Strategies For Growing A Great Services Business

By Julie Giera,

Of the top 35 global IT vendors, 22 are either services providers or product companies with a large services business like IBM. This shift to services has been accelerating over the past five years among technology vendors looking to drive recurring revenues, deeper customer relationships, and additional channels for their products. Building a great services business is tough for many technology vendors, because the things that contributed to their success as product companies are the very things that can be their downfall in services. Forrester has identified the top ten strategies technology vendors can employ to build a great IT services business.

1. Stick to services that closely tie in to your products’ strengths.
2. Organize for services separately from products.
3. Hire experienced sales people.
4. Limit the services portfolio.
5. Automate the proposal process.
6. Market your message through multiple channels.
7. Limit risk in very large contracts.
8. Develop the channel and deal with conflict early.
9. Weigh a direct service model against a subcontracting arrangement.
10. Know your value proposition: Wal-Mart or Tiffany’s?

Source:Forrester Research

How to Pitch InformationWeek

Circulation & Readership
InformationWeek’s audience consists of 1.6 million CIOs and business technology managers and staff found in more than 250,000 locations: 45.6% live in North America, 27.3% in Europe, 20.9% in Asia, 3.8% in Latin America, 2.4% in Africa and the Middle East.

440,000 IT professionals alone read the magazine each week. It’s first in reach to CIOs (107,000) and technology buyers with the biggest annual budgets ($250,000 to $1 million). 72.8% of the readers are IT executives and senior staff; 27.2% are in business management. Their average annual spend is $45.7 million.

Editorial Coverage
InformationWeek is much more than a weekly print magazine. It’s “at the center of our business technology news gathering and analysis,” says Preston. The style and tone are practical and detailed. It’s the publication to which industry professionals turn for subjects, such as vertical industries and IT.

Sections include:
o In Depth (their take on the latest business technology topic)
o News Filter (how top stories affect readers)
o News & Analysis (cover story)
o Tech Portal (security, software, wireless, mobile)
o High Five (business professional’s insights)
o IT Confidential (industry trends and events)
o Down to Business (urgent issues)
o Personal Tech Guide (useful tech tools)

Special issues: The magazine fields more than 20 research studies every year. Topics include: salary survey, information security survey, CIO agenda, mobile and wireless and business intelligence.

InformationWeek.com
The Web site gets 1.4 million unique monthly visitors and 300,000 weekly enewsletter subscribers.

The five newsletters and their circulation:
o InformationWeek Daily: 100,000
o This Week on InformationWeek: 55,000
o InformationWeek Between the Lines: 100,000
o InformationWeek’s Outsourcing Newsletter: 30,000
o TechCareers Report: 15,000

How to Pitch InformationWeek – 10 Tips
Tip #1. Familiarize yourself with the magazine
Acquire some knowledge of InformationWeek’s content and the focus of the reporters you contact. Indeed, lack of knowledge about the publication is one of Preston’s pet peeves. “Build relationships with reporters. Don’t just blanket them with the same messages you send everyone else.” And don’t think of your query as a pitch. “Ideally, you are not selling something to us; you are providing information that we want.”

Tip #2. Provide contacts
If you have a product you would like InformationWeek to review, provide a few consumer contacts so reporters can get feedback from them. Offer as much detail about the technology and its manufacturer as possible. Avoid industry-speak; describe concisely the characteristics of the product, its purpose, price and audience.

Tip #3. Keep it simple
Keep your information simple and straightforward, yet fascinating enough for a case study. They don’t accept embargoed material. They prefer to take “an end-user enterprise perspective.”

Tip #4. Send an email
Most editors favor email. If you must leave a voicemail, clearly state your name and phone number. Don’t ramble (i.e., don’t wait until the system cuts you off).

Tip #5. Craft subject line
Write succinct yet meaningful subject lines that don’t include the words “press release,” exclamation points or all caps. Then, customize your plain text pitches to the journalist’s coverage.

Tip# 6. Don’t send attachments
Don’t include email attachments, especially unsolicited ones. Do include the following bulleted points: what, when, who, where and how.

Tip #7. Limit number of slides
If you send a PowerPoint presentation, limit it to five slides.

