IncTechnology.com > All Topics

Thumbs Down: Mobile Device Hazards

Michelle V. Rafter — 2009-06-27T14:51:35-05:00

James Hofheins loves his job as a social media representative for a Utah retailer. All workday long, the veteran customer service representative monitors Facebook and Twitter for people talking about his company. If there’s a problem, he follows up to make sure things get taken care of.

Hofheins is so enamored with social media he stays on Twitter long after the work day ends to keep tabs on world news, tweet friends and retweet interesting tidbits that float across his Twitter stream. Away from his desk, a Palm Treo is his keyboard of choice for tuning into Twitter, sending email and texting.

But all that connectivity is taking a toll on Hofhein’s thumb, his right one to be exact. The 45-year-old uses it exclusively to type and text and lately he’s been on Twitter so much it hurts. “It throbs from the tip to the bottom joint where it connects to the hand,” he says. “It’s stiff, it’s hard to extend and sometimes the tip is numb,” he says.

Ouch. As more people use an iPhone, Palm Treo and other smartphone and PDAs for social networking, e-mailing and texting, they’re developing aches and pains, including a few ergonomics experts haven’t seen before.

‘iPod finger’ and other aches and pains

In addition to sore thumbs, Tamara James, ergonomics director at Duke University and Health System in Durham, N.C., has heard people complain of “iPod finger,” overusing their index finger to spin the selector wheel of an iPod player. iPhone users have come to doctors complaining of tennis elbow-like symptoms, what one woman with the problem calls her “iPhone elbow.” The American Physical Therapists Association has discussed how typing on itty-bitty keyboards leads to “BlackBerry thumb” since 2006.

While some early research has shown younger people could possibly develop stronger thumb muscles from all the emailing and texting they do, it’s way too soon to tell. “They could be protecting themselves for the future or setting themselves up for problems later on. We don’t know,” James says.

James is taking precautions just case. As one of her duties, James manages a group that collects data on Duke employees' work environments. When a group member complained of hand cramps from using the skinny stylus that came with the PDAs they use in the field, James found a fatter model with a more comfortable rubber grip. “We have to practice what we preach,” she says.

For small business owners, it could pay to be diligent. In the 1980s and 1990s, the appearance of office PCs led to a wave of carpal tunnel, RSI, and other musculoskeletal injuries that tapered off once workers, HR and tech support teams figured out the importance of proper wrist support, seating and posture, and federal and state worker safety agencies passed ergonomics guidelines.

Remedies for an aching thumb

If your thumbs or hands hurt from too much emailing or texting, the first thing t o do is stop. “That’s the most important thing,” James says. “If it hurts, don’t do it.”

Other remedies:

Maintain a neutral posture. Some thumb and elbow pain is caused by holding the joint in a fixed or awkward position for a long time. “If you’re getting numb, compression of the nerve between the hand and the phone causing it,” James says. Alleviate it by using sitting or standing correctly as you type, she says.
Support your arms. If you’re sitting to type emails or text for an extended time, use a pillow or other prop to support your arms and hands while you work.
Take frequent breaks. When desktop PCs became ubiquitous, people had to be taught to take breaks to prevent carpal tunnel syndrome and related maladies. The same holds true for iPhones and PDAs -- taking breaks often to give your hands a rest, James says.
Switch things up. If you normally use one hand to type or text, give it a break and type with the other one.
Do stretching exercises. The American Society of Hand Therapists recommends a variety of stretching exercises in a consumer education bulletin on hand-held electronics and video game injury prevention tips. They include:

Opening your hands and spreading your fingers are far as possible, then holding for 10 seconds. Repeat several times.
With hands laced together, turn your palms away from your body and extend your arms overhead. Stretch your upper torso through your shoulders to your hands. Hold for 10 seconds. Repeat several times.

When the computer mouse came along, work that people did with two hands became concentrated into a few fingers moving the input device around. With the advent of smartphone keypads, that effort is now being directed into one lone digit not designed to do such work. “The thumb is the least dexterous part of the hand. It doesn’t move as well or do as much as other digits,” James says. “So to make it do what an index finger can do, you have to make it work harder.”

Hofheins, the Utah social media rep, is coming to terms with his late-night Treo habit – and his sore thumb. He’s started taking ibuprofen, but has yet to a doctor, saying: “I’m afraid they’ll tell me to stop.”

