Stratoserve LLC

The Stimulus Package, Recovery and Diffusion of Innovations

Innovation is about change, change in a product, in a service or process. However, no matter how appropriate the innovation is it takes an understanding of innovation diffusion to get the target market to adopt it.

The stimulus package is an innovation to deal with the recession and hopefully most pieces will work. The "diffusion" of each initiative will take time.And every time you get stuck in traffic because of lanes closed due to repair think positive ! Maybe it's the stimulus package making its way to your town or commute....

Local Governments should consider  putting  up signs at construction locations that are funded by the stimulus - so that drivers feel more upbeat as they get through traffic congestion.

Some visible and physical signs will also start reducing the fear that people feel in a recession.

Supply Chains and Distribution Channels (B2B) really don't talk to each other

The recent IBM Study points out that visibility and risk are important concerns of supply chain managers. The summary of the report  suggests that companies seem to be more in touch with their suppliers than their customers when it comes to aligning supply with demand. More bluntly the buy side and the sell side have little clue about what's developing on either side of the firm's value chain.

The stark differences in orientation,training and lack of communication between the market end of a company (the B2B end or distribution end) and its back end supply chain function is intriguing. There was a time when these functions were combined together as a "commercial" function which went out of fashion in the late eighties and business school academia,consulting companies and companies themselves pigeon holed sales, marketing and distribution in one bunch and the the supply chain,materials,logistics and procurement as another bunch of functions. If the CEO did'nt actively promote the communication and co-operation between these functions - you landed up with things like the mortgage mess. Those coming up with derivatives never really needed to understand the different types of mortgages that were actually being given out.

ERP systems and particularly Web 2.0 applications will hopefully help better co-ordination in organizations and till they  kick in - some old fashioned "talking" between the marketing and supply functions should help keep the value chain straight.

CRM on iPhone

The new iPhone 3G is great, although being tied down to one carrier (AT&T) might be constraining for some as are the extra charges for Internet access. However, it is really a great device particularly for those who need to get onto the web while on the go. And now CRM vendors like Salesforce.com and biggies in the ERP business Oracle and SAP are getting into top gear to provide access via the iPhone 3G. Check out the scoop on all of this in the article here.

Driving the CRM application to the iPhone or Blackberry will certainly improve adoption of CRM software. More so, in these challenging economic times when new business is difficult to get and existing customers might have needs that businesses might find less costly to service.

Small business,gas prices and the Internet

Luckily for bigger organizations Internet adoption had come before the -$4/gallon gas prices. Since last year I was hearing about major organizations cutting empty office space because most people did knowledge work and preferred to work from home and come in for meetings. Yesterday the small Gloucester Township, New Jersey was reported to be considering closing municipal offices on Fridays to save 35000 $ in heating and cooling costs. I guess Gloucester City can manage most service activities from its website or at least get more applications on-line. Both citizens,employees and the town administrators would be happy so long as the town tax for next year is contained !

Small businesses, like your neighborhood plumber,on the other hand are extremely hard hit.Most rely on traditional advertising including painted vans (that move with gas) to spread their marketing message. A majority do not have websites and those that do -have no real system to keep track of inquires or sales leads and just can't afford fancy customized back-end databases to provide customer service. However, this very large engine of  the American economy is realizing the potential of saving gas and costs  through transferring some of  its business functions on-line. A day may not be far when your plumber gives you a recorded message to fill up a web form with your job details or check progress on-line on an ongoing project!

Booming choices in CRM,SCM,ERP- executing "benefit of the benefit"

When I walked through the exhibitor booths at the ISM conference, I was struck by the rather large number of software vendors who were trying to explain how their software would "solve" the problems of procurement,bidding,contract,supplier relationship and add "visibility" to the supply chain. Many of these solutions could speak to your legacy systems and most of them were web based and did not involve buying software and all the challenges that are involved in getting a system started. This was a sudden but clear change from earlier exhibitions I have been attending where "mega" ERP companies would be intimidating visitors by the daunting task and budgets involved in actually getting these systems to work and realizing the benefits that the system promised.

And now I saw that there is one more CRM system launched. This one is from Sage Software and is aimed at the small and medium enterprise and does many ERP functions as well.

The question is : where does all this lead the manager of a large enterprise or the owner of a small one in these tight economic times ? Adoption of these systems should be much easier than the early ERP systems but a clear and compelling articulation, for every customer that adopts these systems, would help the customer in quickly capturing the cost savings or revenue growth that these systems promise. Does this happen during the sales cycle for the system? It probably does  in the presentation slides of the software sales teams - but the challenge for the buyer is to capture the "benefit of the benefit" during the sales and buy process of the software and try to articulate  it to the  functional goals of the "owner" department. The luxury of the disconnect between why you acquire a system and what you can do with it might be somewhat reduced this way.

Are P-Cards abused ?

Some years ago I wrote a paper on P-Card users doing maverick purchases.  Generally, I thought the issue was resolved till the recent GAO report, much discussed in the popular media.

P-Card  use  in Government, according to the report, has  grown from 3 billion dollars in 1996 to over 17 billion dollars in 2006. This growth has resulted in over $1.8 billion in savings in various transaction costs,compared to centralized purchasing and all the associated paperwork of small value "C" class purchases.

