Social Media and Government 2.0

I’ve uploaded a new presentation providing an overview of social media, social network analysis, and social media’s influence in executing Government 2.0 initiatives. It can be found in my documents/presentations area on my website.

Social Media and Government 2.0 | Nov 2009

A Brief Lesson on Network Economics

Today I delivered a lecture on network economics. Network economics is a principle for competitive advantage within information technology strategy. I thought that I’d jot down a few ideas from that lecture for the blog.

Imagine a world with only one fax machine. The value of that fax machine is practically worthless: there is nobody to fax to. Add one additional fax machine and the fax becomes more valuable – now you have somebody to fax to. Then, add 10 more fax machines. Add 100. Add 1,000. And the value of your fax machine has increased exponentially. There is now a network of other nodes (fax machines) to interact with.

This is one illustration of the multiplier effect of a network economy. There is increasing value in numbers. We could apply this principle to the number of computers connected to the Internet; the number of hotspots in a city; the number of iPods in a marketplace; the number of books in Amazon’s digital catalog. The Kindle, for example, becomes infinitely more valuable with more content from Amazon; the iPod with more features and content from iTunes; wireless technologies with more spaces to achieve connectivity; the Internet with more participants. This is another facet of networked economics: more content and interconnectivity increases value.

Another idea is the concept of economy of scale, inverse scale, and marginal cost. Let’s take Moore’s Law. You might be familiar with this. Moore’s Law is a 40-year old computing axiom that states computing power will double every 18 months while the price drops by half. This means that – if you and I invested in an online business – the price for that computing infrastructure comes closer and closer to zero every year. Plus, what we built can manage not one user, not a hundred users, but thousands of users, all at the same price. Therefore, we have a huge economy of scale capable of supporting an exponential volume of business that keeps getting cheaper to offer every year. Some would even say our marginal costs would be so low within three years that we’re running our business for free.

Free. That’s a powerful word these days and free is all around us. It’s a component of network economics, too. Why is it that companies like Google, Amazon, Microsoft, and hundreds of others do offer and will offer software and other digital content for free? Why? Because of network economics, it’s virtually costless to maintain on a server, virtually costless to distribute, more users adds more value, and more users generate more content - which, by the way, is practically costless to maintain and adds yet more value to your product. Hence, Google offers incredible functionality (email, picture management, spreadsheets, word processing, maps, telephony)… free. To Google, what they build becomes practically costless to maintain within three years, extends value to all, interconnects all, and generates more content on the Internet; more content means more search; and the more search means more revenue for Google. So why offer so much for free? Because it’s the fastest way for those exploiting network economics to make money. It’s also an interesting way to quickly build a brand.

Look at your business model. In spaces where friction is necessary to increase volume, you cannot take advantage of network economics. In that model - the traditional model of business – the more money you make is dependent upon the more volume you sell, and volume may be entirely dependent upon labor, space, utilities, taxes, distribution costs, oil – overhead. More overhead introduces long term expenses which erode profitability, unless you get bigger, to handle more volume, and become increasingly dependent upon growth to achieve earnings attractive to capital investors. Friction denies you passage on the network economics highway.

Getting bigger is, in fact, unsustainable. The bigger you get, the more spread out you become, the more you rely upon economies of scale to reduce expenses and contain the cost of your growth. If your business model is totally dependent upon growth to attract capital, you need either one of two things: a dramatic change in technology to afford ever-astounding capabilities to lower costs, or, more overheads. Otherwise, growth is unsustainable precisely because it can’t take advantage of network economics. And newsflash: sustainability is a big strategic idea these days.

Now imagine your frictionless business model. How can you leverage technology to connect to more people, interact in a costless way to build marketing presence and buzz, to build a community of interested followers, to lower transactional costs and achieve higher economies of scale, to reduce marginal costs to zero, and reduce friction? I’m thinking social media, business process automation, open source, cloud computing, Internet connectivity and interoperability, mobility, telecommuting, and electronic communities. It is the impact of becoming frictionless. Doing so will allow you to master the problem of network economics and exploit technology as a strategic tool. Now _that’s_ the competitive application of technology.

R

Presentation: An Overview of the US Department of Homeland Security

Just added to the Documents/Presentations portion of the website:

An Overview of the US Department of Homeland Security | Nov 2009

Green and Sustainable Technology Strategy

I just finished watching a very important video on anti-consumerism called The Story of Stuff. It’s a powerful piece and I’d recommend it to anyone. Certainly it’s useful in explaining a global crisis that we all face. It’s also a practical exploration of the sustainability challenges that are facing small to mid-range business. Then I got to thinking: how I could apply some of these ideas to a viable technology strategy for the small to mid-range business?

