Google targets Australian web service providers

I see from IT Wire that Google Australia is offering free training in its products and free AdWords advertising to companies and individuals that offer web services to SMBs in a bid to get them promoting Google's offerings to their customers. I quote:

In a blog posting, product marketing manager, Richard Flanagan, said: "If you're a webmaster, digital agency, freelancer, IT consultant, or provide any other web services to Australian small businesses, you can apply to join the program starting today.

I am a bit surprised that Google hasn't tried this before. The web has become a very crowded place. While Google dominates the search marketplace in Australia, the range of competitor offerings on different platforms grows all the time. Facebook is an obvious example.

Back in January 2008 in Google's growing market share I made a passing reference to Google's business model, including the way that Ad Sense arrangements provided a pool of working capital. I have a strong feeling that Google's revenue from Ad Sense has been under a degree of pressure.

State of the Blogosphere 2010 a note

Just a short note so that I can delete the email and not lose the link.

Technorati has release its annual survey of the blogosphere, in this case State of the Blogosphere 2010. From a quick scan, the survey's results contains a range of interesting material.

Hilary Clinton and web 2.0

A short post to record something for later reference.

Over at Club Troppo, Nick Gruen has long been banging the drum for web 2.0 as a way of making more Government information available and in a more useable form. For reasons that I will discuss in a later post, I think that the work done by enthusiasts such as Nick is very important.

At this point, I simply want to note that that Danielle Cave's post on the Lowy Institute blog, Chasing Hillary Clinton,  provides an interesting example of the use of various web tools for political and public policy purposes.  

Digital Intelligence

Last month Thomas, one of my blogging colleagues, discussed in The future the possibility of doing a PhD on digital intelligence. Thomas wrote:

Howard Gardner’s multiple intelligences theory has always had me interested and somewhat of a believer. I certainly believe in the essence of the theory as he wrote it, but I feel that the theory has been abused and diluted and manipulated in wrong ways over the past few years (having read research about it for the past 6 years). But, yes, I do subscribe (as many probably do) with the notion of different intelligences.

What I would like to investigate is whether with this massive explosion in technology in people’s (see; children’s) lives, is there a new branch of the ‘intelligences’ that Gardner came upon emerging that we could term ‘digital intelligence’? That is to say, are people now developing new and distinct ways to comprehend technology, the new ways technology is creating and presenting information, and the way the digital world works?

For those who don't know Thomas, he is just completing an honours degree in education at the University of Sydney. I promised to provide a comment.

Much of the focus on the application of computing and communications technology in the classroom or in business has been on ways to better use the technology. I say computing and communications technology rather than just digital because the focus appeared well before the internet.

You can see this focus in the various Australian school curricula. There acquisition of various types of computing skills, the use of technology to do things, is built into every subject and every stage. You can also see it in teacher's blogs such as that of Maximos62 who is an enthusiast about the possibilities opened up by the digital technologies.

The actual impact of the technologies on the way that students, and people in general, think is less well understood.

We already know that technology shapes thought in often unseen ways. The rise of the motor vehicle is a classic example. It fundamentally reshaped the structure of life in country, town and city. It also changed the way in which we look at the world. It actually altered our mind settings, imbedding new perceptions of space and time.

We know that computing and communications technology is having similar effects. Indeed, we talk about it all the time. Yet the actual affects on the way we think are not well understood.

The initial stages of the computing and communications revolution focused on the storage, transmission and dissemination of data. Initial applications were business focused. The rise first of the PC and then the internet, added access and presentation to the original focus; the concept of interactivity emerged; the digital world became personal.

There are considerable tensions between the old and the new.

The use of the new computing and communications technologies in organisations, the desire to achieve uniformity and processing efficiency, led to the emergence of what I call command and control organisations. The bounds of individual authority were reduced, replaced by central decision rules and various types of performance measurement. My last post, Scoping the decline in organisational performance, is concerned in part with what I see as the adverse effects of these changes.

The internet and the associated new tools including social networking pose a fundamental challenge to the command and control paradigm because they transfer power from the organisation to the individual. To a degree, organisations including Governments that have used the technology to improve processing efficiency and to assert central control now struggle with changes that threaten that control. You can see this play out in, for example, the debate over internet filtering.

At individual level, people are still coming to grips with just what this new world means not just in terms of the use of the technology itself, but also in the impact of the technology on ways of thinking and acting. The debate over Facebook and privacy is an example.

Whether all this translates to a new type of intelligence, digital intelligence, is open to question. My problem here lies in the use of the word "intelligence". Quite clearly, new ways of thinking and acting are emerging. Quite clearly, people's ability to access and use the new technology varies enormously; the digital divide originally foreshadowed in this country by people like Barry Jones is here. However, does this constitute an "intelligence" in the way referred to by Gardner? It may, but it's also a question of definitions. 