Tip #8. Target your queries
Check InformationWeek’s editorial calendar to better time your queries.
http://www.informationweek.com/edcal/2007

Tip #9. Contact the right reporter
Send your story leads directly to the reporter who covers the beat or technology you’re involved in. You can find a list of reporters, beats and contact information here:
http://www.informationweek.com/contactus.jhtml

Tip #10. Identify time zones
Consider time differences when contacting them. Not everyone is based in New York.

Contribute to InformationWeek
Staff writers and freelancers produce most of the magazine’s content. If you want to freelance, send an email to the managing editor/features.

InformationWeek does not publish unsolicited articles; make sure a story is approved before you spend much time on it. The magazine does accept opinion columns, however. They like to hear your perspective on relevant issues.

Also, consider the Lightning Post — the site’s discussion forum. It connects readers to editors. They don’t promise to answer you, but they do promise to read your message. “Because of sheer volume, we may not respond to every query,” Preston says.

Press Kits
Editors prefer emails to press kits. Always include contact information and a product summary with whatever you send.

Meet Preston and Other Editors
Preston says you can meet the magazine’s editors in any of their offices. They are even available at “the principal’s site, if the principal and story is compelling enough.”

Editors attend various conferences and trade shows. The major one: InformationWeek500, a three-day show at which the 500 most innovative business technology users are named.

Source:Marketing Sherpa

7 Deadly Startup Mistakes

By John Foley

Sun Microsystems drew some 300 entrepreneurs to a startup “camp” in New York. The event was full of advice on things emerging companies can do raise their chances of success — and a reminder of flubs to avoid.

Sun hosted the get-together as part of its outreach to early-stage companies. Sun launched its Startup Essentials program in the United States a year ago and has engaged some 1,000 companies since then. Sun extended the program a few months ago to India and China and plans to offer it in other parts of the world, according to Sanjay Sharma, Sun’s director of startups and emerging markets market development. Sun helps startups with free software, services, discounted hardware, and hosting in hopes the small fries will turn into larger customers down the road.

A lot of good advice was presented. Saeed Amidi, president of Plug And Play Tech Center in Sunnyvale, Calif., talked about the benefits an incubator can offer. Since opening its 175,000 square foot facility last year, Plug And Play has become home to 112 startups backed by a total of $350 million inventure funding. Companies there have ready access to venture firms, data center hosting, tech vendors, and fellow innovators.

Other presenters included Jason Hoffman, founder and CTO of Joyent, who gave a primer on how to architect Web applications for scalability; Alan Sutin, an IP lawyer with Greenberg Traurig, who talked about patents and trademarks; and Jed Katz, managing director of DFJ Gotham Ventures, who went over the dos and don’ts of working with VCs.

The venue also served to demonstrate what to avoid if you’re an up-and-coming company. The following list is drawn from my observations at the day-long affair. Here’s what not to do if you’re a startup. Don’t…

1. Bungle the napkin pitch. Several of the startups I met were anything but concise in getting their ideas across. That’s a missed opportunity. Entrepreneurs must be able to articulate big ideas in a few seconds.

2. Dress like a scarecrow. Old shirts, baseball caps, and sandals are great for the weekend, but they don’t make a great first impression at a business event.

3. Spill the IP beans. Attorney Alan Sutin warns that you have only a year to file for a patent after your idea has been publicly disclosed. Once you start blabbing, the clock starts ticking.

4. Go it alone. Veteran investor Amidi of Plug And Play Tech Center says entrepreneurs need to find one or two partners who share their passion for the business. If you can’t convince one or two others this is a great idea, it probably isn’t.

5. Set up shop in Timbuktu. You’re much better off in Silicon Valley or some other center of entrepreneurship and funding. “If you move to the Bay Area, your chances of success double,” says Amidi.

6. Call your investors dopes. One speaker said his startup got its initial funding from “friends, family, and fools.” He was kidding — I think.

7. Snooze during brainstorming. The guy next to me began snoring more than once during presentations. There are diminishing returns to those late nights working out a business plan.

I can’t guarantee your startup will be successful if you avoid these gaffes. But it’s good bet it won’t be if you don’t.

Source:

YourStreet Relaunches; White Label & Widgets On the Way

By Kristen Nicole

YourStreets found it wasn’t working out as a real estate resource for localized content, so it’s switched gears to become an aggregator of local data based on individual neighborhoods. This makes sense on several levels, but it’s a difficult task to undertake, and must be executed well for optimal results.