Device Detection Protects Your Site from Fraud

Minda Zetlin — 2009-06-25T16:40:27-05:00

2Checkout.com is a hosted solution that lets small businesses accept credit card and PayPal payments online. With 20,000 to 30,000 companies using its service for hundreds of thousands of customers, fraud is a constant concern.

2Checkout.com used to avoid fraud through address verification (making sure credit card billing address matches the one provided by the user), bank identification number (BIN) matching, and verifying computer IP addresses, according to Sebbe Jones, manager of fraud and disputes. But as the operation grew, and technological changes affected its automatic fraud controls, 2Checkout found it was having to flag more and more of its transactions for review by a human employee before completion. “Our review rate went from around 25 percent to around 45 percent,” Jones says. “We got very behind in verifying orders -- as much as three or four days behind. We knew vendors wouldn’t stay with 2Checkout.com for very long if we didn’t do something about it.”

Device "fingerprinting" solution

For 2Checkout.com, part of the solution is a technology variously called “device detection,” “device identification,” or “device fingerprinting” that allows an e-business or other site to collect and analyze data about the device connecting to the website, wholly separate from that provided by the human using it.

“We can monitor whether the computer’s time stamp matches the location where the user claims to be, whether the fonts in use on the computer match the local language in that location, and whether the computer is pretending to use a different operating system than what is actually installed -- a Linux computer running a Windows simulation, for instance,” says Reed Taussig, CEO of ThreatMetrix, a subscription device detection provider. Of course, there could be a perfectly innocent explanation for any of these -- they simply serve as red flags that indicate a transaction may require human review.

Device detection alone is probably not enough to protect your business, but it can be a powerful addition to your fraud-prevention arsenal, along with address verification, behavior-based analysis, and other more traditional tools. “Unlike some systems, with fraud management you’re fighting an intelligent being on the other end who will intentionally avoid normal behavior. As a result, rational systems have a hard time identifying fraud on their own, without human interaction,” explains David Britton, senior vice president of product development at 41st Parameter, the fraud detection service 2Checkout.com uses. “The best approach is to have a number of tools at your disposal, including device identification. That allows you to have the fewest manual reviews.”

These tools are especially important these days, because checking a device’s IP address no longer provides the fraud protection it once did, he adds. “Most people think it’s a silver bullet, but an IP address can easily be spoofed.”

Tips for successful device detection

If you decide to add device detection to your e-business anti-fraud arsenal, here are some tips for getting the most out of this technology:

Know the rules -- and how they should apply to your customers. You should understand exactly what attributes are likely to flag a device and which rules are appropriate, or inappropriate, for your customer base. “Once I was talking to the CTO of a gaming company, and I mentioned that our software could flag a computer that was cloaked,” Taussig recalls. “He said, ‘We don’t care about that. Gamers all cloak their computers.’”
Use device detection at all three stages of interaction with customers. “One advantage is that you can use device identification when a customer first creates an account, when he or she logs in to that account, and when processing a purchase,” Taussig says. This, he notes, gives you the best chance of identifying fraudsters before they can do any harm.
Plan for change. The one thing you can be sure of when it comes to fraud detection is that nothing will stay the same for long. You should be constantly reviewing and adjusting the rules used to flag possibly fraud, while surveying the horizon for new fraud innovations, and new technologies for fighting them. “Companies that do this well are watching the technology news, and reading about security breaches at other organizations,” says Shane Sims, director at PricewaterhouseCoopers. “They’re using that information to constantly adjust their fraud controls.”

Real-Time Marketing Tech Boosts Business

Kim Boatman — 2009-06-25T16:31:54-05:00

It’s a Tuesday night, and business is excruciatingly slow at the local pizzeria. So, the owner utilizes a mobile marketing service to send a quick text to the restaurant’s customer base, offering a generous discount to diners who visit within the next two hours.

In uncertain economic times, it’s particularly important to know your marketing is both timely and reaching the right customer base. Increasingly, real-time marketing technologies are helping small to mid-sized businesses nimbly adapt to the ebb and flow of consumer demand. These technologies also offer the ability to pinpoint marketing, providing more return on investment.

“Real-time marketing has emerged as a way for small and medium-sized companies to more easily and efficiently keep up with larger competitors,’’ says Manu Mathew, CEO of marketing business intelligence firm Visual IQ. “All marketers, especially those at companies with smaller budgets and greater accountability, are looking to make each dollar work harder in today’s economy.”