To my mind, the more interesting question is the way the technology is actually affecting the way children think. If you look at the debate in this area at present, it seems to be generally problem focused. Cyber bullying is an example. There is, I think, much less focus on changes in structures of thought and of perceptions, on the way this affects learning and behaviour.

This is, of course, a huge topic. It may be that the use of Gardner's concept, a discussion of what constitutes digital intelligence and how we might measure it, is one way in. Whichever way Thomas goes, the topic is an important one. 

Cloud computing, risks and returns

I have watched the growth in cloud computing with interest. Wikipedia defines cloud computing this way:

Cloud Computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid.

The ideas behind cloud computing are not new. What is new is simply the question of scale facilitated by technological and market change.

Despite the growth, I was interested to see an article by Gordon Peters on IT Wire suggesting that almost half of Oceania IT professionals say that the risks of cloud computing outweigh the benefits, according to the first ISACA Oceania IT Risk/Reward Barometer survey.

ISACA says that CIOs are increasingly interested in cloud computing because of its potential to deliver lower total cost of ownership (TCO), higher return on investment (ROI), increased efficiency and pay-as-you-go services, and that IDC has said that cloud services will outpace traditional IT spending over the next five years, representing approximately $51 billion by 2013.

“Yet IT professionals see risks in entrusting information assets to the cloud,” according ISACA which recently surveyed 218 Australia and New Zealand-based IT professionals who are members of the global, non-profit professional association.

I can understand the cautions, but also think the short to medium term economic benefits will continue to drive market growth. What we all do if entire systems go down is, however, a bit of a nightmare.  

Friday Economics and Management Review 12 Feb 09.

This post reviews some of the economics, management and professional issues that have interested me over the last week.

The announcement of the opening in Australia of UK law firm (here and here) interested me because of the sheer size of the raid (14 partners) on Australian national firm Clayton Utz. While I don't expect A&O's opening to have the same impact on the Australian marketplace for legal services as some of the breathless commentary would suggest (the story made the front page of Australia's Financial Review, for example, with supporting material later), it is still an interesting development.

I spoke of the troubles affecting Australian environment minister Garrett in Insulation, pressure cookers and Minister Garrett.

While the problems that have arisen in the national home insulation scheme are in fact an example of the type of systemic problems that I have been talking about in current public administration, I am more sympathetic to Minister Garrett than you might expect. The genesis of the trouble lay in the pressure cooker atmosphere of Canberra at the time the scheme was developed, decided and first rolled out, a time when people feared an economic Armageddon.

Just looking at the economic stimulus side of the package, this one pumped money into employment far more quickly than any of us (me included) expected. The very speed of take-up was central to later problems.

Unfortunately, one outcome is likely to be a reinforcement of concerns about risk as opposed to risk management. I still see this as a major impediment to improved management, especially in the fish-bowl world of the public sector.

This links to the post I wrote on Will proposed international bank regulations cost all Australians?.

Most business people are worried about the increasing burden of regulatory compliance. There are two different types of costs here. One are the transaction costs directly associated with compliance. Apart from costs to individual firms, the higher the proportion of national resources tied up in this, the lower the proportion available for directly productive activities. The net result is reduced growth. The second costs are those that flow from distortions to the market place and economic activity more generally.

My problem with the proposed international bank regulations lay in the possibility that they might increase interest rates, while actually increasing sector vulnerability, I accept that this was based on very simple, some may say simplistic, analysis. Still, it at least there is a basis there for further thought.

Monday in Problems with computer lock-in I looked at some of the effects of what I call computer lock-in, the way in which past investment in IT and all the systems based on It could adversely affect economic performance. This discussion was triggered by question on an earlier post by one of my old Commonwealth Public Service colleagues Winton Bates, formerly a senior official with the Australian Productivity Commission.

Winton suggested that I should look at some of the later material on institutional economics for another economic explanation of some of the things that I have been talking about. As I admitted to Winton, I am very out of touch here, but he has given me some leads to follow up to re-educate myself.

One of the points I made about IT and communications technology is the way they could facilitate cost shifting as compared to cost reduction. Your costs go down, but this is actually at the expense of someone else, often the customer. Measured by cash and opportunity costs for all, overall system costs may not fall at all and may even increase. 

In the commercial case, this type of cost shifting may yield immediate profits after taking into account any adjustment costs. However, the sustainability of the profit then depends upon customer and competitor response. Where customers make some gain, then they are more likely to accept the costs and frustrations involved.

