOs to try to effect change in the organization?

I put together an off-the-top-of-my-head list of disruptive technologies that have been introduced in the last 20 years without the involvement of IT management. It’s long and I’m sure I’ve missed a few.

Disruptive technology – that which changes the way we do things – is never introduced at the top of an organization. It almost always comes in through the back door. In fact, I can think of only a couple of game-changing technologies that were driven by top IT management: routers and VoIP switches.

Here’s my list of mainstream technologies that were successful in spite of opposition by IT management. Tell me what I missed.

  • PCs
  • Word processing software
  • Spreadsheets
  • Personal faxes
  • Personal printers
  • LANs
  • Unix workstations (which drove Unix adoption on the server)
  • GUIs
  • Presentation graphics
  • Cell phones
  • The Internet
  • PDAs
  • Instant messaging
  • Net conferencing
  • Streaming audio/video
  • Open source/Linux
  • Peer-to-peer networks
  • Wireless LANs

Two podcasts I highly recommend

Doug Kaye’s wonderful IT Conversations site has a couple of sparkling podcasts you’ll enjoy. Less is more by psychologist Barry Schwartz proposes that the stress in our lives is due in large part to the profusion of choices that we have. Whether or not we choose to whip out the BlackBerry or our laptop during our son’s baseball game isn’t as important as the fact that we could do those things. We’re stressed because we have so many options and we feel guilt and regret over the options we didn’t chooose.

Schwartz maintains we need fewer choices in salad dressings (he counted 75 varieties at his local supermarket) and more in political parties. He cites wonderful examples of how consumers shut down in the face of too much choice and opt not to choose at all. It’s thought-provoking, even if you don’t agree with him (which I’m not sure I do).

Also, check out Human Nature by Malcolm Gladwell, the author of the fascinating Blink. It’ll challenge your faith in market research by convincing you that people don’t say what they really think and that their actions are often very different than their intentions. His dissection of the failure of New Coke is particularly interesting.

July 3, 1991

If you Google the date of July 3, 1991, you won’t find much of interest, but I couldn’t let Independence Day pass without noting the importance of that date in tech history. That’s the day that IBM, Apple and Motorola rocked the industry by announcing plans to cooperate on a line of products and technologies. Apple would use IBM’s chips, IBM would incorporate the Mac into its enterprise computers, and the two companies would cooperate on some joint ventures in software development and multimedia.

Ultimately, little came of the deal. The joint venture companies — Kaleida and Taligent — fizzled. Apple continues to use IBM-designed chips, although it’s moving to Intel next year. The Mac never became an important player on the corporate desktop.

But I think this was a turning point for the industry in two respects. One is that it was the first time IBM had even acknowledged the existence of PC competition and actively engaged a competitor in a joint venture. Prior to the Apple deal, IBM was an arrogant and imperious company that tried to do everything its own way. Even in 1991, it was still trying to shove proprietary designs like the PS/2 and OS/2 down the throats of unwilling users. The Apple deal was the computer industry equivalent of the toppling of the Berlin wall. It gave an important seal of approval to the concept of “co-opetition,” or cooperating with one’s competitors, and that concept is a widely accepted way of doing business today.

The deal was also an early acknowledgement by two prominent companies that interoperability was important to users. At that time, the industry was still fragmented into many competing and incompatible camps and the chaos was driving users crazy. IBM’s stepping forward to embrace a competitor’s products signaled the beginning of an end to all this.

It was certainly an interesting time for IBM. The company was about to enter a business vortex that would lead to an $8 billion loss the next year and the removal of its chief executive. But the IBM that was reborn from that crisis was one that was serious about open systems and interoperability and that is much better positioned to thrive in the long term. Like glasnost, the Apple deal was the first step in changing calcified thinking, but that change led to much bigger impacts across the industry.

Oracle surprises, but it shouldn't


Oracle surprised a lot of people last week by reporting a jump in earnings fueled by acqusitions and North American business. What gives? Isn’t this a company tormented by user dissatisfaction, a competitive onslaught from SAP and the distraction of absorbing a very large company in Peoplesoft?

Yes, but those things have very little to do with Oracle’s business, which is humming along with very little reason for concern. The database business is secure, despite the ongoing challenges from SQL Server and open source alternatives. That fact is that for industrial strength applications, Oracle is still the default choice for business, and that is a very good position to be in.

The company’s recent moves into the ERP market are intriguing, and I think will ultimately be successful. A lot has been made in the press of the dissatisfaction of Peoplesoft customers with Oracle’s stewardship, but in its conference call last week, Oracle claimed that customer retention rates are over 90%. This should be no surprise. ERP systems are pretty much hard-coded into a corporation’s IT infrastructure, and the costs and risks of switching can be astronomical. It’s good PR for SAP to run something like its Safe Passage Program but you can expect very few customers to actually take SAP up on the deal. Oracle has a similar program, by the way, which will have similar results.

Switching costs are underreported and underappreciated, but they are a great source of business leverage. Computer Associates built its business on this concept. CA bought failing companies for pennies on the dollar and then milked maintenance revenue for income. It’s a strategy that isn’t always popular with customers, but it works. Oracle knows this, and that is why it’s so confident in the ultimate success of its ERP strategy.