As it’s become a human-influenced search engine to some extent, it has the job of bringing all the relevant data, based on your neighborhood, to the forefront of your results. As a user you can submit your own content, and view other users (neighbors) that are nearby.

This is all displayed on a map as well, offering you a bit more context and an interactive way at which to delve for more information. Additionally, users can converse on various local topics, and these conversations (discussions) will appear along with your search results and on the map as well.

I really like this concept of incorporating several aspects of local life into an aggregated resource, which is rather similar (though less intrusive) that what we’ve seen from Fat Door. So far, the biggest thing missing from YourStreet’s new aggregated view is filtering options to better scour through the data that’s been offered up.

Checking on the news around Chicago, I see a lot of content for sports, but I’d rather see what’s going on with restaurants within walking distance of my house. As it stands right now, there are no good filtering options that I can use to weed out the restaurant data from the rest.

Additionally, YourStreet has some big plans for its new service, which includes a white label solution. To this end, YourStreet will offer selected media partners, like newspapers, to offer a custom YourStreet map to show local news stories. I think extending this to support user-generated content could be a valuable offering to participating media companies as well.

There will also be a widget for you to put a neighborhood map on your blog, website or social networking profile. This embedded map will be constantly updated for new, incoming content. Both the white label solution and the widget offerings will be released early next year.

Source:Mashable.com

Business Intelligence Versus Business Analytics–What’s the Difference?

By Rock GnatovichThe marketing and analyst airwaves are flooding with speculation about what is next for business intelligence (BI). What will comprise BI 2.0?

Historically, this market has been served by vendors such as Business Objects and Cognos. But the competitive landscape is changing. Microsoft has now shrewdly entered the market by driving the placement of SQL servers into the space in order to broadly deploy and deliver its BI suite and reporting services in volume. Oracle has seen the effect of companies moving data out of the database to stage it for analysis. The resulting data warehouses have provided a degree of utility in housing, manipulating and delivering “strategic” information across the organization.

Recently though, established vendors such as SAP and Siebel have unveiled BI product suites under the banner of “analytics.” SAS, a perennial stalwart of the statistics market, is suddenly being touted as the number-three BI vendor and frequently positions itself as an analytics vendor.

With analytics finding its place within many functions and business processes it seems clear that it will be a defining feature of next generation business intelligence. Particularly, a significant new group of business users—a group I like to call “Go-To Guys”—are in need of analytics tools to tackle daily problems and opportunities. Go-To Guys are the operating managers of company—product managers, sales managers, researchers, engineers and marketers.

So, what is analytics? Neil Raden of Hired Brains, a market research and management consulting firm, has said that, “the proper term for interacting with information at the speed of business, analyzing and discovering and following through with the appropriate action, is ‘analytics’.”

CIOs often assume that business analytics (BA) comes along with BI. The traditional BI market has been associated with providing executive dashboards and reporting to monitor the assumptions and key performance metrics that are part of long term planning cycles.

Everybody wants a dashboard. To the extent that all of us are CEO’s of our own business discipline, we want a simple measurement display of how we are doing and an alert mechanism of when something goes wrong. Additionally, dashboards address the growing urgency around Sarbanes Oxley. Monitoring planning assumptions and key performance metrics has now become mission critical from a regulatory and compliance standpoint.

Where BI Stops and BA Begins
But BI reporting ends with the dashboard, which is sufficient only for some business planning, and BA picks up the rest for the Go-To Guys. Simply, this group must interact with data in a much different way from what traditional BI allows.

The Go-To Guys deal daily in unanticipated outcomes and unknown results and it is their job to mitigate risk and capitalize on opportunities. BI is not architected to iterate on new scenarios or for immediate response to unanticipated questions because it is set up to automate the distribution of standardized reports that monitor pre-determined key performance metrics and planning assumptions. BI’s answer to analytics has been to deliver the report to the business user and the business user typically takes the data in the report and dumps it into Microsoft Excel in order to do his own analysis.

As a result, there are $8B (yes, billion) of internally developed analytic applications with Excel as their front end. The BI players treat the output to Excel as a feature. But I actually think it’s a tremendous failing. It is proof that you don’t get BA when you buy BI. The BI architecture cannot support the operating needs of the business users to ask and answer their own questions in response to new occurrences and events in the marketplace.

Secondly, Excel is not an answer either. As soon as the data is dumped into Excel, the user is out of the BI system with no way back in. Any insight that the business user gains while interpreting Excel spreadsheets tends to stay with him—all opportunity for organizational learning or process improvement is lost.