For the most part, these real-time technologies focus on mobile marketing, social media, and combinations of the two to reach customers. Here’s a look at several ways you can utilize real-time marketing tech:

Reach your regular customers

Companies such as Zingr and Jittergram are designed to help you reach regular clientele with offers through mobile messaging. Flexibility and immediacy are key, says Margaret Donnelly, vice president of business development and marketing for Jittergram. The company has focused its efforts in its home base of New Hampshire but plans to expand.

“With traditional couponing and promotions, it is kind of up to the consumer when they want to come in,’’ Donnelly says. “Jittergram allows the merchant to generate incremental business when they need it most.”

Zingr allows a business to narrow its focus, says spokesman Sarah LaLiberte. “As a business, you are able to target the appropriate customers with the appropriate message at the appropriate time,’’ she says. For instance, a hair salon that notices an open day on its books can define a search by customers who live close by, who’ve utilized the salon in the last year and who haven’t visited in the last five weeks. If 75 people fit the profile, says LaLiberte, the business could use Zingr to send a 10 percent coupon to 25 people. If the response isn’t sufficient, a coupon worth 20 percent could be sent to the next 25. If the salon still needs to fill a couple of slots, a coupon worth 25 percent off would go to the remaining 25 people.

“The difference between e-mail and this new mobile marketing is the level of customization and strict anti-spam opt-in rules, and the bonus to businesses is immediacy,’’ says LaLiberte.

While traditional couponing offers a 1 percent response rate, Jittergram’s Donnelly puts response rate to these text messaging offers at 7 to 14 percent redemption. Start-up cost is reasonable -- Jittergram customers can send as many as 500 messages a month for $75. And the Web interfaces for both companies are easy to negotiate.

The key to these services is establishing a strong subscriber base. Businesses usually offer incentives, rewards and contests to enroll their customers. It’s also important not to inundate clientele with messages. Jittergram suggests no more than one or two a week and allows businesses to segment their subscribers to reach targeted audiences, says Donnelly.

Track potential customers by interest

RunE2E, a customer relations management firm in Alpharetta, Ga., uses LeadLander, a real-time tool that shows which companies are visiting RunE2E’s website and what content they’re viewing. “As a B2B company, we find it invaluable,’’ says Alex Gramling of RunE2E. “If we see a company looking at our content, we can immediately follow up with a phone call and try to learn more about their interest. It’s a great way to identify new leads and even see if competitors or current prospects have been on your site looking for info.”

TwitterHawk uses the immediacy of Twitter to find potential customers by searching Tweets by location and topic. Using search terms and locations you determine, TwitterHawk then sends automated responses you’ve created. For instance, if you run a coffee shop in a certain town. You could search for Tweets using “coffee,” sent by people within five miles of your town. You’re also able to confirm matches before a response is sent and to even personalize a response. The company charges 5 cents a response. Controls help keep the annoyance factor down so that you’re not sending multiple responses to one person.

Attract customers by proximity

Proximity Blue is launching Bluetooth marketing zones in New York/NewJersey-area malls where Bluetooth-wearing customers are instructed to download messages and offers from businesses. “A small to mid-sized business can now have their ad sent out at these high traffic locations and drive traffic to their own location,’’ says Alex Teplish of Proximity Blue. Floor decals, banners and signage let consumers know about the downloads, and the messages are limited to one every half hour. Once people leave the zone, they no longer receive the prompt. The plan is to expand to malls throughout the country.

MobiQpon is among companies enabling businesses to reach local consumers through mobile messaging. You create a coupon online that is sent to consumers who are able to categorize offers by location and type. Yowza, an iPhones app, operates in a similar manner. And Krillion, a real-time product search engine, lets customers know exactly where a product is in stock in their area. So, if you’re selling a certain brand-name grill and you use Krillion, your business’s information will pop up when a consumer visits Krillion to find a source for the grill.

Increasingly, businesses have the opportunity to market more effectively, using new technologies. The challenge is to react swiftly to information you receive through these new marketing technologies, says Sergio Alvarez, founder and chief operating officer of online advertising company Ai Media Group. “If used correctly, real-time marketing can help gain new customers at a time of a need and not a want -- think basement water proofers during a rainstorm,’’ says Alvarez. By presenting your exposure at the appropriate time, you maximize return on investment, Alvarez says.