Interested in trying to bunk some of these curves and to build a more sustainable, greener approach to managing information systems? So am I! Here are eleven of my ideas:

1. Re-use/Extend. Planned obsolesce is designed into every chip, every motherboard, and every piece of software you buy. The useful life of a PC asset is about three years. After that, software introduced into the marketplace demand even higher performance capabilities. Then, we’re forced to upgrade to buy increasingly expensive software and hardware to do… what? The same things like word process, email, browse the web, and manage security. Open Source software offers an alternative to this pattern of consumption. Designed to be lightweight and efficient, free Open Source solutions are great for extending the life of these assets at little to no cost. Instead of thinking about asset retirement, I’m trying to think about how clients can reuse their existing machines as kiosks or as low-end stations for a workforce doing regular, simple, predictable tasks. Instead of retirement, how can we reuse and extend PC assets instead of purchase new ones?

2. Consider Capability Over Design. I think we too often get caught up in purchasing the latest shiny and new machine, device, peripheral, or software because it looks cool. Windows 7, for example, may look cool, but what does it help you do? Well, the same things that Windows Vista did, and Windows XP did, and Windows 2000 did, and so on. The latest Mac and iPod looks cool.The latest Dell laptop looks shiny and sporty. The latest mini-PC really wets the appetite. Yet, don’t they provide the same capabilities of your existing “stuff”? What is the value of zero additional capability to you or your business? Think about that the next time you feel like upgrading.

3. Skip a Cycle. Products and software in technology are released in 18-24 month increments as a part of planned obsolesce marketing. Instead of falling for that trap, skip a cycle. Wait four or five years prior to the next purchase or upgrade. Show a discipline in your IT spending that recognizes that the “latest and greatest” doesn’t yield additional capability and is meant to simply drain your resources.

4. Recycle. Unfortunately, even when using Cloud Computing or Open Source, there will come a time where the asset must be disposed of. Don’t allow the asset to simply linger in the back room, and most states have anti-dumping laws that prohibit electronics from being submitted to landfills. They must be disposed of in an appropriate fashion. Luckily there are plenty of outfits near you that’ll take the asset and recycle its components for use in refurbished machines, or they’ll take care of the toxins (lead and mercury) for you. Be conscious of your own recycling behaviors with all manner of software, media, peripherals, monitors, and hardware.

5. Centralize and Outsource. Consolidating databases, applications, and backend services to more scaled platforms (moving from microcomputers to mid-range machines, for example) allows the firm to reduce the Total Cost of Ownership associated with operating many cheaper boxes, but it also allows us to conserve electricity and generate less heat. How can we reduce the footprint of our data center – either through consolidation or outsourcing to hosted applications and services? Cloud computing offers many practical solutions that achieve a higher economy of scale than what you could produce on your own. This is a great conservation and maintenance question but it’s also a strategic question: how can you convert your floorspace to revenue-generating activity, or, eliminate your IT floorspace entirely?

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6. Think Green. If you’re going to purchase new assets and peripherals, what can you do to reduce the impact to the environment as a whole? Well, if you’re a decision-maker in your firm for IT spending, you should bookmark PC Magazine’s Special Coverage on Green Technology. This gives you brands, models, vendors, and solutions that could be the better choice for the socially-conscious IT consumer. And not just hardware but software. Maybe, though, your known-brands have a green alternative or a plan to address this requirement coming from socially-conscious consumers? Look into it. How can you measure the outcomes of your decisions in terms relevant to the environmental movement or anti-consumerism?

7. Say No to Shrink Wrap. Still buying software off of the shelf and installing it from discs? Instead, purchase online – download the product and install it on the target machine. Avoid the shrink-wrap, packaging, and whole oil-infested distribution model that brought it to the retail store to begin with!

8. Telecommute. Ten years ago, 16-percent of the domestic US population did some form of telecommuting; today, more than 29-percent of the domestic US workforce engage in telecommuting. This means that your competitors are reducing the amount of energy needed to warm/cool a building, or, needed to move an employee to an office place. They have shifted the cost for energy consumption away from themselves and to the backs of their employees, but at a far less scale of consumption than in a skyscraper or business park. They’ve taken advantage of tax incentives offered by municipal and state governments to get more cars off the road. They’ve built stronger relationships with valued employees without increasing compensation dramatically, so that employees can enjoy greater work/life balance. They’ve reduced the floorspace and all of the costs needed to maintain it: energy, taxes, utilities, janitorial expenses, insurance. They’re doing this and reaping huge rewards. The question is then: why aren’t you? I’d like you to imagine a world ten years into the future that owning or leasing floorspace is an albatross to your cash flow and a competitive liability. Dude, today: how can you ditch the bird?!