So requirements for analytics are different than the requirements for BI, but the benefits are different as well.

Technically Speaking…
There’s also a technical component to all of this reinforcing the claim that the technical requirements to support analytics are different from the technical requirements that enable BI. To facilitate reporting and dashboards, BI traditionally works with aggregated data. Business users cannot rely solely on aggregated data in the operating environment. They have to be able to get to the details. The aggregated data will many times obscure the key issue or opportunity in your information.

BI data is typically staged in an OLAP cube to support drill-down. In analytics the Go-To Guys have to be able to get directly to the source data in the database. The key facts needed to make your operating decision are often not in the cube because they haven’t been anticipated by the IT department. This is not a question of the trees obscuring the forest—you have to be able to see both. The business users cannot be disconnected from the critical data needed to make a key business decision.

And lastly, the requirement of the BI system has been to monitor the data based on pre-configured questions requiring only a thin client environment to inform the user. In the operating world, users need to engage with the information requiring a richer client to support interactivity and the ability to ask and answer their own question without having to go back to IT.

What are the characteristics of an analytic savvy organization? First of all, even the planners want into the act. Analytics is enabling more proactive, high-frequency planning cycles. Planners are better able to refine and iterate the plan, shifting resources to higher performing areas with the goal of being first-to-market and never having a warehouse full of trendy goods once the trend is over. Secondly, the analytically savvy organization is more agile—able to adapt and respond—whether that’s to a competitor that releases a new product, a change to the pricing structure in the marketplace or the success of its own marketing campaign.

Remember, you don’t get business analytics when you buy business intelligence. The requirements are different and the benefits are different. The return on information and expertise achieved by arming your operating managers with analytics will supercharge your existing BI investment.

Source:

An Introduction to Business Intelligence (by CIO)

Compiled by Ryan Mulcahy, CIO

What is business intelligence?

Business intelligence, or BI, is an umbrella term that refers to a variety of software applications used to analyze an organization’s raw data. BI as a discipline is made up of several related activities, including data mining, online analytical processing, querying and reporting.

Companies use BI to improve decision making, cut costs and identify new business opportunities. BI is more than just corporate reporting and more than a set of tools to coax data out of enterprise systems. CIOs use BI to identify inefficient business processes that are ripe for re-engineering.

With today’s BI tools, business folks can jump in and start analyzing data themselves, rather than wait for IT to run complex reports. This democratization of information access helps users back up—with hard numbers—business decisions that would otherwise be based only on gut feelings and anecdotes.

Although BI holds great promise, implementations can be dogged by technical and cultural challenges. Executives have to ensure that the data feeding BI applications is clean and consistent so that users trust it.

What kind of companies use BI systems?

Restaurant chains such as Hardee’s, Wendy’s, Ruby Tuesday and T.G.I. Friday’s are heavy users of BI software. They use BI to make strategic decisions, such as what new products to add to their menus, which dishes to remove and which underperforming stores to close. They also use BI for tactical matters such as renegotiating contracts with food suppliers and identifying opportunities to improve inefficient processes. Because restaurant chains are so operations-driven, and because BI is so central to helping them run their businesses, they are among the elite group of companies across all industries that are actually getting real value from these systems.

One crucial component of BI—business analytics—is quietly essential to the success of companies in a wide range of industries, and more famously essential to the success of professional sports teams such as the Boston Red Sox, Oakland A’s and New England Patriots.

With an analytical approach, the Patriots managed to win the Super Bowl three times in four years. The team uses data and analytical models extensively, both on and off the field. In-depth analytics help the team select players and stay below the NFL salary cap. Patriots coaches and players are renowned for their extensive study of game film and statistics, and Coach Bill Belichick reads articles by academic economists on statistical probabilities of football outcomes. Off the field, the team uses detailed analytics to assess and improve the “total fan experience.” At every home game, for example, 20 to 25 people have specific assignments to make quantitative measurements of the stadium food, parking, personnel, bathroom cleanliness and other factors.

In retail, Wal-Mart uses vast amounts of data and category analysis to dominate the industry. Harrah’s has changed the basis of competition in gaming from building megacasinos to analytics around customer loyalty and service. Amazon and Yahoo aren’t just e-commerce sites; they are extremely analytical and follow a “test and learn” approach to business changes. Capital One runs more than 30,000 experiments a year to identify desirable customers and price credit card offers.

