The World is Flat
Monday, February 27th 2006 | Ismael Ghalimi
I just finished reading The World is Flat by Thomas L. Friedman, New York Times columnist and author of The Lexus and the Olive Tree. In his last book, Friedman identifies ten events and trends that are flattening the world we live in today. I agreed with most of the thesis, and tried to relate to it my own experience working at Intalio.
Flattener #1: 11/9/89
When the Walls Came Down and the Windows Went Up
The fall of the Berlin Wall made the world an open playing field. Today, Intalio does most of its business in North America and Western Europe, but we’re getting more and more demands from Latin America, Eastern Europe, the Middle East, South Africa, Asia, and Australia. The Wall has been down for more than sixteen years, but as an American company, we still cannot do business with Cuba, Iran, Sudan and Syria.
Flattener #2: 8/9/95
When Netscape Went Public
The Internet is the infrastructure that made BPM possible. It gave us web services and a Service Oriented Architecture that allows processes to be integrated with existing systems at a fraction of the cost of traditional EAI approaches. It provided the communication vehicle for the Open Source movement to really catch on and dramatically lower the cost of commodity software components. Finally, it gave us the vehicle through which we can market and sell our software, using participative communication tools such as this blog, and circumventing the physical packaging of software, thereby allowing us to conduct our business in a purely electronic way.
Flattener #3: Work Flow Software
Let’s Do Lunch: Have Your Application Talk to My Application
Standards such as BPMN and BPEL are enabling interoperability across Business Process Management Systems in a way that early workflow pioneers could only dream of. Public APIs for popular online services are turning the BPMS into a mean and lean mashup machine, paving the way for truly componentized IT architectures where system architects simply assemble existing components, and software code writing is reserved for the most arcane applications.
Flattener #4: Open-Sourcing
Self-Organizing Collaborative Communities
More than 80% of the code developed by Intalio is Open Source and in the process of being donated to the Apache Software Foundation and the Eclipse Foundation. This code forms only 20% of the software we ship to our customers, the remaining 80% being borrowed from existing Open Source projects. This participative model is pushed a step further with the introduction of a Demand Driven Development model, whereby smaller communities of users participate in the funding of specific product features, which are in turn donated back to the Open Source community. This creates an accelerating factor that turns traditional closed-source development into a massive competitive disadvantage.
Flattener #5: Outsourcing
Y2K
Most functions that are not core to the business are outsourced. This includes facility management, human resources management, public relations, advertising, finances, legal, software development, quality assurance and testing, consulting, and customer support. The only functions that are kept in house are the ones that are critical to the development and distribution of a complex software tool: architecture design and customer training. Most of the engineering team that remains on our payroll is composed of highly talented architects, while we use our training group as the most technically-aware pre-sales organization.
Flattener #6: Offshoring
Running with Gazelles, Eating with Lions
Most of our software engineering is done out of Western Ukraine, where we find extremely talented developers at a rate similar to what we would pay in India, but with a yearly turnover of less than one percent. Our software quality assurance and testing is done out of Bangalore, India, where we are also setting up a support infrastructure that will be available from 9 AM GMT-1 (Paris) to 6 PM PST (Tijuana, CA). We are also working on the development of telesales organizations to be based in India and Ireland.
Flattener #7: Supply-Chaining
Eating Sushi in Arkansas
Several customers have asked us for the packaging of our BPM software into a hardware appliance. The question is not whether we will do it or not, but when. Because we want to remain a software company and do not want to manage an inventory of expensive hardware products, we’ve been discussing with supply-chain partners that can take the most recent version of our software, install it on hardware appliances, and get it shipped to customers in less than 48 hours, anywhere in the known world.
Flattener #8: Insourcing
What the Guys in Funny Brown Shorts Are Really Doing
Our decision to release our first BPM appliance will be driven by a single metric: volume. We will pull the trigger as soon as customer demand will be sufficient enough to allow us to work with in-sourcing partners such as DHL or UPS in order to provide technical support for the hardware part of our solution.
Flattener #9: In-forming
Google, Yahoo!, MSN Web Search
Intalio’s marketing budget is pretty low. In fact, for the time being, it does not even exist, and this blog is the only marketing investment we’ve made over the past three months. We do not go to tradeshows, unless we’re invited to speak there and travel expenses are paid by the event’s organizers. We do not advertise in any trade magazine, and instead work hard to get the BPM 2.0 section of this blog to be syndicated by online publications such as BPMG, BPM Institute, and BPTrends. Moving forward, the only marketing expense we are planning to make will be for Google Adwords, but we will do it in such a way that it directly pays for itself, by tracking the conversion of paid-for clicks into paying customers for our training services, using Google Analytics in combination with Salesforce.com.
Flattener #10: The Steroids
Digital, Mobile, Personal, and Virtual
Our biggest productivity enhancer is called Office 2.0. All our customer information is managed by Salesforce.com, our software documentation is developed through Confluence, an enterprise Wiki platform, and our internal communication is conducted through blogs, email and Skype.