Using Twitter to Find Customers

Minda Zetlin — 2009-06-25T16:19:20-05:00

Boloco, a burrito restaurant chain with 16 locations often runs ads in a Boston newspaper. The ads contain coupons for the chain’s popular burritos for a special price of $3. It makes sense to advertise in Boston, since 13 of the chain’s 16 restaurants are there, but CEO and co-founder John Pepper wished the ads could also bring customers to Boloco restaurants in New Hampshire and Vermont. So, when he ran one recent ad, Pepper also posted a photo of the coupon on Twitter, inviting diners to bring in any image of the coupon -- a photocopy, printout, or even an image on a mobile phone -- to get the discount.

“It was a way to bring people outside Boston in the print advertising, and a way to increase our visibility,” says Pepper, whose Twitter ID is @boloco. The tactic proved wildly successful, he says. “Usually we get about 350 coupons on that kind of promotion. This time we got 900, including the mobile phones. About 25 percent of our transactions that day came from the coupon, which never happens.” In effect, he says, posting the ad on Twitter decreased cost per reader by increasing circulation.

Connecting with customers

Most business that use Twitter think of it mostly as a promotional tool, a way to announce new products, perhaps gain readers for a blog. But some smarter companies are actually using Twitter to sell products, such as Dell Corp., which recently acknowledged that it had made $3 million in sales in two years over Twitter, primarily by posting coupon numbers for discounts of 10 percent or more on Dell Outlet items.

“There’s no reason not to try Twitter,” notes Stefanie Nelson, marketing manager for Dell, who created Dell Outlet’s Twitter campaign. “There’s no cost, and it’s a limited time commitment, at least it was for me at the beginning. Before we built up the following and reach that we have now, it took me literally minutes a week.” (Things have gotten a bit busier now that @DellOutlet has over 700,000 followers.)

According to Nelson, the most important first step is to know exactly what you want your tweets to accomplish. “Understand why you’re on Twitter,” she says. In her case, she adds, the objective was to quickly sell Dell Outlet items, which are usually excess inventory. And, she says, “If you know your objective, and who your target audience is, Twitter can be just as effective for a small company as a large one.”

Boost sales with Tweets

Using coupons to create boost sales is only one way to reach customers with tweets. Here are a few others:

Give your company a human face. Pepper uses TweetDeck to track mentions of “Boloco” on Twitter, and one day it flagged a tweet in which a woman bemoaned the cool, rainy weather this summer and pondered whether to spend the afternoon at Boloco or a different restaurant. “I’ll respond to that one, with something like, ‘I vote for Boloco!’” he says. Twitter users are usually pleasantly surprised, he adds. “They expect @Boloco to be like @DunkinDonuts. They don’t expect to hear from the head of the company.” There’s a delicate balance between making human contact, and sharing too many everyday details that may not interest your customers, Nelson says, a dilemma she partly addresses by using @StefanieatDell for more personal tweets. Whatever you do, she advises, avoid spamming followers with promotional direct messages not specifically written for them.
Find customers when they’re looking for your product or service. Searching Twitter can be a very effective way to find new customers. For instance, Rocky Mountain Ace Stores, an affiliation of Denver area Ace store owners, uses monitter to search Twitter for both keywords and locations of tweeters. One day, the group flagged a Denver man worrying about insects in his lawn. “So we tweeted to him about beneficial insects, such as ladybugs, which will eat bugs all summer, and which we sell,” says Andy Carlson, who owns an Ace store in Denver and is on the group’s board. “He wound up coming in to one of our stores and buying ladybugs.” Chris Savage, CEO of Wistia, a video-sharing site for business use, advises putting some thought into picking the terms you search on Twitter, just as you would for meta tags. “Research the most frequently searched terms in your market on Google and other search engines,” he says. “Then search or monitor those terms on Twitter.
Deal with disgruntled customers -- fast. One evening Ace customers posted an angry tweet because a tool he’d bought from a Denver area store broke after one use. “We got in touch, recommended which store he should go to to return the item, and alerted the manager at that store,” Carlson says. “He didn’t know that Ace hand tools all carry a lifetime guarantee.” The man was very impressed, and went from being angry at Ace to being a devoted Ace customer. The complaining tweet came through late at night, Carlson notes, well after the stores were closed. And, he says, it was especially important to intervene quickly. “You don’t know whether he’s going to go back to the store right away, or stew about it for three or four days and tell more people. The more time between the bad experience and the resolution, the more likely he is to tell his friends, so the quicker we can solve a problem, the better.”

And that’s the nice thing about Twitter, he says. “You can catch a problem when it happens, and do something about it.”

