Advertising Platforms As A REAL Business Model?

So I read in the Wall Street Journal yesterday that 3 major technology companies get over 80% of their revenue from advertising:

These companies and their percentage of advertising revenue are:

Facebook – 98.3%

Twitter — 86.4%

Alphabet (Google) — 86%

It’s a wonderful thing how advertising pays for the wonderful free Internet services. 

Looking back to when I was a kid, I guess that how we got all those marvelous TV shows without having to pay for a cable subscription. 

But what I always wonder in the back of my mind is whether collecting advertising dollars is a REAL business. 

Yeah, sure these companies are mammoth and have made themselves and their shareholders gazillions of dollars.  

But somewhere I keep telling myself this doesn’t quite add up. 

If you make something of value then someone is willing to pay for it. 

If it doesn’t have value then you have to give it away for free. 

If facebook or twitter actually charged money for their service, I can’t imagine anyone would actually pay squat for it.  

Google is another story, but if they started to charge, you’d just go to a service like Explorer or Safari that doesn’t.

So if the only way to provide the service is to shove advertising down your customer’s throats, again I have to ask is that really a business. 

If I can’t see how a company can sell something based on the VALUE they are providing, honestly it’s not something that I can really get myself behind. 

Out of the three companies–Google is perhaps the only one that I can see as a real something. 

As for Facebook and Twitter, despite the Presidential tweets and Russian interference in our elections, I don’t see the underlying greatness. 

Maybe I am way wrong, but if you don’t want to pay for it then what the heck is it really worth! 😉

(Source Photo: Andy Blumenthal)

Apple Watch Disappoints

Apple Watch
Okay, so here’s the Apple Store…



The table with the Apple Watches is proudly on display towards the front of the store.



What do you notice about this picture? 



Correct, there is NOT a single person looking at these watches!



And I have NEVER seen a single person wearing an Apple Watch.



Even though there certainly are other customers in the store looking at other highly desired Apple products. 



The customer closest to the watches has his back turned to them.



No killer apps–where’s the beef in terms of functionality? 



Maybe that is unfortunately the story of the Apple Watch version 1.0–the customers were lining up to check them out a couple of months ago, but now they have turned their backs on this product failure. 



Sadly, I feel like Steve Jobs and Dick Tracy are turning over in their graves at about this time now–how do I know, just check the watch. 😉



(Source Photo: Andy Blumenthal)

>Competitive Sourcing and Enterprise Architecture

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Our economy is heavily based on ensuring a competitive environment to drive innovation, cost-competition, and consumer value.

One of the reasons why mergers and acquisitions are reviewed so carefully is to ensure that they are not anti-competitive, which would result in anti-trust action.

Competition law, known in the United States as “antitrust law,” has three main elements:

  • Prohibiting agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels.
  • Banning abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position.…
  • Supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to “remedies” such as an obligation to divest part of the merged business or to offer licenses or access to facilities to enable other businesses to continue competing. (Wikipedia)

Competition law has been extended to the federal workforce as follows:

The Office of Management and Budget Circular A-76 mandates that “To ensure that the American people receive maximum value for their tax dollars, commercial activities should be subject to the forces of competition.” This includes the following activities:

“a. Identify all activities performed by government personnel as either commercial or inherently governmental.

b. Perform inherently governmental activities with government personnel.

c. Use a streamlined or standard competition to determine if government personnel should perform a commercial activity.”

The concept of A-76 is that without federal workers having to compete for their positions against for example, the private sector, then there is no way to ensure value for the American taxpayer. Where is the incentive for the federal workforce to perform if when they aren’t performing competitively, and they are not threatened with replacement by a better, more effective and efficient provider?

Federal Times, 12 May 2008 reports that “all indications are that as the Bush administration winds down, so too has its most controversial government reform: competitive sourcing.”

“Many in Congress have aggressively challenged the practice as being unfair and demoralizing to federal employees and last year they passed myriad reforms and restrictions that are already being felt.”

While I agree that competitions drive efficiency in the marketplace, I think A-76 has missed the mark in terms of reforming federal human capital.

Why?

Competing federal workforce against private sector contractors on a cost basis does not necessarily ensure best value. From an enterprise architecture perspective, we are missing something crucial in A-76 and that is the human capital perspective.

The human capital perspective on EA is one that was initially proposed by John Zachman, the founder of EA, and I am a strong proponent of it. Essentially, it says that just like the other business and technology perspectives of the EA, human capital is a filter through which you must make organizational decisions.

The human capital perspective of the architecture provides us an opportunity to optimize federal workforce performance in the first place, before getting to an outsourcing decision point. Additionally, if you can’t effectively manage your own workforce, what makes you think you can better manage a contracted-out function? (In the same issue of Federal Times, there was an article about how the federal procurement officials are resigning in droves!)