Interestingly, my quick reading of the GAO report suggested that the troubles are with mainly the purchases over $2500 that are 3% of transactions but 44% of the dollar value. Proper authorizations
( "control") are lacking and called for. The sampling of abusive use made for salacious headlines in the popular media.

I suppose much research on P-Cards need to be still conducted, but I think one finding from my own paper , is pretty applicable to the GAO report.  That is:

• Train P-Card users to be careful, particularly above the micro purchase threshold of $2500. Get approvals  soon after your purchase if you can't get approvals before buying, particularly if you are a Government employee or your organization rules have a P-Card per transaction limit. Also facilitate this by asking the card companies to report all buys above  your  threshold so that the very next month all approvals are sorted out. Should not be too difficult as only 3% of the transactions are over the limit of $2500.

Doing so would deter P-Card misuse (if you need to face your boss either immediately before or after  a dubious purchase, you'd think twice)  but, on the downside,would also make the GAO report less  colorful!

You don't repeat reverse auctions!

Reverse auctions are controversial. Suppliers bid their lowest rates on-line and prices keep going down and the buyer's organization is happy. Inefficiencies in the supply chain reduce, transparency increases and suppliers are on their toes. Sounds not very collaborative and that's what I had though so far till I went yesterday to the CAPM Seminar "Sourcing the Pfizer Way".

The seminar was held at the Global R&D center of  Pfizer,Groton  and was kindly organized by Mary Kachinsky of Pfizer and participants learned a great deal  about sourcing particularly  in a knowledge intensive environment where all your internal clients are highly qualified  scientists and physicians involved in drug discovery.

I had missed Sam Dowell's great presentation at NECON 2007 where I had presented as well. The "aha" moment came for me, when I realized (after a question) that you don't repeat reverse auctions. You do them initially to rationalize your supply base and also when you are checking out overseas suppliers for price. You invite bidders after a thorough pre-screening and always invite several suppliers in multi-country reverse auctions so that there is enough "same country" competition. And most important, you do not necessarily go with the lowest bidder and make that very clear, upfront. But once you decide suppliers you try to make the relationship work ...

e-Sourcing Workshop by Jim Kelly

The e-Sourcing Workshop  by Jim Kelly (of JVKG  )  turned out to be brilliant (check out the photos above).Here was someone who had worked for many years in procurement  and was able to bring out the practicalities of technology adoption in the automation of requisition to procure and pay in a variety of industries.

Later, I had a quick discussion with Jim about how B2B research looks at the e-procurement problem. B2B researchers look at buy tasks as a new task or modified re-buy or straight re-buy with major implications for B2B marketers. Similarly, procurement folks, being key members of buying centers have an urgent need to convert products and services to "straight rebuys" that allows the buying process to really reach out globally for suppliers. And naturally, it is far more easier on e-procurement when requirements are standardized.

A great insight from Jim's talk was, for me, a better understanding of  the nature of the organizational e-procurement process. Consider a three year contract that is negotiated using an e-procurement system. The buyer who works on the system would typically move out of her/his role in three years when time comes to  put out an RFP for the new contract. Institutional knowledge  of the RFP process for the commodity in question is lost and the new buyer has to start all over again.

Apple iPod early adopters receive iPology

Less than two months ago this blog discussed the spectacular iPhone launch. Today the early adopters who had signed up for the $599 iPhone are furious. Apple decided to reduce the price to $299 to enhance adoption by mainstream consumers, in time for the holiday season. According to Steve Jobs the price cut will make the iPhone more affordable.

Understandably, the price cut has left the original early adopters of the iPhone, angry. Naturally, if you stood in line for hours and forked up $2000 for the yearly contract and then realized that the marketer had cut prices by 33% in less than 60 days - you'd feel shortchanged.

Luckily, Steve Jobs and Apple have responded and are giving a $100 credit. What was Apple thinking? Early adopters are crucial for any market and more so for the revolutionary products like the iPhone. Early adopters are those who are recognized as folks who "are first to try something new" and "order a new dish or go to new restaurants" and generally take the risks and kinks that come with being the first to try something new. Most consumers just wait it out till things stabilize and some (the laggards) do not adopt the innovation at all. Without early adopters there would be no innovation which could really reach the market. I am glad that Apple realized it's folly and Apple enthusiasts are happy again. The iPology worked ! Classic service recovery by Apple on this one.

Barry Diller and the IAC

Fifteen years after Barry Diller had gone to see QVC the home shopping network, he was on CBS 60 minutes today. Within minutes of being on 60 minutes the Internet search engines were buzzing with searches for "Barry Diller" ! How much the media consumption experience has changed over the last 15 years !

And Barry Diller a former media executive  guessed that there would be some kind of technology convergence in consumer buying behavior. I liked the way CBS showed the QVC format which historically involved infomercials,call centers and computer screens. Add the Internet and you have the huge and growing IAC portfolio. You would have used at least some of the famous IAC brands like Expedia,Ticket Master if not many others.

I also  enjoyed the admission by Barry Diller and the clarification by his wife Diane von Furstenberg that he starts with only a fuzzy idea of where he is going to go. He "fakes it till he makes it" - I suppose all kinds of visioning is like that- you have to believe in something and see how you go, but keep going. In parting, Diller made a wonderful and thoughtful comparison between Google and IAC.While Google was a mega brand people didn't know about IAC but if IAC became like Procter and Gamble ,which has so many famous brands - it would be great.I thought , this was a rather neat way of looking at a portfolio of Internet brands.