Who should lead the way?

Sharing is vital to the success of BI projects, because everyone involved in the process must have full access to information to be able to change the ways that they work. BI projects should start with top executives, but the next group of users should be salespeople. Because their job is to increase sales and because they’re often compensated on their ability to do so, they’ll be more likely to embrace any tool that will help them do just that—provided, of course, the tool is easy to use and they trust the information.With the help of BI systems, employees modify their individual and team work practices, which leads to improved performance among the sales teams. When sales executives see a big difference in performance from one team to another, they work to bring the laggard teams up to the level of the leaders.

Once you get salespeople on board, you can use them to help get the rest of your organization on the BI bandwagon. They’ll serve as evangelists, gushing about the power of the tools and how BI is improving their lives.

How should I implement a BI system?

When charting a course for BI, companies should first analyze the way they make decisions and consider the information that executives need to facilitate more confident and more rapid decision-making, as well as how they’d like that information presented to them (for example, as a report, a chart, online, hard copy). Discussions of decision making will drive what information companies need to collect, analyze and publish in their BI systems.Good BI systems need to give context. It’s not enough that they report sales were X yesterday and Y a year ago that same day. They need to explain what factors influencing the business caused sales to be X one day and Y on the same date the previous year.

Like so many technology projects, BI won’t yield returns if users feel threatened by, or are skeptical of, the technology and refuse to use it as a result. And when it comes to something like BI, which, when implemented strategically, ought to fundamentally change how companies operate and how people make decisions, CIOs need to be extra attentive to users’ feelings.

Seven steps to rolling out BI systems:

1. Make sure your data is clean.
2. Train users effectively.
3. Deploy quickly, then adjust as you go. Don’t spend a huge amount of time up front developing the “perfect” reports because needs will evolve as the business evolves. Deliver reports that provide the most value quickly, and then tweak them.
4. Take an integrated approach to building your data warehouse from the beginning. Make sure you’re not locking yourself into an unworkable data strategy further down the road.
5. Define ROI clearly before you start. Outline the specific benefits you expect to achieve, then do a reality check every quarter or six months.
6. Focus on business objectives.
7. Don’t buy business intelligence software because you think you need it. Deploy BI with the idea that there are numbers out there that you need to find, and know roughly where they might be.

What are some potential problems?User resistance is one big barrier to BI success; others include having to winnow through voluminous amounts of irrelevant data and poor data quality.

The key to getting accurate insights from BI systems is standard data. Data is the most fundamental component of any BI endeavor. It’s the building blocks for insight. Companies have to get their data stores and data warehouses in good working order before they can begin extracting and acting on insights. If not, they’ll be operating based on flawed information.

Another potential pitfall is BI tools themselves. Though the tools are more scalable and user friendly than they used to be, the core of BI is still reporting rather than process management, although that’s slowly beginning to change. Be careful not to confuse business intelligence with business analytics.

A third impediment to using BI to transform business processes is that most companies don’t understand their business processes well enough to determine how to improve them. And companies need to be careful about the processes they choose. If the process does not have a direct impact on revenue or the business isn’t behind standardizing the process across the company, the entire BI effort could disintegrate. Companies need to understand all the activities that make up a particular business process, how information and data flow across various processes, how data is passed between business users, and how people use it to execute their particular part of the process. And they need to understand all this before they start a BI project, if they hope to improve how people do their jobs.

What are some benefits of business intelligence efforts?A broad range of applications for BI has helped companies rack up impressive ROI figures. Business intelligence has been used to identify cost-cutting ideas, uncover business opportunities, roll ERP data into accessible reports, react quickly to retail demand and optimize prices.

Besides making data accessible, BI software can give companies more leverage during negotiations by making it easier to quantify the value of relationships with suppliers and customers.

Within the walls of the enterprise, there are plenty of opportunities to save money by optimizing business processes and focusing decisions. BI yields significant ROI when it sheds light on business bloopers. For example, employees of the city of Albuquerque used BI software to identify opportunities to cut cell phone usage, overtime and other operating expenses, saving the city $2 million during three years. Likewise, with the help of BI tools, Toyota realized it had been double-paying its shippers to the tune of $812,000 in 2000. Companies that use BI to uncover flawed business processes are in a much better position to successfully compete than companies that use BI merely to monitor what’s happening.

