Notes from Anywhere by Nelson Nones

If It Feels Good, It Must Be Scientific

In case you hadn't noticed, there's a debate raging in the scientific community over whether Pluto is really a planet. However I note today that the scientific method has now evolved enough to put this issue to rest.

Link:  Hubble Has Three Moons, Hubble Images Show (by Alex Dominguez, October 31st 2005)

"The jury is still out on the impact additional moons will have on the ongoing debate over whether Pluto is actually a planet. [A team member said] while having a moon is not a criteria -- Mercury and Venus are moonless -- having more can't hurt ... 'Just on a visceral level, the fact that Pluto has a whole suite of companions will make some people feel better.'"

You Read It Here First

Yesterday, in my post Software On Demand, I wrote, "I believe it is ... clear that [lack of a fragmented, federated data model] threatens to obsolete every one of the world's great application software franchises (Microsoft, SAP, Oracle, Intuit) ..."

It's gratifying to know that when the world's biggest software firm sees it in Notes from Anywhere, they realize they'd better act fast.

I have to give Microsoft some credit, though. Linn's article accurately notes that "An ambitious plan, code-named Hailstorm, to store personal information such as passwords and credit card numbers was eventually all but scuttled after widespread privacy concerns."  You may recall that Hailstorm was to be a Web service that you could access anywhere through your .NET Passport account. The idea was to store all those passwords and credit card numbers in one place. Microsoft would have stored that information as a kind of federated data, and hosted the Web service, that permitted you (or an application that has your .NET credentials) to deal with multiple banks, department stores, credit card companies and so on instead of one-by-one as you have to do today.

Trouble is, Microsoft got the fragmentation part backwards. Credit card numbers may be "public" in the sense that both parties to a transaction need to know the same number, but passwords most definitely are not. As I wrote yesterday, "A model for fragmented deployment ... would allow private data to be stored exclusively on the user's ... premises (for security and confidentiality) and public data to be hosted by the service provider (for availability)." Let's see if Microsoft gets it right this time. Maybe by reading this post before they make their announcements tomorrow.

Link:  Microsoft May Expand Web-Based Offerings (by Allison Linn, October 31st 2005)

"Microsoft Corp. is widely expected to announce on Tuesday further forays into software and services that can be accessed over the Internet -- a growing competitive arena that some say could eventually threaten Microsoft's biggest cash cows."

Software On Demand

I'm a Salesforce.com user and I think they've got a great product. Also, I'm familiar with both the business and technology drivers behind "software as a service." I posted recently on capitalizing software investments (What Chinese Businesses Will Pay for Software, October 12th 2005) plus I work for a company, Apriso, that makes business software using "SOA" (for "service-oriented architecture").  And I happen to believe that the folks duking it out at Oracle, Salesforce.com, NetSuite and Microsoft just don't see the elephant in the room yet.

Why? Because none of their business models or products adequately address two revolutionary forces that are transforming the software world today -- mandatory computing, and electronic collaboration.

Mandatory computing refers to edicts from higher authorities that force businesses to computerize a process, whether they like it or not. The earliest example I'm aware of goes back 30 years, when the American Internal Revenue Service (IRS) required businesses to submit payroll tax reports electronically. This mandate fueled the growth of ADP (NYSE: ADP), one of the first "on-demand" services, which today processes 1 out of every 6 American paychecks (including mine). For this reason I disagree with anyone who thinks that online services were once considered a "crazy idea."

RFID (radio frequency identification) is a much more recent example of mandatory computing in which higher authorities like large retailers (Wal Mart, Tesco, Target) and government agencies (Food and Drug Administration and Department of Defense in the U.S.) require suppliers to electronically identify articles (cases of merchandise, unit dose pharmaceuticals) using globally unique serial numbers. This mandate affects thousands of suppliers, many of whom are small or medium-size businesses who just don't have the cash or know-how to install, maintain and upgrade the systems they need for this purpose. Like payroll tax filing 30 years ago, I predict strong demand for online RFID services -- but I don't see anything specifically like this on offer yet from Oracle, Salesforce.com, NetSuite, Microsoft or even SAP.

Electronic collaboration and mandatory computing are intertwined, and RFID is a great illustration of this. If you're a Wal Mart supplier, you pack merchandise in cases and slap a unique RFID tag on each one (remember, Wal Mart made you to do this, or else). Then you shrink-wrap the cases on a pallet and slap another RFID tag on the pallet. As the product moves out the door, you scan each pallet to create an electronic advance shipment notice (ASN) that identifies which cases are on which pallet, and then you send the ASN to Wal Mart. When Wal Mart receives the pallet, they scan it again and match their scan to your ASN.

