Good News! Making new revenues & profits from Technology!

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Right now the whole 2009 picture doesn’t seem too good. That’s if you can see a picture at all, as after Davos it appears the ‘great and the good’ are as confused as the rest of us, and there seem to be more and more CEOs deciding that they won’t provide forecasts for their enterprises […]

Right now the whole 2009 picture doesn’t seem too good. That’s if you can see a picture at all, as after Davos it appears the ‘great and the good’ are as confused as the rest of us, and there seem to be more and more CEOs deciding that they won’t provide forecasts for their enterprises for the next quarter, let alone the year! I have attempted to be balanced during the past six months about doing the right thing to save money but at the same time suggesting that there are new market opportunities arising from new technologies. Well right now I have decided that its time to be a little more positive by pointing out two very different success stories by well known companies. One is in Business to Business and the other is in Business to Consumer, both are global names, and both have created entire new market places that did not exist before, using technology that has only become possible in the last three or four years.
Let me start with the easy one for everyone to recognise and identify as it’s in the consumer market by Amazon. I was doing some research on Cloud Services/Computing so of course was looking at how Amazon Web Services were supporting various business activities. As part of this I was looking at how the Amazon Kindle, defined by Amazon as an eBook but that’s only part of the story, is a perfect example of an always connected by wireless, supported by Cloud Services running over Cloud Computing, device, when I encountered an article about the market capitalisation of Amazon. It might not have been what I was looking for, but how do you pass finding out that the Kindle has created a market, revenues and profits for Amazon that the analyst reckoned had added $9 billion to the Amazon market capitalisation?

As BreakingViews requires a subscription I will highlight their comment as follows; Amazon has a market capitalisation at $24bn whereas for their normal retail operation the multiple on revenues and profits would suggest $16bn. The article then worked out line by line how much money the Kindle was producing, would make for Amazon, and why the additional business provided the extra revenue and profits to provide the multiple for the extra $9bn. The stock market apparently understands the ‘iPod’ effect in creating an entire new market funded by device sales for huge amounts of reoccurring high margin service revenue. As a regular book reader and Kindle user I can only agree with the assessment! But it’s not just the device, it’s the always in place link and relationship with Amazon too, they use it to constantly update with text based matters that their great CRM systems says I will like, and they are right. So I buy more, pay less per item to get an electronic copy and make life easier for myself and Amazon as well. Only problem currently is getting one, and just like the iPod it’s twice the list on eBay! Learn more from the VP of Kindle division at Amazon on YouTube.
My second example is much more industrial and comes from General Electric who competing for a share of the truck and trailer leasing market in North America added on board Telemetrics called ‘Veriwyse’ to understand exactly what the truck, trailer and load were doing and where. The launch was fairly low key, but from this has grown a vast services business based on GE Veriwise division acquiring all the monitoring information from an ever growing fleet of truck/trailer units travelling across North America, and then cutting and dicing the information to be able to reuse it, or resell it to a wide range of transport operators. Once again the key is that the customers pay for the equipping of their trucks with Veriwise so market entry and creation is directly funded by customers, and what customers too. They range from Wal-Mart to the US Post Service, or from information conscious to cost conscious, and every group in-between with a wide variety of quotes as to the benefits.
Once again this is an always connected system, this time by satellite as far as the sensors are concerned, though the other way round information can be passed back to the driver by wireless. And there is any number of reviews to be found on applying the system just by googling Veriwise, if you want to get more details on exactly what it is and does then work your way through the list here. However this is one market that didn’t stop at trucks, today Veriwise is used for Rail, Shipping and Air management as well so now try figuring out the revenue this entirely new market created by technology has created for General Electric!
Okay neither is about conventional IT, but then who said it had to be? The whole point is that Technology, Connectivity and People have become ubiquitous so the idea that our ‘information technology’ is limited to internal Enterprise applications is to me at least not understandable. These new markets with extra revenues and profits are all about applying technology that is recognisable to many IT technologists to the business, or as Forrester and the Business Schools with call it ‘Business Technology’ in ‘Enterprise 2.0’ business models. BUT you can’t have these new markets, use this new technology, etc without is connecting with, and being supported by, fundamental commercial transactions in the existing IT system. Yes it means getting our minds and skills around using new things, but right now I think we need to really be making innovation mean something more than a new idea for cost cutting.
At this stage some of you will be excited by the opportunity and that’s the good news, and some of you will be frightened by the changes and demands this will make, but when these kind of results are seen then CEOs are not going to hesitate in looking to find ‘someone’ who will build and operate these new capabilities for them.

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