More tips for getting BI right

• Analyze how executives make decisions.
• Consider what information executives need in order to facilitate quick, accurate decisions.
• Pay attention to data quality.
• Devise performance metrics that are most relevant to the business.
• Provide the context that influences performance metrics.

And remember, BI is about more than decision support. Due to improvements in the technology and the way CIOs are implementing it, BI now has the potential to transform organizations. CIOs who successfully use BI to improve business processes contribute to their organizations in more far-reaching ways than by implementing basic reporting tools.

Source:

Five tips for making a popular (and maybe profitable) Facebook app

Third-party developers offer the following tips on how to make a popular application for Facebook:

1. Target the friends list

2. Make it sticky

3. Make it social

4. Leverage your site

5. Prepare to scale

(see more at http://www.unitedbit.com/?p=88)

Strategies for Being a Platform Leader

By Annabelle Gawer and Michael A. Cusumano

In recent years, many high-tech sectors have become battlegrounds for companies bent on establishing their product as the next industry platform. Whether it’s a smart phone or a videogame console, products that become platforms dominate sales in their niches, give rise to numerous complementary products from third-party developers, and reap enormous profits.

Too many companies, though, wind up losers in platform wars because they were too protective of their technology or intellectual property, or failed to recognize the platform potential of their products. Apple Inc.’s Macintosh computer and Sony Corp.’s Betamax video recorder were excellent products that could have become industry platforms. Apple recently realized that it may miss a major platform opportunity with its iPhone by limiting its use to selected carriers and preventing third-parties from adding new applications. It has decided to reverse the latter policy.

To have platform potential, a product, technology or service must:

• Perform at least one essential function in a product or combination of products that execute an increasing variety of tasks — the way PCs have become an integral part of Web browsing, gaming, telephony and other activities — or solve an essential technological problem for many players in an industry.
• Be easy to connect to or build upon, allowing the system to be expanded to new and even unintended uses.

Then a business strategy is required that enables a company to make its technology or service fundamental to an emerging platform and helps the market tip toward that platform. The company must create economic incentives that encourage other firms to develop complementary applications for the platform, and at the same time protect its own ability to profit from its innovations. This balancing act is perhaps the greatest challenge to platform leadership.

Google’s Success

Google Inc. is a prime example of a successful platform builder and leader. First, it solved an essential technical problem: how to find anything in the maze of Web sites, documents and other content online. Second, it distributed its technology to Web-site developers and users, making it easy to connect to and develop upon. It also allowed for different uses, such as combining search with different kinds of information or graphics, like maps and pictures.

Where Google cemented its position as the platform leader for Internet search, though, was with its business plan. In the early years of e-commerce, there was a lot of confusion about how to make money on the Web. Google found a way by linking focused advertising to user searches. Its ad fees also seem low or modest relative to the ads’ effectiveness. In effect, the company revolutionized advertising by redesigning the relationship between advertisers and Internet users. Today, Google’s market value stands at around $145 billion, eight times that of the largest ad agencies.

GM Loses Its Way

For a less-successful attempt at establishing a platform, consider General Motors Corp.’s 1996 introduction of OnStar, a wireless system that gave automobiles new communications capabilities, such as navigation, notification of accidents, engine diagnostics and opening of locked vehicles.

Initially, GM managed to get competing auto makers to adopt OnStar for their vehicles. Gradually, however, those rivals concluded that OnStar’s capabilities, and the information it generated about customer driving habits, were too valuable to let a competitor control. Consequently, these firms decided to build or buy competing systems.

GM failed to position its technology as an essential part of a neutral industry platform, which it might have done by spinning off OnStar as an independent company or building a Chinese wall around the unit, blocking any flow of information between it and GM that could be seen as damaging to OnStar’s clients. While GM failed at the business aspect of creating an industry platform, OnStar remains an attractive service platform for GM customers. OnStar Vice President Nick Pudar says that GM’s commitment has helped the unit rapidly deliver continued innovations for “a wide range of GM vehicles,” and that customers have responded well. “A broad adoption of OnStar throughout the industry would have resulted in slower technology development,” he adds.

The ability to establish a platform is an option for small and large companies alike. Success depends not on size but on a company’s vision, and its ability to create a vibrant ecosystem that works for the leader and its potential partners.