If you're familiar with business systems, you can already see that none of today's widely-deployed commercial packages (SAP R/3, Oracle e-Business Suite and others) were ever built to handle this problem. Instead, they assume that every business uses its own product and serial numbering scheme. This organization-centric model just won't work with RFID tagging, which is a global or network-centric concept.

Let's apply the same logic to Salesforce.com. I can personally attest to the fact that I collaborate with business partners on nearly every deal I do. Yet the highest level of sharing that Salesforce.com supports is -- you guessed it -- the organization. There is no way that I can see for implementing a sharing model between organizations. As a result I can't use Salesforce.com to collaborate with a partner on a specific deal unless we give one another reciprocal access to each organization -- something that my company would never allow because we keep our pipeline confidential. 

Salesforce.com doesn't allow me to collaborate because it lacks what I call a "federated" data model. Today's business databases aren't federated. They are either wide-open (like the currency site from OANDA) or they sit behind an organization's firewall (whether hosted "on-demand" by a service provider, or managed by a traditional IT department). What's needed -- but is not yet available -- is a way to partition an organization's database into "public" and "private" zones. The public zone contains what you want to (or must) share with external entities like trading partners (Wal Mart), governments (IRS) and other interested parties. The private zone contains information that you don't want and don't have to share.

Assuming that such a "federated" data model existed, then it must also be possible to deploy it in fragmented instead of monolithic form. Why? Well, imagine if products like Quicken or Microsoft Money were available "on-demand." Would you subscribe for the sake of low cost and convenience, yet take the risk that someone else might be snooping on your personal information? Or are you more comfortable with the idea of keeping your personal finances locked up in your own computer?

A model for fragmented deployment of a business database, combined with generally-accepted SOA principles, would allow private data to be stored exclusively on the user's business premises (for security and confidentiality) and public data to be hosted by the service provider (for availability). Regardless of where the data resides, the applications that create, read, update and delete it can always be leased on demand.

I believe this is what the elephant in the room really looks like. And I believe it is equally clear that this elephant threatens to obsolete every one of the world's great application software franchises (Microsoft, SAP, Oracle, Intuit) and wannabes like Salesforce.com and NetSuite -- because none of their application software products are truly capable of doing what businesses will urgently require in the future.      

Link:  Ellison, Old Friends in Software Showdown (Michael Liedtke, October 30th 2005)

"Once considered a crazy idea, the concept of online, or "on-demand," software has turned into a hot market as thousands of companies decide they would rather lease applications monthly than pay an upfront licensing fee and then deal with the costs -- and headaches -- of installation, maintenance and the inevitable software upgrades."

Global Commerce Imperiled by Number Shortages

Sunday (yes, it's already Sunday morning here in Bangkok) is my day for searching and hopefully posting oddball news. On a whim, I searched "number shortage" and came up with some interesting tidbits.

The first number shortage, automobile VIN Numbers in America, definitely explains why most experts think oil prices will fall soon. Let's face it, the so-called "fuel shortage" is merely contrived, and easily rectified by stabilizing Iraq, building more refineries and adopting synthetic fuels technology. On the other hand, the cost of modifying information systems to add one digit to the VIN, which theoretically makes it possible to build 100 quadrillion more cars (if you only use numbers, and no letters), would either bankrupt the entire auto industry or make cars so pricey (if manufacturers passed on the retrofitting cost) that no one would buy them. It's obvious that we face a future of fuel surpluses and car shortages.

The item from China shows that this problem is by no means confined to the West. China, with roughly 4 times America's population, already has a phone numbering system capable of supporting 100 billion telephone subscribers (3-digit area code and 8-digit local number), which is almost 80 phone numbers per capita. America's measly system can support only 10 billion numbrs (3-digit area code plus 7 digit number) which is a mere 33 numbers per capita. The American government just regulates the phone industry, but the Chinese government not only makes whatever rules it wants; it owns the phone company. So forget about adding one digit and a trillion more phone numbers. Instead, declare a number shortage and impose a fee worth up to USD 1.5 billion per year in revenues!

Links:  The great American VIN Number shortage (David Thomas, Autoblog, July 1st, 2004)

"Automakers may have to resign to taking VIN numbers from countries that don't mass produce vehicles, like Batswana [sic], to extend the supply of future VIN numbers. They could also reclaim numbers assigned to out of business car makers like Plymouth, Oldsmobile, Mitsubishi ..."