The ERP market is now a two-horse race, and Oracle is one of the survivors. Expect it to do very well. SAP, by the way, will do just fine, too. A duopoly is a great competitive situation if you’re one of the two companies involved. Customer choice, unfortunately, suffers. That’ll be a subject for another post.

IT enrollments down but they'll come back – believe me

Linda Tucci documents the dramatic drop in college computer science enrollments on SearchCIO.com this month. The decline is as much as 70% over the last 15 years by one measure.

There’s a lot that can explain this: outsourcing has put IT folks out of work, technology budgets have shrunk since the tech bubble burst and competing fields like finance and real estate development have looked a lot more lucrative recently.

But mainly this is a cyclical trend. CS enrollments have followed a sine wave pattern for many years in a contra-pattern with IT budgets. It’s a constant imbalance: computer enrollments decline when tech spending drops off and then when spending picks up again, there are too few students to hire. So enrollments increase.

In fact, SearchCIO.com documented this trend conveniently in an article just two days after the first one, reporting that 14% of CIOs plan to hire while only 3% plan to cut staff in Q3. What’s driving the trend? A bullish business outlook and the need to deploy new technology. The sine wave continues.

Podcasting is the future of Internet radio

Podcasting is taking off with amazing speed and this is a very exciting development. I am convinced this will be the future of Internet audio, at least until digital streaming to cell phones comes along. An article in the Wall Street Journal points out that Apple and Microsoft are both going to build podcast readers into their operating systems and that personalities like Rush Limbaugh and Al Franken are recording podcasts. There is so much to like about podcasting that it’s hard to believe that the move to this offline audio broadcasting won’t be dramatic and very disruptive to convential broacast media.

I’ve been a fan of offline audio for nearly 10 years. I subscribed to the Wall Street Journal on a service called Audible.com since 1996, and I feel an emptiness in my day if I don’t get my WSJ fix.

Yet I don’t think podcasts will send terrestrial broadcasting into the toilet or shake up people’s behavior in the short term. Podcasting is in the hype tornado right now. All kinds of media outlets are jumping on board and individual podcasters are testing this newfound electronic pulpit. But the fact is that most podcasts are really pretty awful. While listening to someone get up and pour himself a cup of coffee in the middle of a podcast may be novel and cute at the moment, in the long term the audiences will migrate to the more polished programmers. Like blogs, podcasts will give a voice to those who choose to use it, but the most successful podcasters will be the most polished. Still, expect that the podcasting movement will produce a few new stars.

The real impact of podcasting — as of any new medium — will be felt years down the road. Terrestrial radio has its work cut out for it as more and more of the two million MP3 player owners discover they can effectively program their own radio stations. Podcasting is to radio what TiVo is to TV, and broadcasters must adjust.

If you’re an IT pro or if you just like following the industry, check out Doug Kaye’s excellent IT Conversations podcast site. He’s posted hundreds of interviews and speeches from major technology conferences, including speakers like Lawrence Lessig, Clayton Christensen and Steve Wozniak. Doug isn’t trying to make money with this site. He just wants to share this wonderful stuff. Send him a donation.

A very bad prediction

I’ll start by citing a statement I made in my annual predictions column, this one for 2004:

Blogging’s wave has already crested now that millions of online diarists are realizing that not that many people actually read this stuff.
I missed this one by a mile because I was looking at things from the wrong perspective.

The Internet is important not because it’s a broadcast medium but because it’s a narrowcast medium. A lot of publishers made this basic mistake in the early years of the Web; they assumed that the Internet was simply another channel by which to deliver their broad and homogenized information. In fact, what the ‘Net created was a means for people with highly specific interests to connect with each other. The economics of this model didn’t make any sense in the traditional media business. We knew how to build businesses by delivering content to a million people, but not how to build them around audiences of a few hundred.

My own company, TechTarget, has been successful because it figured out the latter problem. You can build a successful business around select and small audiences if they’re the right people. You don’t get multi-million dollar Super Bowl ad deals out of the approach, but you can get a lot of smaller sales that aggregate to the same thing. You just have to approach the problem differently.

The error in my thinking two years ago was that I thought blogging was all about appealing to big audiences. It’s not. In the tech industry, people like Dave Winer, Mitchell Kapor, Jon Udell and Ray Ozzie define the blogosphere. They may not attract millions of readers, but they do attract a few thousand very committed viewers and that’s enough. That’s a proof of concept.

After 23 years in the tech journalism business, I’ve learned a little about a lot of things and not a lot about anything. I’ll leave depth to the people who know their fields very well: the Ray Ozzies and Dave Winers of the world. They are the core of the blog movement. The value that I can provide is in giving some context to the events that are going on in the tech sphere every day. Believe it or not, not a whole lot is new out there and much of the politics and intrigue of this industry has a predictable pattern. What isn’t predictable is the disruptive effects of new technology: how declining storage prices can lead to new applications of data mining or how global positioning systems can change the face of industrial logistics. That’s what really excites me about this industry: Little changes can have very big ripple effects. I’ll try to predict some of those changes in this blog.

And I’ll post a lot of silly pictures of my kids and my adventures. This is a diary, after all. 🙂

See you around. I hope you get something out of all this.