This can be difficult when an industry is undergoing transition and its contours are ill-defined, or when technology is evolving too rapidly. But on the other hand, these are the very conditions when platform strategies can stand out — precisely because they are so badly needed.

Source: Business Insight

Profiting from Social Networking

By Maha Atal

Here are two potentially billion-dollar questions: How can you turn the Web’s social-network users into consumers? And how can you turn idle browsing into a flourishing bottom line? Back in May, marketers hoped they might have the answer when social-networking giant Facebook opened its network to external developers. This instantly allowed them potential direct access to a user group of millions who are notoriously unimpressed by traditional advertising methods. The only challenge: developing real-world applications that users might want to embed in their profiles, which would have a real-world effect beyond mere entertainment.

Three months later, it’s clear that there’s no foolproof formula for success. Companies categorize their own applications from a list of 22 options and, as such, “businesses” come from across the board. In fact, the most popular “business” listing is Total Sports Fan, a sports application run by Boris Silver, a Wharton School student who has no plans to exploit the app as a business. In fact, he says, he listed it in that category because “he just kind of wanted to.” This free-and-easy attitude is all part of the territory, and other, more serious-minded ventures need to not only understand this attitude but be willing to live with it.

Know Your Audience

Four of the most popular applications within the category include the virtual trading program Fantasy Stock Exchange, a recruitment specialist called Jobster Career Networking, an environmental activist app known as I am Green, and a person-to-person loan service called the Lending Club, which has what may be the most successful business model. Though they’ve attracted 174,000 users among them to date, capitalizing on those users is still a challenge. Here, we assess what they’re doing right, analyze what they could be doing better, and determine what their stories can teach other companies that want to enter the space.

First: This is Facebook, kids. 56.4% of users are under 35, according to ComScore. Applications need to be appropriate and relevant to that audience. Kevin Rablois, of Slide says there are two ways for a business application to grow: through exploiting its social side or by providing users with a means for self-expression.

The Fantasy Stock Exchange (FSX) application, sponsored by virtual stock trading site HedgeStop.com, is currently the second most popular business application, with 92,000 users signing up since its launch in early July. On the application, as on its mother site, users trade virtual money based on real-time figures provided by NYSE and NASDAQ. The application loads content directly from HedgeStop.com and the 18- to 35-year-old players using it represent a similar demographic to those already using the company’s core Web site.

Getting Beyond Marketing

HedgeStop.com hopes to earn money by selling banner advertising space on its application pages, promoting the idea that virtual traders can be real spenders. But since Chief Executive Daniel Carroll admits that targeted users are “mostly beginners” who don’t yet have real funds to trade, they are also unlikely to be big spenders. Not to mention that an old-fashioned ad business model rather misses the point of the forum. Young users are wary of potential manipulation, and may be turned off FSX altogether if advertising gets too intrusive. Finally, the application has yet to offer features unique to Facebook. There seems to be no reason users shouldn’t simply go right to HedgeStop.com.

It’s a common mistake, says Facebook Senior Platform Manager Dave Morin. According to him, too many companies still see applications as marketing rather than as new business. They bring users to an application either to advertise to them or to build a connection they hope will subsequently send users off Facebook and to their main business—a company Web site, say, or its online store. Instead, companies should be trying to make the application into a self-sustaining business that generates revenue through the service it provides on Facebook. “The applications that are the most successful are the ones that integrate seamlessly into Facebook,” Morin says, a model that conveniently supports Facebook’s own business ambitions.

A Business-to-Business Model

At the same time, most users expect Facebook to be entertaining and, well, free, so getting them to pay for an application directly is unlikely. Companies such as the career networking site Jobster.com are trying to get other businesses to pay for access to Facebook users.

On Jobster’s Facebook application, called Jobster Career Networking, users post résumés and declare career goals. Jobster then feeds those résumés to companies such as Nike, GE, and Merrill Lynch, which pay a $100 monthly premium fee to access résumés from Facebook. That’s in addition to the $300 they pay for résumés from the main Jobster.com database. It’s a premium they’re prepared to pay to access young workers with perhaps nontraditional backgrounds. “We aren’t after the companies that want a classic job board,” says Jobster’s Vice-President for Corporate Communications Christian Anderson. In its first month on Facebook, Jobster Career Networking moved 300 companies from regular to premium membership and brought in 50 new partners, generating several hundred thousand dollars in revenue, according to Jobster CEO Jason Goldberg.