Phone Number Shortage Leads to New Fees (ChinaTechNews, January 5th, 2005)

"Special emergency and public numbers like 110, 119 and 12315 are exempt from the fees."

No, I'm Not Scooter Libby

One of the promises I made to myself when I started this blog was to avoid politics. I hate politics. In fact, I hate politics so much, I can honestly say that I would rather do my taxes, or go shopping, than get involved in politics.

However I could not avoid noticing today's photos of Lewis "Scooter" Libby on crutches after his indictment on Friday. I'm not posting about the indictment, or what it means to the future of my country (I'll leave that up to the windbags at home who, thankfully, can't shout loud enough to be heard in Thailand).

First, even though I recently broke a bone in my foot and am also still on crutches, I'm not Libby so don't start flaming on at me. How can I prove this? Well, first, there's a picture of me in Shenzhen in my October 19th post. I don't think I look anything like the guy in the above picture. In fact, I don't think anyone in the October 19th photo looks like that guy.

Second, if you really know me, you already know that I wouldn't be caught dead with anyone as unattractive as the lady in the red dress (above photo). I have much higher standards than that. Specifically, I would rather be seen with ladies like the one on the left in the Shenzhen photo (not Bargitta, though, I'm her boss and she is a teriffic sales executive; moreover I am unforgivingly intolerant of workplace harassment ).

I tried to research the Web on why that guy is on crutches in the first place. Oddly, I could only find 2 items on the whole Internet, and the most specific one (reprted by the Idaho Press-Tribune on October 26th) has already been yanked off the Web (if you don't believe me, try this link). But the Internet never forgets, so I was able to retrieve this fragment:

"Libby has been on crutches after breaking a bone in his foot."

My, How Times Have Changed

The Heights is the independent student newspaper of Boston College.

Student? Boston College?

Back in my college days at the University of Virginia (hardly known as a bastion of progressivism), growth was bad, the United States was an imperialist power, and collectivization was the right way to lift masses of people from poverty. Students in my day (including me, I admit) weren't so modest to admit they don't have the knowledgee to explain David Ricardo's theory of comparative advantage.

I got hooked on economics as an undergraduate and, having also been a map fanatic my whole life, ultimately did my graduate work in economic geography -- the field of social science that emerged from Ricardo's theory of comparative advantage. This theory not only explains why, say, the US is losing manufacturing jobs to China; it also explains very local phenomena such as land use patterns, or why Phoenix is growing at the expense of, say, Toledo.

I would like to add my own opinions on the benefits of free trade, not from an American perspective but from the perspective of an American who has spent most of his time in Asia during the last 10 years.

When I first visited India in 1993, the country was just beginning its transformation from the socialist-collectivist model espoused by my fellow students in the 1970s, to a full participant in the global economy. Walking to my limousine from the airport was like walking onto the set of a 1950s movie, because every car in sight (even the brand new ones) looked like my parents' old 1950 Chevy -- not a foreign import anywhere due to the 300% duty imposed on so-called "luxury" goods. The squalor I saw during my first visit to Delhi (such as babies being born to beggers on the sidewalk just outside my 5-star hotel, or beggars chopping their kid's fingers off to get sympathy from passers-by) was palpable. I was physically sick for weeks after returning home to Chicago.

India is no paradise these days, and poverty is still rampant, but you would not recognize the place 10+ years on. In Delhi in the early 1990s, it was said that one-third of the city's 12 million people lived out on the street. This was very believable; makeshift beds lined any one of New Delhi's magnificent boulevards as far as you could see. That's all gone today. In cities like Bangalore and Chennai, the streets these days are chockablock at all hours with well-dressed young people browsing through books, having coffee and chatting up friends.

What happened? Free trade, that's what.

10 years or more ago, India had a comparative advantage -- millions of smart kids who could read and write English, were adept and well trained in computer science, and were delighted to work for a fraction of what people consider a decent wage in America. The "first world" (America, Western Europe, Japan, Australia) had a comparative advantage, too -- trillions of dollars to invest and the technical knowhow to build the global wide area network that we know today as the Internet. What happened? India bought networks, and the "first world" bought IT talent.

Who won? From first-hand observation, I'd say the street people of Delhi (and their kids), to say nothing of the teeming throngs of young adults who work for companies like Tata, Infosys, Satyam and HCL (yes, Virginia, the "trickle-down" theory also works). I'd also say that a lot of people benefited in the West, too: think of all the high tech jobs in America that did not exist 10 years ago. And any person or company that uses computers (even my octogenerian parents fall into this category) have definitely benefited from affordable computers and instant access to information that simply wasn't obtainable a decade ago.