Looking at it from that angle, the world seems pretty flat indeed…
Many thanks to Alex for recommending Thomas L. Friedman’s great book.
Entry filed under: BPM 2.0, Consolidation, Office 2.0, Offshoring, Open Source, SOA, SaaS, Social Networking, Standardization
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Sounds like a must-read book! Here are some comments:
Flattener #4: Open-Sourcing
I think that it is interesting to compare Intalio with Cordys. For my master’s thesis, I’ve been looking a bit at Cordys as well and they seem to fish in the same pool as Intalio does, but they work differently. They have budget to go to CeBIT and organize expensive IDC seminars, they work with closed source software, they do less outsourcing (I assume)… And from what I see, the company seems to do quite well. Am I missing the point here?
Flattener #5: Outsourcing & Flattener #6: Offshoring
It is a well-known economic principle to outsource and offshore as much as possible and to focus on your key business, but doesn’t this create a tremendous lot of overhead? I mean, the advantage you gain with outsourcing and offshoring, does it compensate the overhead of managing and keeping track of everything? Would Intalio’s corporate model also be applicable for large companies, like IBM for example?
Flattener #7: Supply-Chaining
A possible solution could be to cooperate with HP. They have the hardware and can handle the volume. The only thing that could be of a problem is that certain business interests are overlapping and competing… But on the other hand, it fits better in the outsourcing principle of Intalio.
Flattener #9: In-forming
I think that’s a problem of lot of (commercial) open source companies. Even with a huge budget for advertising, open source still has the stigma of “not as good as commercial software for support” I think. Therefore, reach the developers that introduce the technology inside the company. With the efforts of Intalio in the open source community this shouldn’t be much of a problem. I think we still need some years before the generation of students that worked with open source and are used to it are in senior management positions :-)
Lee,
Here are some answers to your questions:
Flattener #4: Open-Sourcing
Cordys has a good product, but companies such as Intalio are developing Open Source alternatives that have similar features and are sold to customers through an incremental pricing model. Sooner or later, customers will demand the Open Source model from their vendors, and closed-source vendors such as Cordys will have to follow suit, or they’ll just disappear.
Flattener #5: Outsourcing & Flattener #6: Offshoring
We found the overhead to be manageable and its cost to be less than the savings we made going offshore. We also found the flexibility we get in being able to increase the size of our offshore team on a month notice to be a huge benefit, especially with respect to the implementation of our Demand Driven Development model.
Flattener #7: Supply-Chaining
HP would be a good candidate indeed.
Flattener #9: In-forming
I would contend that the perception you have of Open Source is a little bit dated. Companies such as JBoss have demonstrated that you can get world-class support for Open Source projects, and most JBoss customers will happily tell you that the support they receive from JBoss is far superior to the support they could get from BEA or IBM. I tend to agree with them.
[…] I recently had a discussion with Ismael Ghalimi from IT|Redux about the difference between his company (Intalio) and Cordys. They both develop SOA software, but the former does it open source, the latter closed source. They both seem to do quite well, so I asked him what the major difference is now between the companies and if open source is that great, why is a company as Cordys making then money? You can find our discussion here. One of the models that open source companies often adopt is called the “demand driven development”. This comes down to the fact that you let several customers pay for a new feature and they get the feature lets say 4 months of 6 months before the open source community. You can find more about this here. […]
I just got back from the First IT|Redux breakfast and it was excellent. Learned a lot about outsourcing tactics and might actually re-consider working with an off-shore team.
Ismael asked the group what they thought the 11th Flattener is… I suggest the following: Instant feedback loops. As entrepreneurs, not only are we able to deploy faster, cheaper and broader, but because of the instant feedback loops now available, we are able to know what works within days if not minutes of release.
There’s all kinds of feedback loops that exist today that didn’t exist even two years ago. For example, pay-per-click advertising is being used not only as a customer acquisition channel but a test bed for new ideas, value propositions and even product development priororities. Digg and Del.ico.us provide statistically significant votes (or lack thereof) of what users find interesting (or not). Session based analytics, which is the ability to see what a single user is doing with your software tells you instantly what is working for them or not. Reverse lookup IP addresses show you which companies are evaluating you. International visitors try new features in the middle of the night during “off-hour” deployments and sometimes break them before the US wakes up - giving you enough time to fix and redeploy.
This compression of time has profound implications. The cost of getting it right goes down and more importantly, we can more rapidly evolve into successful enterprises.
Flattner 4. Open-sourcing
I know company’s shouldn’t leave themselves with only open source software, they should have another altnative and closed-source could be that altnative.
Flattner #5. Outsourcing
Now days company’s go outside to hire with contractor’s doing the work of there employees use to do. Sometime I think they spend more money for hiring outside then just to train there own people to do the job. If you already have competent personell to do the job, then I’m for it. Sometimes it just goes down to some of the details of retirement and benefits that they don’t want to pay, to there employees.
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