A related problem is that one set of costs can be seen and measured, the other less so. This can be a significant public policy problem, for in cost shifting associated with the delivery of centralised services you have defined gains to the taxpayer on one side, sometimes hidden if unmeasured costs to taxpayers on the other. The issue is further complicated.

I became interested in the Bellingen Hospital case because I noticed a new Facebook page Tuesday this week. I have been interested for quite some time in the way that different social networking tools can be used and the dynamics associated with them. In this case, an un-official Save Bellingen Hospital Page was started Tuesday morning asking people to say why the Hospital should be saved. By the time I noticed it later that day,  it had already gathered over 200 fans.

To provide some background information, Bellingen is a small town on the New South Mid North coast with a population a bit under 3,000. Health authorities are considering closing certain service there requiring people to travel instead to the bigger Coffs Harbour hospital. This is a bit over half an hour away from Bellingen by road.

I know Bellingen quite well, was sympathetic and very interested in the comments. So on Thursday morning I wrote a sympathetic supporting story about it on my New England Australia regional blog, Bellingen organises to save hospital. By this morning, the Facebook page had 812 fans, and I followed up with a second story,  Bellingen Hospital, Facebook and the costs to the community, looking at some of the community cost issues.

These are the type of cost issues that are generally not measured. One side effect - and this is not unique to Australia -  is the way that service centralisation has in fact had a quite devastating on the economic and social life of many smaller communities.

    As I finish, the number of fans on the Save Bellingen Hospital Facebook Page has just reached 1,046.

End of the IT revolution - or a new beginning?

In my post End of the IT revolution - organisational rigidity I pointed to some of the reasons why modern organisations are losing the ability to take advantage of the new technology. My bottom line was:

The net effect in many organisations I know is that the new technology, and especially the internet, becomes something to be controlled rather than managed.

In a comment on the post Bruno Fiorentini said in part:

In the real modern organizations, the network should not be so rigid and would have appropriate areas where employees and customers could share and expose ideas....The collaborative and open process provided by the internet environment is the true spirit that should reign in the networks. The companies that understand that and do not fear to be open will really benefit from this concept...

Bruno is right. But how to make it happen? I think that four things are key.

I think that the first key step here is to free up things behind the firewall. If you give greater freedom to experiment here, then you can test things in a controlled environment.

The second key step is to trial things externally on a pilot basis. If you want to do new things with customers, then test them. But do keep things as simple as possible.

The third key is to create a budget that will support experimentation. This need not be large. The key thing is that it should be accessible without heavily formalised control procedures.

The final key is to turn your IT area from a control to a facilitation, support function.

Four little steps. They just require a change in approach.

End of the IT revolution - organisational rigidity

In my last post, I posed the question Have we come to the end of the IT revolution? Now this really should be a rhetorical question.

Over the last weekend I was a speaker at the 2008 conference of the Australian Federation of Intellectual Property Attorneys or FICPI. There Peter Williams from Deloitte Digital set out cogent reasons why the internet should provide a base for a continuing IT revolution. Despite this, I am sceptical.

In this post I want to look at some of the institutional rigidities that have emerged in modern organisations that work to prevent gains from the internet. Then in the following post I will look at some of Peter's arguments as to just what might be possible if those rigidities could be overcome.

Consider the modern organisation. It is likely to have the following features:

1. A web site used to promote the organisation and its services or products. This may include password protected areas to allow staff and possibly customers to access services and facilities.
2. An intranet used to give staff and in some case customers access to key information. As much as possible, this will be used for specific internal functions to reduce load and costs. As a simple example, as many HR functions as possible will be worked through the intranet.
3. Great dependence on email to communicate within the organisation and between the organisation and its customers, suppliers and other stakeholders.

It is also likely to have the following features:

1. A central IT department that attempts to control the whole process.
2. Rigid rules governing what can and cannot be put on the web site and intranet, along with formalised content approval processes.
3. Rules governing use of email. This may include limits on the size of attachments, as well as the number of adressees.
4. Rules governing what can and cannot be loaded to specific computers, along with approval processes.
5. Monitoring systems to track traffic and to identify improper use.

Now I understand all the reasons why these features exist. However, in combination they have become a real drag on the effective application of new technology.

The problem here lies not so much in the rules, but in the way that they are applied. A further problem lies in the focus on cost cutting as compared to performance improvement. The type of problems that can arise include:

1. It takes so long to get new content up that people no longer bother.
2. Individual authors who want to do new things cannot access the necessary knowledge because no one is responsible for making it available.
3. Experimentation becomes impossible because the hurdles that have to be jumped to do so are just too high.
4. Required internet access crashes because of things like spam filtering devices that give you an error messages.

