How Technology will change Small & Medium sized Business

And here come 2012. The era of computing has seen some dramatic improvements in 2011. But what is interesting is the evolving focus of technology majors from large enterprises to small and medium sized businesses. So what could be the major movers and shakers for the next two years as we gear ourselves to ride this wave of technological evolution, more in terms of focus and perspective?

  1. Small and Medium Enterprises (Popularly called SMEs) will ride the wave on e-business offerings. The time has come when even the smallest service provider will leverage m-commerce to advertise his service range for the customer in serviceable range, with the growing popularity of location based services. Everyone with a mobile is potentially reachable through this technology, which is fast increasing in popularity. The fact that Forrester Research predicts m-commerce will grow at a compound annual growth rate of 39% through 2016, and that tablet adoption will grow at a compound annual growth rate of 56% per year through 2015, indicates Location Based Services have a really bright future.
  2. With the increased popularity of SaaS models in Information Technology offerings, small business can today harness the power of costly powerful technological resources, shared by multiple users, without shelving off millions of dollars. I foresee more and more focus of offerings in the domain of Business Intelligence, which are in a cloud model, for SMEs from the technology service providers. With the resources moved to a cloud, it would be possible to harness the power of ever improving processing capabilities to the available data and then leverage the information and knowledge and gain competitive advantage. The offerings of Business Intelligence on the cloud, should be of the greatest boon to the SMEs and should have a great rate of technology adoption.
  3. With the increasing access and penetration of the internet, the years to come may witness a growing proliferation of web based start-up ventures, which may operate purely on a click first e-business model. There may be a splurge of knowledge disseminating service providers or web-based internet marketers leveraging the power of affiliate marketing. However, it would remain to be seen whether this time the wave survives longer than the last wave which crumbled during the dotcom burst of the late 1990s. These pure-click e-business models may be further boosted by the integration of such business with the social networking sites like Facebook and Twitter, the likes of which have seen a faster adoption amongst the consumers than any other technology.
  4. With a greater focus on web-based offerings, very soon SMEs will start harnessing the power of open source resources and applications, in the regular operations and transactions. Job monitoring, scheduling, live meeting and communications in general will start being more accessible to the SMEs without deep pockets. This may see a fast growth amongst businesses who are able to assimilate the benefits of the increasingly accessible technological offerings.
  5. Last, but not the least, technology may again be leveraged in providing social services. With the increasing focus on social marketing, and the issues centered on triple bottom line, sustainable governance structures may evolve amongst the SMEs which would be heavily leverage on the power of technological advances in general, and e-Business models in particular.

In short the next few years promises to deliver a lot to us. But to what extent the technology evolution and revolution will witness an adoption and assimilation in the SMEs will be interesting to monitor. What do you feel about this era of technological evolution and its impact on SMEs? Write to us.

Pricing of Telecommunication Network Services

Pricing is one of the key components of services marketing. Service providers like that of telecom service providers, often are at a major dilemma, how to price their offerings? What would be a sensitive price point for converting a potential target customer into an actual consumer? The divide between perceived value of  a service and its perceived cost would often vary across segments of customers for the same service offering.

So how should a pricing manager go about pricing network services?

Typically some of the more classical approaches in pricing Telecommunication Network Services are as follows:

  • Maximization of consumer surplus
  • Welfare maximization
  • Peak load pricing
  • Pareto optimal pricing
  • Ramsey prices
  • Cost based pricing

Here the objective of the pricing manager would be to set a pricing technique which depends on measurable parameters

  • Fully distributed cost pricing (preferred by regulator)
  • It may obscure the fact of inefficient technology
  • Over provisioning of infrastructure
  • Long run incremental cost approach
    • It may be costly to implement

    This pricing technique must ensure that if not at an individual service level, at least at a service bundle level, the price bundles post consumption must be profitable to the service provider.

    Another  major challenge for the pricing manager is how to apportion the cost when same resource produces two services (voice and video). This becomes extensively critical when a cost based pricing mechanism is used. It is important to note at this point that decisions, if not prudently taken, would turn a Business Unit of the service provider into a potential cost center without strategic deliverables. Cost apportionment is especially problematic and questionable in an industry marked by production not directly proportional to input materials (as all services are, where the intellectual capital matters a lot more than tangible artifacts).