Given that Facebook is a social network whose main function is entertainment, there’s a danger that job hunting may not be an activity users wish to load onto their profile, when they can do so just as well on Jobster.com or any other job search site. In fact, mixing business with pleasure is a concern for users who might not want their new boss hearing about their high jinks on vacation. This reality could provide a stumbling block for Jobster’s latest feature, which enables users to add endorsements from Facebook friends to their résumé cover letters.

Rablois is skeptical of Jobster’s plan. “Why would I want recommendations of my skills or a dedication posted along with drunken photographs?” he wonders. And won’t employers disregard friends’ recommendations as entirely, unashamedly biased?

Jobster’s Anderson says users have expressed the same concern. “We’ve really had to work to clarify that companies won’t see your profile, that you won’t be ‘friending’ companies.” Consequently, says Anderson, they won’t be able to judge the friends you cite as references; they’ll just know how many recommendations you have. But this means that Jobster Career Networking has to restrict its links to the social core of Facebook to function as a professional application. It’s a risky strategy. Given that the application adds little to users’ experience of Facebook, they might as well use Jobster.com or other recruitment sites. If users ultimately decide against linking their private and professional lives, companies will be quick to pull their support. For now, though, it’s paying off: 52,000 users have downloaded the application since late July.

Showing a Green Side

I am Green lets users list simple environmentally conscious choices they make in their daily lives on their public Facebook profiles. On the application’s main page, users can talk about green technology, organic produce, and environmental issues. Founder Karel Baloun plans to monetize his 27,494 users by selling advertising space and selling green products on manufacturers’ behalf. Baloun says he’ll avoid young users’ hostility to advertising by providing content only from the green companies they already like and discuss on the application page and by polling them about the brands they’d like to see involved.

Slide’s Rablois thinks this might work, because users committed to a niche cause might be eager to buy green products. Then again, potential sponsors might not pay much to participate in such a niche market. Like HedgeStop.com, Baloun is trying to bring an old media business model into a new media space.

Fees for Lending Service

The smallest of these four business applications may be the closest to developing the most appropriate business model. On Lending Club, a person-to-person lending company that launched via a Facebook application in May, the social component is at the center of its business model. Borrowers load the application to meet up with lenders from within their existing Facebook networks and social groups. They then negotiate rates directly. Once an agreement has been made, they head to LendingClub.com, based in Sunnyvale, Calif., to enter bank account details, so funds can be transferred directly between accounts. Lending Club takes a small cut, up to 3%, of each loan.

Says LendingClub CEO Renaud Laplanche, “Person-to-person lending works best in an a environment where people feel connected to one another, lending to friends and friends of friends.” He also claims that peers trust peers to give better rates than a bank. So far, the site has attracted 13,163 users. With its 3% transaction fees, Laplanche estimates that by the end of August, the company will have moved $1 million since its June launch. But the revenue for the company in the same three-month interval is only $30,000. Given the minimal costs of maintaining the Web site and its relatively small staff of 21 people, this may be enough for now, but as the application grows, its infrastructure costs will expand. Raising the company’s commission, however, would quickly jeopardize its value proposition to users.

Facebook, where users expect applications to augment their social experience with little effort and at no cost, may be a tough environment for companies whose ultimate goal is making a buck, especially since so many companies are still trying to work with traditional ad models. Ultimately, the most successful applications are those whose business model, brand identity, and natural users match the culture and demographic on the network. As such, the top applications may not provide plug-and-play solutions for every brand hoping to enter Facebook. But the lessons they teach about the need for authenticity and relevancy are universal tenets for marketers in the Web 2.0 age.

Source: BusinessWeek Online

Social Computing Moves Into Recruitment

A new research by Forrester.

Human capital management (HCM) professionals are faced with a shrinking labor pool, lower unemployment rates, vacant jobs orders that require increasingly specialized and sought-after skills, and an environment where traditional recruiting processes and systems fail to align with many job seekers’ use of technology. To combat these challenges, strategic recruiters are finding alternatives to turbo-charge their traditional recruiting programs — and one alternative is Social Computing. Younger workers — and to an increasing degree older ones, too — are embracing Social Computing as a way to consume information and build relationships. Firms must deliberately weave many aspects of Social Computing into their traditional recruiting programs to find — and ultimately hire — the best talent possible.

Read more at http://www.unitedBIT.com