Profiting from Contagion

With the global financial contagion continuing to spread today, forcing the 'invisible hand of the market' to roll up multiple titans of industry into single defensive units against the credit crunch, the frothier end of the tech scene parties on.

The fall tech conference season is in full swing, with Interop and Web 2.0 Expo happening today in New York City amongst other events - even as New York Times columnist Paul Krugman compared the financial situation to the sinking Titanic in his blog:

...flooding from the initial hole tipped the ship, and the compartments were open at the top, so that compartments that hadn’t been ripped open by the impact of the iceberg started filling up, tipping the ship even more, flooding more compartments … Remind you of anything in the news lately?

Dennis Howlett intimates in his 'Irregular Enterprise' blog today that there are opportunities in the inevitable coming tech fall out despite the backwash from sinking financial entities.

There is no question the big players - SAP, Oracle, IBM, MSFT - have been watching the x2.0 movement like hawks and will be picking off successful vendors in a rapidly maturing market, keen to roll them up into their upsellable offerings, much as the bankers are doing with their mergers.

As I wrote on Monday, and Dennis amplifies today, there are great opportunities in the SaaS and open source spaces for those companies who can stay ahead of the pack and remain successfully independent.

Sam Lawrence, Chief Marketing Officer of Jive Software wrote on his personal blog this morning about enterprises being 'execution machines':

Remember when you got your first job? You were hell-bent on making a difference and changing the way things got done. You were filled with ideas. Problem was, the minute you looked for a place to deliver that value, you were shown your box and your crank. You probably thought you’d be given a chance later on but then found out that the higher up you go, the bigger your crank. There are generations worth of “keep the trains on time” DNA in place in the Enterprise. No time to change things, those trains have been running like that for years.

So long, in fact, that Enterprises are experts at execution. Everyone has their cog in that machine. Given the legacy in place, it’s no wonder that there are a ton of execution resources and expertise in place. But to unlock innovation, there’d have to be a way to deliver conceptualization and strategic value as part of everyday work, not to mention persistent expertise on how to do it.

Pete Fields, an SVP at Wachovia - a bank which may merge with Morgan Stanley in the coming hours - has discussed his experience around this most eloquently: he talks of employees arriving at their first job at a brand name company with enthusiasm through the roof. A year later many of these same people, having experienced the limitations of cranking to 'keep the trains running on time' lose enthusiasm and are just going through the motions of working.

Keep the fires burning

The conceptual constraints of cranking 'trains' through a timetable dulls the sharpest minds, who can often clearly see much better ways of doing things and wind up frustrated. To a vendor like Sam Lawrence's Jive software, the solution is their Clearspace Social computing environment. This infrastructure is one enabling dimension of a bigger process issue in many companies however.

The other critical dimension of enabling innovation must come from the organizational structure of a business entity. You can install a wonderful tech infrastructure that supports and enables collaboration, but without transparency and the type of management that encourages and rewards innovation, it is hard to kindle the fires of participation and enthusiasm.

The coming internal battleground for budget constrained companies looking for ROI justifications for infrastructure spend will be around looking closely, regardless of vendor size, at how quickly they can derive genuine value from proposed integration.

Processes and insights to tap into the collective genius of collaborative innovation and problem solving will often be the driver of these decisions.

Technology, whether a standalone environment or an integration of multiple components, will be judged on the ability to support innovation that delivers in a difficult economy, and not on the x2.0 or other buzzword wow factor.