    To take care of this challenge, one may approach this dilemma using the following approaches:

    • Subsidy free (very difficult to decide on the price)
    • Sustainable (Ramsey pricing)
    • Activity based costing : It is based on a hierarchy of four levels and is a refinement of FDC approach

    Another major issue is Pricing Services Bundles. Pricing is a major decision point in the adoption of service bundles, especially when the key differentiators are extremely intangible in nature. That again is another ball game. If you find that interesting, you can go through the following article of mine: A Model for Bundling Mobile Value Added Services using Neural Networks, 2012, International Journal of Applied Decision Sciences, Vol. 5, No. 1.

    Do get back to me if you have any queries.

     

     

    Location Based Services

    Location-Based Services (LBS) typically are information based or entertainment providing services, accessible with mobile devices like smart phones, web-enabled phones, PDAs, Notepads and Palmtops through the services of a telecom network provider. Typically these services utilize the ability to make use of the geographical position of the mobile device. These services are getting immensely popular as a tool for services marketing for B2C focused businesses.

     

    For example, you are at location X. You suddenly need servicing for your car or gas. Also you are hungry. With Location Based Services enabled on your mobile device, you can be guided to the closest place at the time of your need to the junction that can service your needs in the best possible way. It may be a Gas Station with a food joint.

    This is not all. Location Based Services have a very high potential for cross-selling and upselling new services and lower cost of customer acquisition. Intimation of location specific services may be offered to potential customers, and conversion of leads to sales may be extremely high, in certain services. For example, close to a highway, if a joint is present that provides refreshments, and the travelers are intimated of the same during a journey about the same, this may rake in huge benefits.

    With the increasing popularity of cloud computing in the era of information technology enabled services (more often internet enabled services), Location Based services are one of the more promising services technology majors are focusing on, due to it extremely high potential revenue generating future. Started first by the 3 majors in 2000, Ericsson, Motorola and Nokia,Location Based Services and the research on the service science on the domain has never looked back. The first major full-scale commercial Location Based Service was launched by DoCoMo in Japan , based on triangulation for pre-GPS handsets in 2001. Services like Friendfinder, Yellow pages, houseposition, emergency call location etc. were the first few services that harnessed enormous acceptance from its targeted consumer base across geographies.

    Today technology majors like IBM have their own extensive solution for work-force management, that uses platforms for location based management systems. The recent acquisition of GoWalla by Facebook is another such indication that even Social Media majors are considering potential revenue from advertisements from such services. The potential profitability of such services are encouraging the trend, and as more and more focus is increased on the Cloud Computing, these services are bound to be a major revenue earner for technology giants, and can be a crucial ace for the players in the IT services and IT enabled services industry.

     

    Debt Crisis in Europe

    The woes of the economic slowdown and financial crisis in 2011 is largely attributed to the debt crisis in Europe. This is not a recent happening and bubble started growing from as early as 2009. The 3 of the highest exposed countries; namely Greece, Ireland and Portugal, collectively account for six percent of Eurozone’s gross domestic product (GDP).

    Greece is under a massive burden of debt, over 50% which according to financial analysts, ma become bad debt. There is a lot of pressure from institutions like BNP Paribas to write off a major part of the debt. Investors who have share in the huge debt of Greece, have taken reclusive protection in the form of credit default swaps. However, this may not be sufficient protection, in case the lending rates increase even more. As it is, the cost of capital is sky high in the European countries and the Euro is under severe stress from the tactics taken by Greece, which has somewhat affected its strength. Greece is attempting to corral as many investors as they can. The more bond holders they persuade, the more that Greece would benefit.

    Ireland is in no way, better off. Even though these banks have received  significant bailout assistance from the European Union and the International Monetary Fund to cover the current insolvency, Ireland’s policy makers really need to figure out how to service this public debt, without triggering a shiver down its economy. Their bank’s are still balanced on a very fine needle, which may collapse at the smallest shock from any of its investors.  however, it is comforting that the latest Euro Plus Monitor reports that Ireland has somewhat progressed in dealing with its financial crisis, and the nation may grow self-sufficient from the second half of 2012 onwards.

    Portugal may be a victim to successive rounds of speculation by pressure from bond traders, rating agencies and speculators. Today the nation may be on the verge of requesting a second bailout, and follow the path of Greece.