The net effect in many organisations I know is that the new technology, and especially the internet, becomes something to be controlled rather than managed.

Google's growing market share

In October I carried a post discussing the dangers posed by Google's growing market dominance. Recently there was an interesting article in the Australian Financial Review - I cannot give a link - providing more data.

According to the US firm Hitwise, Google's share of the US search market rose from 58.3% in March 2006 to 61.8% in November 2006 to 65.1% in November 2007. Each one per cent shift in market share appears to be worth about $US100 million ($A113.8 million) in extra advertising revenue.

According to Scott Kessler from Standard & Poor's, Google's growth will slow in 2008 because of a maturing search market together with improved service from competitors. Mr Kessler also feels that there is a risk that Google might get distracted by its non-search projects.

I have always been fascinated by the way Google's business model fits together. Yes, Google search is the jewel in the crown, but there is more than that.

Bogspot is a good example.

By providing a free blogging platform, Google has attracted millions of bloggers. I tried to find an actual number, but without success. These provide a platform for Google products such as adsense, search and referral. In parallel, Google blog search provides an increasingly used tool for searching the blogosphere, one that has I think now over-taken Technorati in popularity.

Many of the blogs have very limited traffic, so the actual revenue to Google per blog from its products is low. However, the sheer number of blogs makes for high aggregate numbers. Further, Google does not pay its publishers until their earnings reach $US100. This provides a handy source of working capital.

Google is constantly fine-tuning its services to try to increase revenue from its existing base. This is not always successful - the company is withdrawing support for its referral product in Australia, presumably because of lack of profitability.

Low cost management of large numbers is critical to Google's success. I have not tried to analyse Google's accounts, but successful product management in the blogging environment requires a large base to spread fixed costs with very tight control of variable costs. So the whole system depends upon effective automation.

The Dangers of Google's Market Dominance

Interesting article by Paul McIntyre in the SMH, October 18, 2007.

Paul notes that Australians have been warned that their unwavering loyalty to Google as their default search engine risks triggering huge price rises for paid search advertising, a trend that has forced some advertisers in Britain out this advertising mode.

According to Paul, an estimated 40 per cent of the $1 billion Australian internet advertising sector is spent on paid search. He quotes the warning of John Tawadros, the worldwide chief operating officer of the search engine marketing group iProspect, that Google's market dominance meant prices could only escalate in Australia.

In the US, Google North America controls 62 per cent of all search requests, followed by Yahoo! with 25 per cent and MSN on 4 per cent. In Australia, google.com.au has 72 per cent, google.com has another 17 per cent, 89 per cent in all. Yahoo and MSN in Australia account for 4 per cent each of Australian search requests.

The increasing cost trend to paid listings has encouraged many companies to focus on organic search, a form of search familiar to all bloggers. After all, we do monitor where our traffic comes from!

I cannot see paid listings disappearing. The market place corrects. In this context, I have noticed a downward trend in the Ad Sense per click values across a number a number of sites that I monitor.

Personal Networking Strategy in an On-line World

There was an interesting post by Dennis D. McDonald addressing this question: would you benefit from having a personal online networking strategy?

In Dennis's view, a "personal online networking strategy" is a coherent view of how you use various media for communicating and managing relationships with other individuals and groups.

Now I actually wish that I had read this before I gaily sailed forth. Then, a Google search on Belshaw generated less than a thousand hits. Today, there are more than 492,000. Of these, as best I can work out, something over 10,000 link in some way to me.

Now I am not complaining. It's just that when I ventured forth into the on-line world I had no idea so that so many aspects of what I do or think about in both personal and professional life would become so visible. It becomes very hard to hide!

Maybe if I had thought about it, I would have gone a different route. But then, perhaps not. Still, I would have done things in a more conscious way.

I commend Dennis's post to you as a short, simple, introduction to the things that need to be considered.

Social Networking - A Group Is Its Own Worst Enemy

Interesting article from Clay Shirky on the sociology of on-line groups. It's a little old now, 2003, but still good for all that.

As a collective, we have long been interested in this topic for two reasons. Some of us consult in the area and hence are interested for professional reasons. Then, too, we have tried to us the technology to keep our own distributed network in contact.

The second has been less successful than the first. The reasons are simple. While a fair bit of the new social networking technology aims to facilitate and support the creation of groups, we are already one. So the technology has to fit into existing structures, group dynamics and processes. And here it does not work as well.

A core reason for this is that our people judge the technology in terms of its immediate contribution to their personal and professional objectives in a Group context. Here they judge the time taken to learn to use the technology plus the time taken then to use it against the returns. And too much technology fails this very basic test.