9. Kill/Destroy All Meetings. There is nothing worse than the time-suck associated with meetings in my opinion. The floorspace necessary to have them, the distraction to critical knowledge workers who’re mature and self-directed anyway, the loss of efficiency and productivity, or the energy/time that it takes to get to them – whether they’re across town or across campus. Meetings suck. They represent a by-gone era of managerial pride, arrogance, rank materialism to impress vendors and clients, and pointless communication wrapped around one or two important facts. Going back to telepresence: this would be a great technology solution to minimize/eliminate the role of meetings in your life, but also, collaboration software like Google Apps or Zoho Project would be an awesome way to keep everybody on the same page without wasting everybody’s time, energy, and resources. What about podcasts, vidcasts, wiki’s, or blogs? Heck, they’re free! If anything, what can you do to reduce the number of meetings you must have by half using common microcomputer technology available to you today?

10. Turn Off the Asset. I’m beginning to rethink an age-old idea that PC’s should be left on during non-peak times so that maintenance can be performed on them in the evening. Still trying to formulate a strategy for this one – it’s difficult to suggest that people turn their PC’s down at night because, in the IT universe, we need them online to conduct remote access, pass them patches, upgrades, and to perform routine scans of their hard disk for malware and viruses. Servers are measured by 24×7x365 reliability. Generally, though: what can we do to turn off assets that aren’t in use? That may take a more creative approach to reduce energy consumption.

11. Use IT/Tell People About IT! Hey, all of this is marketable! If you can measure what you’re doing as a small business to reduce a carbon footprint or tackle socially challenging issues like consumerism, that’s an opportunity to tell your employees and stakeholders about the strategic importance of changing the way you’re doing business. This is a great opportunity for you to market your company – or even your decisions – as a means of positively affecting broader societal problems.

Now, these are just a couple of ideas. What are yours? Anything else that should be added to this list?

And you know what? It doesn’t matter if you can’t do all of them tomorrow – pick five, heck, pick three – and concentrate exclusively on executing those elements of change. Three smaller steps are better than none, and could bring us just a few steps closer to being better stewards of the scarce resources afforded to our small businesses.

R

The Five Biggest IT Mistakes Committed by Small Business

1. No Administrative Controls.

Administrative Controls are the policies prepared by management that communicate their intent to control the information system. Policies are the voice of management; without a voice, management’s intentions concerning the information system are unclear and ambiguous. Without policies, instead of managing by discipline and principle, a small business manages solely by assumption. Policies, in fact, guide the implementation of Technical and Physical Controls that would eventually be used to protect the system.

2. No Audits or Corrective Action.

Audits should be conducted at least once per year that verify management’s intentions are being executed. There should be a documented and recurring process that evaluates the Technical and Physical Controls extended to secure the system, and evidence of what steps management took to fix discrepancies. Combined with a clear Administrative Control, an audit confirms management’s commitment to managing their system and clearly demonstrates “due care” – a legal benchmark considering negligence. The absence of a clear policy and a routine effort to verify that policy is being rightly executed could lead one to presume incompetence and negligence on behalf of management, which may expose the company to civil and criminal penalty.

3. No Spending Plan.

Information technology is very expensive. Without a plan to control both capital acquisition and service expenses, many small businesses will make needless and unmanaged purchases that render their information system inconsistent and unreliable. Further, management should make every effort to draw a line between spending and desired capability as to rationalize how every dollar spent on IT helps execute their business plan. Over time, unmanaged/uncoordinated IT spend raises TCO (Total Cost of Ownership) and drains cash resources from the firm without achieving strategic goals.

4. No Risk Assessment.

Risks change almost hourly with information technology; literally, we measure certain threats in “zero-day” time frames. Further, the regulatory reporting environment concerning technology evolves just as frequently. It’s impractical though to believe that the small business can devote daily attention to risk management. Instead, looking at the risks and vulnerabilities posed to an information system perhaps quarterly, or, bi-annually, is a reasonable approach to re-calculate the risks and re-evaluate the safeguards that help protect the information system. Again, a documented risk assessment demonstrates management’s intention to take their “due care” obligations seriously.

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5. No Disaster Recovery Plan.

Nearly every small to mid-range business that I’ve ever met has two mission-critical components to their information system: an electronic component and a paper component. Papers stored in file cabinets are under the same kinds of risks as data stored on a hard drive, yet little attention is paid to the redundancy of paper-based data, or how electronic data is centralized, stored, backed-up, and archived. Without a conscious plan, management _assumes_ recovery would be possible and operations could be restored within a “reasonable” time frame. However, it’s precisely that assumption that prevents management from taking more proactive measures to guarantee a successful recovery of their business in the event of an emergency.

Conclusion

Small business owners are usually buffeted with a vast array of opinions concerning the operational management of their microcomputers. “You should install this patch,” says one professional, or a business associate will suggest, “You need this browser and this anti-virus.” However, these issues are a distraction from managing IT in a broader context. These solutions are implemented in pieces without a coordinated strategy.

Instead, if management was to install a proper discipline that routinely evaluates risk, plans for disaster recovery, and implements corrective action based off the intentional voice of policy, then the selection of browsers, patches, and anti-virus software would be a result of those activities. This is how we manage IT in the enterprise, and this is how small business should be managing IT, too.

R