Tech Talk: Food Maker Grows with ERP

Elizabeth Wasserman — 2009-06-17T11:19:04-05:00

Ateeco, based in Shenandoah, Pa., is the parent company of Mrs. T's Pierogies, a leading manufacturer of the pasta and potato delicacies that can be purchased at supermarkets and other retail outlets around the country. Since the overwhelming majority of the firm's customers order electronically, Ateeco grew and streamlined processes by moving to a new enterprise resource planning (ERP) solution, Tim Coyle, director of technology, tells IncTechnology.com.

Elizabeth Wasserman: Why did your business need an ERP system?

Tim Coyle: We service all the major supermarket chains and big box retailers all across America. Some of those companies are pretty sophisticated. We need a system for bringing in EDI orders since 96 percent of our invoices and orders are sent electronically back and forth. We need a system that can process that, as well as show us inventory balances and keep accurate counts of our inventory. We have 13 frozen warehouses around the country, as well, and we need to know how much product by SKU we have at those facilities so we can plan and have an accurate balance sheet. Since we're a food manufacturer, we also need to do lot tracking and we need to know what raw materials go into today's production run and what customers have ordered in that production run in the even of a major recall.

Wasserman: Have you ever had a major recall?

Coyle: Never. Knock on wood. But we've had some minor ones.

Wasserman: What type of system did you have before?

Coyle: We had a legacy system that was a solid system for us from a financial perspective but it only provided us with tools to provide functions for light manufacturing. However, we're a heavy manufacturing company that also does distribution. We tried to make accommodations to do what we needed but we reached a crossroads where we had to decide in order to satisfy growth and profitability and our strategic objectives over the next five to 10 years whether we would customize this system or find a new platform that was a better fit.

Wasserman: I guess you decided to find a new platform. How did you go about doing that?

Coyle: First we developed criteria. We felt we needed a vendor that had experience in food and beverages, was financially stable, had good references, and had proven methodologies. Most importantly, the vendor needed to help us provide a promised return on investment. ERP systems don't come cheap. We needed a promised ROI that could be delivered. We went through the request for proposal process and chose two dozen vendors. We received responses back from 10. Then after a review process we narrowed our choice down to two vendors. We actually chose a company but our management team was uncomfortable with the platform they ran on. So we went back to the drawing board and re-reviewed our vendor list. We had initially included SAP in the RFP process but they were not a vendor to small and mid-sized businesses. They were going to charge three or four times what we were going to spend. But when we went back to the drawing board, we found on an Internet search IDS-Cheer. They did food and beverage systems for small and mid-sized businesses and has a product called Aris Smartpath SAP All-in-One. It was an SAP produce preconfigured for a small or mid-sized company and further configured for a food and beverage customer. That allowed us to fin a price point in SAP that we could afford. We went live Jan. 1, 2007.

Wasserman: What have the results been?

Coyle: We've been able to reduce our finished goods inventory and be leaner on inventory balances that we carry. We've had a record sales year with a record low level of inventory. That sounds like it shouldn't be able to happen. The ERP system didn't cause that but it allowed us to manage our inventory with a system that we could trust. With our old system, inventory accuracy could swing anywhere from the mid 60s to low 90s. If you're not really sure what you have on hand, it's impossible to plan accurate. Now our inventory at all locations is 98.9 percent accurate. We can say with certainty what we have on hand and carry lower inventory balances. We also close our books now in two days, where it used to take somewhere between 7 and 10 days. We've been able to clean up some of our processes with better controls in the system. Our data doesn't get off base. We've reduced our finished food inventory by 25 percent on average. We're in a period of record sales with record low levels of inventory. It's the best of both worlds.

Tech Talk: Florist Switches Payment Platform

Elizabeth Wasserman — 2009-06-17T11:12:49-05:00

KaBloom is a Massachusetts-based online florist in business since 1998 that has a patented technique for shipping fresh-cut flowers in water overnight. The company found that sales increased dramatically after switching to a new online payment platform that allowed the firm to better communicate with customers and allowed customers to more easily process payments, CEO David Hartstein tells IncTechnology.com.

Elizabeth Wasserman: You have a patented system for sending fresh flowers in water to customers over night. How did that impact your technology decisions?