Who lost? Well, employees of American IT companies who thought they could rip off customers by charging premium rates for supposedly scarce and specialized programming talent were among the first to bite the dust. (Think EDS; and while I'm on that topic, is there any connection between their recent performance and Ross Perot's neo-isolationist views?) Other victims include people at private networks for electronic data interchange (EDI), whose business model (customers pay lots of money for dedicated access to global network bandwidth) was guillotined by oceans of cheap Internet capacity. Or telephone company workers who used to charge premium prices for long distance or overseas calls that can now be placed at zero marginal cost. (An interesting point. India still has a telephone monopoly and its tariffs are among the highest in the world, with the crappiest service you can imagine. Might this be a competitive disadvantage that others will exploit?)

I could go on and on, but I'll conclude instead by saying that today's critics of globalization, like many of my university colleagues 30 years ago, are simply trying to hang on to their cash cows because they're too lazy to compete heads-on with people who can outperform and underprice them. Or, they're politicians who know a vote-getting opportunity when they see one.

Link: Globalization: the good, the bad, and the benefits (by Kevin Boland, The Heights, October 27th, 2005)

"Globalization has created some losers, but it has created far more winners. I believe that as long as we continue to meet the challenges that globalization presents with the optimistic 'can do' attitude that characterizes us as a nation, the United States will always come out ahead."

The Future of the Newspaper Business -- Commentary

I have 3 comments on this.

First (and correct me if I'm wrong), the New Orleans Times Picayune went all online with no dead tree version right after Hurricane Katrina, so this has definitely happened already.

Second, I notice that the Wall Street Journal (including the Asian edition) now consumes less than half the pulp that it did before -- but the online content hasn't changed a bit. Could this be the start of a trend?

Third, I never buy paper subscriptions. The only time I need them is when I'm flying and can't get online. But the airlines (Thai, at least) always have free paper editions of what I want to read (like the Economist), which I can take with me if I don't finish them off on the flight. No need to take notes, or bring the paper with me if I'm done -- I can always go back and look the article up on the Net. This is how I did my piece earlier this month on what it's like to do business in China.

Link: Why You Should Pay to Read This - New York Times (by Jeff Nolan, October 24th 2005)

"One day soon, and it will definitely happen at some point, a major newspaper is going to go all online with no dead tree version. A newspaper is in the business of delivering information, not pulp."

The Web Site For Airline Foodies

I just love airlinemeals.net, which bills itself as "the world's first and leading website about nothing but airline food."

I can also vouch for its authenticity, having flown Shandong Airlines quite a few times myself.

Link: Shandong Airlines photo taken by Mark Wang (September 24th 2002)

"This was really quite good for a 40-minute domestic flight within China!"

The End of Globalization: Is Japan Leading The Way?

Michael Maiello's review of John Ralston Saul's The Collapse of Globalism (Overlook, 2005) merely states what should be obvious to anyone in the developing world: after their home-grown economic policies fail, governments defer to commerce for the heavy lifting (think China, India and Brazil), while attempting to maintain control over everything else.

The European Union, which is trying mightily to assert as much control over its member countries as it can, is no more a proponent of globalization than the Japanese government -- except when it suits them.

Links: Globalization's End by Michael Maiello (Forbes, October 21st 2005)

"Globalization was supposed to deliver a world without borders and its adherents have often said that the power of governments would wane against the more fluid powers of commerce. Saul says that it just isn't so. Governments can make choices, and people aren't required to simply follow what the market dictates, even if it hurts them."

EU urges Japan to adopt world's most widely used mobile phone system (Kyodo News, October 21st 2005)

"'We had the impression that our colleagues in the [Japanese] Ministry of Internal Affairs and Communications -- maybe rightly named internal affairs -- were too much concerned with internal affairs and not with what is happening abroad,' ... The European Union is more flexible and diverse in its global outlook in the telecommunications industry as the bloc is made up of 25 countries, ...  'By nature, Europeans are much more open to globalization.'"

Spam, Splog and Swiki

Wikipedia's definition of Wiki vandalism includes "Spam, the insertion of irrelevant links for commercial purposes only."

Since there is now such a thing as splog, I'd like to propose the Neologism Swiki, meaning a form of Wiki vandalism in which the vandal inserts irrelevant links for commercial purposes only.

A good example of this is Wikipedia's supply chain article. This page was updated with spam links to a well-known software vendor at least twice in September.

And I thought they were a class company! Lord knows, I'd never do that!