Wednesday, February 13, 2008

The Business of Information


I was writing a paper about managing content in the organization and wondered if people had an idea about what went on when one submits a web-search? I posed the question to my associate - Arlene, who paused and with a quizzical look responsed she had never really thought about it.

In brief I explained that these powerful search engines index every word (except words like a, an, the, but, to, ect.) on every webpage and essentially return to you the results. The Google boys, of course, made some enormous improvements on this search technology - that dates back to the 1960s - but that's essentially how it works. Anyway, we had an interesting chat and I found that Arlene was taking some courses and the information I passed to her was of some interest. So, I followed up with the following email.


Hi Arlene,
Thanks for your input yesterday. You were very helpful. Our ensuing conversation about information management was also interesting. As mentioned here are some pointers that may help you further explore the topic.

There are sectors of the Marketplace that are being transformed by ICT (Information and Communications Technology). At the core of this is the advent of a new global communications structure called the internet. What we call the internet consists of various layers of technology like physical wires and networks operating under a common standard called TCP/IP (Transmission Control Protocol & Internet Protocol). As we move up the layers things start to look more familiar and we come to something called http:// (HyperText Transfer Protocol). This is where interfaces, links and user navigation takes place.

We have moved from Web 1.0 to Web 2.0 – a shift from web as massive bulletin board to a place were people go to interact and transact. The seemingly sudden emergence of massive social networking sites like YouTube, MySpace and FaceBook are testament to this. In 2006, Time Magazine declared “You” as “Person of the Year” in recognition that “You” can control and contribute to information on a world wide scale.

Underneath all this, another phenomenon was taking place – the emergence of Open Source (free) software. Highly customized Open Source software has been used to create many of the dynamic new sites that are emerging – like the ones mentioned above. One of the most phenomenal uses of Open Source was the emergence in 2001 of an online encyclopedia called Wikipedia – a vast compendium of information created by on free software by volunteers on a scale never seen before witnessed, in peacetime, on this planet. It is the 9th most used site in the world, it is controlled by a non-profit foundation and operated with a staff that has grown to seven, on a budget that will this year be between 2 and $3M. Wanna listen to the founder, Jimmy Wales? Still more. In the last link, Wales refers to Economist Friedrich Hayek and a paper her wrote in 1945 called “The Use of Knowledge in Society.” It’s tough reading so if you want a synopsis – go here.

I’ll bet you didn’t know the organization even supports an Open Source Product called Plone. Anyone with Managers approval can have it installed free of charge in order to set up collaboration environments where information can be created and managed by people in different branches, division and organizations. People can even have it configured to invite stakeholders from outside the firewall to collaborate. The product is known internally as The Collaboration Tool Service (CTS) - more. In the past 12 to 18 months 200+ CTS sites have sprung up with 5,000+ registered users.

Open Source Software exists legally through something called the GNU General Public License. If you’re interested in learning more about what that’s about in the attached WORD presentation by Eben Moglen else – click here.

More on free software.

So how does all this relate to business and economic models? Microsoft has become immensely wealthy by selling a product that costs little to manufacture. I suggest pharmaceutical companies live in a similar world where cost is essentially in the up front research and development. In other words, we actually purchase IP – intellectual property. Look what happened to the music industry when people got feed up paying $20 for an album that contained 1 or 2 good tunes. As a result, we now purchase music for $.99 per song. The movie industry didn’t experience the bootleg fate apparent in the music industry. Perhaps it was because this industry said pay $15 to come in and experience the movie in state-of-the-art comfort or wait for a month or 2 and watch the movie in the comfort of your home for $5 or even less. We rent movies and purchase music.

In essence, when we “purchase” software, we rental or licence the right to use the product – that is those of use who don’t use bootlegged or pirated software. The fact is that most of us are very 90% happy with our software and are not looking forward to paying several hundred dollars to upgrade to the latest version of MS Windows and MS Office – if that’s what you use. Certainly MS sits with billions in its reserves is not on the verge of bankruptcy but stockholders are looking and increasing their returns. So how will Microsoft, whose stocks have been declining of late, ensure profits and survival. No one on the outside can profess to answer this, however it could look down its products to ensure they can only be installed on one machine. But won’t that discourage people who don’t have enough cash from upgrading to new MSs products which will prevent illegal copying?

First it must be noted that Microsoft would probably not be in the position it is in today if it did not at one time passively promote the free distribution of its software. In the days when the computer operating system of the day was MS DOS, the predominant software products were Lotus 123, dBase and WordPerfect. Each product its product against unauthorized, bootleg distribution by digitally protecting its installation disks against unauthorized use – and this worked relatively well, that was until the company that made the operating system moved into the application software business and produced a product that could be readily copied and distributed between friends, family members and neighbours. This practice was contagious – viral in nature. One by one, the 3 great software industry leaders were brought to their knees.

The death knell occurred at the point the DOS based versions of MS WORD, EXCEL and Access were transformed into something new Рversions that would operate under what came to be called Windows. Of course only Microsoft had a full picture of this new operating system. The corporate that provided the operating system on which Lotus 123, dBase and WordPerfect depended and not only become competitor, it had rewritten the operating system. The 3 competitors of MS had a choice, invest in a total rewrite of their products or wait and watch to see if the new operating system would be adopted by consumers. Consumers loved MS Windows. In many cases, individuals had Windows operating at home long before it was adopted in the workplace. Why? MS continued to consumer market share by allowing people to copy and freely distribute its Windows operating system and integrated suite of products. This is not to say that the products were not good, they were consequently adopted widely in the workplace after receiving acceptance by everyone from the office managers teenage kids to the technician who was chomping to have MS Window Product Support replace DOS Technician on his or her resum̩. Has MS skilfully executed a well developed marketing plan or been involved in some predatory practices. A quick look to the other side of the pond shows MS contesting an EU court decision Рmore.

The other day, a colleague noted, “Other accelerators already in evidence that influence our ability to collaborate are our attitude to IP and our ability to 'waste' things. The entry phase of the new business model requires the establishment of 'reputation' which is gained by freely sharing IP; the latter phase (which can be quite small) involves conversion for commercial gain. When the cost of something virtually disappears (and it can therefore be 'wasted') and the leverage to be gained from sharing is apparent, then collaboration happens! That way be both gain confidence in our potential collaborations, are presented with the means to enable them, and maybe turn them into something worthwhile!”

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