What can we do to first improve performance results from the federal workforce (and I’m not saying that there is any problem to begin with)? The same as with any organization—provide strong leadership to them. Provide them with a bold vision. Hire the best and the brightest. Accelerate the hiring and clearance processes. Make clear their roles. Inspire them as President Kennedy did when he stated “Ask not what your country can do for you, ask what you can do for your country.” Challenge the workforce and empower them. Provide training, career growth, and financial and other incentives. With these, the federal workforce can truly be competitive and best value—if not all the time, then certainly much of the time.

The enterprise architecture way to do this is to first, baseline your current workforce. Then, look at best practices, benchmark, and set the targets for your people. And finally, develop a transition plan to move your workforce from the baseline to the target.

There is much more work to be done in this area, and obviously this is just a cursory overview or sketch of what the human capital perspective of EA would do. On a personal note, this is an area of great interest to me and I look forward to exploring it further.

>UPS is Enterprise Architecture Fait Accompli

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Fortune Magazine, 12 November 2007, has an amazing article about UPS ( a company which last year had $47.5 billion in revenue and 100,000 driving jobs)—they are a flawless example of the integration of people, process, technology, training, and a keen customer focus; a shining example of what enterprise architecture hopes to instill in the organization!

  1. People—“UPS drivers make an average of $75,000 a year, plus an average of $20,000 in health-care benefits and pension, well above the norm for comparable positions at other freight companies.”
  2. Process—UPS relies on “human engineering” and has “’340 methods’, a detailed manual of rules and routines” that is taught to UPS’s legions of driver candidates. Moreover, detailed metrics are kept on trainees and throughout their professional career at UPS, so that “a supervisor meeting a new driver for the first time will know every single possible thing there is to know about him.”
  3. Technology— UPS has the delivery information acquisition device (DIAD), their electronic clipboard, “which is GPS-enabled, plans drivers’ routes, records all their deliverables, and is said to rival the iPhone in capability.”
  4. Training—UPS has opened a new full-service training center, a $34 million, 11,500 square-foot facility, called Integrad. “The facility and curriculum have been shaped over here years by more than 170 people, including UPS executives professors, and design students at Virginia Tech, a team at MIT, forecasters at the Institute for the Future, and animators at an Indian company called Brainvisa.” The facility even has a “slip-and-fall simulator” to safely prepare trainees bodies to be alert to falls, and a UPS “package car” with see-through sides, sensors to measures that forces on trainees joints, and videocameras to record their movements as they lift and lower packages.”
  5. Customer—“What’s new about the company now is that our teaching style matches your learning style. But we’re still taking care of the customer.” UPS is “the world’s largest package–delivery company…delivering an average of over 15 million packages a day.”

“While customers may be at the heart of UPSs business, it’s drivers who are at the heart of UPS itself…watch closely and those deliveries [are] an exhibition of routines so precise they never vary, limbs so trained they need no direction, and words so long remembered, they are like one’s own thoughts.”

UPS has mastered all of the following enterprise architecture aspects or perspectives:

  • BUSINESS—the precision of honed business processes (“340 methods”)
  • PERFORMANCE—the measurement of every critical management aspect, especially as it relates to their all important drivers and their deliveries.
  • INFORMATION—UPS is an information-driven company that captures information, analyzes information, and uses it to train and refine their personnel and operations.
  • SERVICES—business services such as delivery and training are best practice and tailored to meet customer and employee needs.
  • TECHNOLOGY—the UPS electronic clipboard enables the information capture and provision that is needed to continuously meet mission requirements.

While, I don’t love their brown uniforms (that is supposed to hide dirt), to me the successful integration and implementation by UPS of these core architecture factors makes it a case study for EA!

>Marketing and Enterprise Architecture

>In the book Marketing Insights from A to Z by Philip Kotler, the author states:

“Marketing is too often confused with selling. Marketing and selling are almost opposites…Marketing is not the art of finding clever ways to dispose of what you make. Marketing is the art of creating genuine customer value. It is the art of helping your customers become better off. The marketer’s watchwords are quality, service, and value.”

Kotler goes on as follows:

“Selling starts only when you have a product. Marketing starts before a product exists. Marketing is the homework your company does to figure out what people need and what your company should offer. Marketing determines how to launch, price, distribute, and promote your product/service offerings to the marketplace. Marketing then monitors the results and improves the offering over time.

User-centric EA is based in marketing: In User-centric EA, we don’t serve up esoteric, incomprehensible, technology laden jargon filled “artifacts” that is destined to become shelfware; instead,

  • EA exists only to create genuine customer value.
  • EA is driven by the business and works for the business users.
  • EA works to understand their needs and strives diligently to fill them.
  • EA provides the enterprise with business and technology information, planning, and governance as required by the business!

The business drives the product and service offering of EA, participates in the creation of the actual EA deliverables, and provides continuous feedback to help tailor and improve the EA over time.

Just like marketing, EA must identify their customer base, discover their need set, and provide ongoing customer value so as to get, keep, and grow their customers.

Marketing is about being customer minded and so is User-centric EA.