    The European central bank may have to soon bow down to the financial pressure and start printing money, and there is almost a 50:50 convergence in mindset amongst economists that ECB should conduct outright quantitative easing (QE). attempts may be taken to increase the capitalization of European banks to the tune to 10% to ward of liquidity crisis.

    That the European Central Bank and Germany have rejected calls from euro-zone political decision makers to bail out Italy and other struggling euro members by intervening massively in bond markets is of even greater discomfort. This may be an indicator of a gradually declining economic strength of these two super-institutions. The focus of these to fight inflation, may be a decision making point, however, as these institutions are pointing out, European countries need to make long term economic reforms to service the existing debt and stabilize the internal economy and the banks.  The European Central Bank is one of the very few strong institutions still with the capability to buy off significant portions of the Italian and Spanish debt. However, on the bright side, the European Union has agreed to a below-inflation budget increase for 2012 (which may even extend to the first quarter of 2013) as its members held ground against pressure from Brussels for a bigger increase.

    Interestingly, the European Union sees the probably GDP growth in the next year (2012) at just 0.6%, down from its forecast just six months ago of 1.9%. However, it is interesting to note at this point that the 2011 forecast was cut to 1.6% from 1.8%. Due to the high cost of working capital and subdued credit demand, investments that may create value appear to be dwindling in nature.

    Under such a situation, the bubble may grow till the early 2012 before it bursts, and finally economic reforms ushering in stability and prosperity may start from the second half of 2012. It may be late 2013 or even as late as the second half of 2014, that the affected countries will regain self-sufficiency and move on towards economic stability.

    Agile software development methodology

    Agile software development is a model for development of information technology systems based on iterative and incremental development, based on feedback from the clients.  In this methodology the requirements and solutions evolve through collaboration between self-organizing, cross-functional teams who work in close liaison with the clients. It promotes evolutionary development, adaptive planning and encourages rapid and flexible response to change.

    Although the methodology was conceived in the early 1990s, it started gaining in popularity after 2001 when the methodology started getting adopted in research laboratories of major technology companies. Generally speaking Agile software development is more suitable for products and less for services. Even amongst products, Agile software development methodologies are more suitable for smaller to medium sized products. Ideally development teams for such products have a size ranging from 5 members to 20 or 30 members, although, instances were noted when the methodology was successfully used with a team of 100 members.

    Some of the more popular Agile methodologies are as follows:

    •     Agile Modeling
    •     Agile Unified Process (AUP)
    •     Dynamic Systems Development Method (DSDM)
    •     Essential Unified Process (EssUP)
    •     Extreme Programming (XP)
    •     Feature Driven Development (FDD)
    •     Open Unified Process (OpenUP)
    •     Scrum
    •     Velocity tracking

    A major difference of Agile methodologies from the Systems evelopment Life Cycle (SDLC), or software development life cycle models is that the requirements from the client is collected iteratively and in an evolutionary manner. In contrast, in the SDLC methodologies, each stage, including the requirement analysis stage, needs to be completed and finalized, before moving on to the next stage.

    Also, another major difference of Agile methodologies from the Systems evelopment Life Cycle (SDLC) is that the degree of documentation done is typically a lot lesser. Because of smaller team size, extensive informal communication makes high quality software development feasible. But it would be difficult to ensure high quality in larger projects, due to this methodological limitation, which is mostly made by choice to ensure faster delivery of software projects.

    The Agile methodologies focusses on different aspects of the software development life-cycle. Some focus on the practices (extreme programming, pragmatic programming, agile modeling), while some focus on managing the software projects (Scrum). There are also methodologies which have a focus on all the stages of the SDLC (DSDM, RUP), although most are tailor cut for the requirements specification phase (e.g. FDD).

    Hope this short and simple note is sufficient for an introduction to Agile software development methodologies. Do let me know if you need any more information.

    The Agile methodologies focusses on different aspects of the software development life-cycle. Some focus on the practices (extreme programming, pragmatic programming, agile modeling), while some focus on managing the software projects (Scrum). There are also methodologies which have a focus on all the stages of the SDLC (DSDM, RUP), although most are tailor cut for the requirements specification phase (e.g. FDD).

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