David Hartstein: We've been in business since 1998 and our business has gone through different cycles. Today we have over 30 stores but our business model right now is focused on mainly selling online at KaBloom.com. The majority of our stores are in Massachusetts. We also have stores in Chicago and Florida. But we deliver nationally. Fresh cut flowers that are delivered over night are usually delivered by FedEx without water. When you go through the rigorous distribution and logistics within FedEx, you can not pack flowers in water. Think about taking a bottle of water and putting stems inside. If this ends up on its side or upside down, the water will be all over the place. We have a patented technique where we are the only one in the world that can ship fresh flowers in water via FedEx. Our flowers can be in any position, upside down and sideways, and no water will spill. When we started offering this to customers, we needed a new platform, a new way to communicate with our customer and tell them about what we do, what we have, and why we are different.

Wasserman: What did you decide to do?

Hartstein: We decided to implement a new payment platform called whizPay mainly because it provides reliability and ease of use. It provides a very easy customer checkout process. The back office that we have with it has very rich functions. It assists us with product description, with the content, with our stores and our stores managing platforms. Each store has the ability to manage their orders. It's a central platform that they can access from different locations. They get a notification when an order comes in for them. They have the ability to log in to the main platform, communicate with the customer, change the order, change the address. Without having to have an administrator do it for them.

Wasserman: At the same time, does it protect your data?

Hartstein: It's all secure. There is information that can only be managed by the administration and not by each store. They can not delete a customer's information. There are other benefits, too. For example, say we have a store in Virginia. That store knows their customer base and knows what the customer likes. They have the ability to display the designs that their customer likes so that when the customer orders a certain design, the system knows to go to that store to deliver that product. We have the ability to say that product X can only be delivered from Y location.

Wasserman: What it easy to implement?

Hartstein: It was easy -- as far as anything in technology is easy. We launched Sept. 1, 2008 and we never had to during that process shut our site down and bring other alternatives online. There are always hiccups but we've never had issues.

Wasserman: What results have you seen?

Hartstein: Since February of this year, we have seen an increase of about 50 percent in orders through the new platform. That is quite astonishing in this market. There are two reasons for this. First, we have a product we sell that no one else sells and that is that we are the only one can deliver flowers in water from coast to coast over night. Second, our management function within our platform allows us to communicate with our customers in a much easier way.

Tech Talk: TV Frame Maker Shares Files

Elizabeth Wasserman — 2009-06-17T11:08:44-05:00

HD Envy is a business that started less than two years ago in Florida to design, manufacture, and sell custom frames and mounts for flat panel TVs. Sean Thorp, managing officer of the company, tells IncTechnology.com that by outsourcing management of files and servers the company was able to avoid having to hire IT staff while enabling employees in different locations to collaborate and work on the same files.

Elizabeth Wasserman: Tell us about your business.

Sean Thorp: We've been in business for about a year and a half. We have offices in St. Petersburg, Largo, and Sarasota in Florida where we manufacture, sell, and distribute frames for flat panel televisions. If you want a wall-mounted flat panel TV, and the black frame doesn't match your décor, we make frames that fit right over your screen that allows someone to basically match their television to their décor. It's kind of going back to what televisions used to be when they came in a cabinet and looked like a piece of furniture. It used to be that manufacturers understood this and would try to provide different frames but if they do that now it's more of a hassle. They have to stock one red and one blue of each television in their distribution centers. That's where we step in. We base our frames off the Video Electronic Standard Association (VESA) standard so that they fit right over the television and the wall mount.

Wasserman: You have staff working in a variety of locations. What kind of IT problems did this create?

Thorp: We have nine employees right now working in a variety of locations in Florida and overseas. We're geeks at heart. We understand there were going to be some problems. When we first started the business, we didn't even have an office. We were working from home. So we started using Google Apps, which was a fantastic service that cost $50 per user per year. That took care of e-mail and documents. Then we started looking at Microsoft Exchange servers and Sharepoint. But to use those products we would have needed to hire an IT staff and at that point we didn't have any money. How can you convince someone who needs to be making $80,000 a year to work for free? One of the problems we ran into is we started having these documents in PDF forms with non-disclosure agreements and we had to figure out where we could store those so that we could call them up and access them from anywhere we were. If my partner, Howard Hochhalter, was in Sarasota and I was in Palm Harbor, or if we were dealing with a business partner in China, how could we share these documents that included photographs of our designs? Google Docs couldn’t handle those.

Wasserman: So what did you do about it?

Thorp: At first, we started an FTP server off the domain. We tried that for three weeks and it was a nightmare. We had multiple versions of documents all over the place. So then we went shopping for a solution. We figured we couldn’t be the only people who needed to look for something better. We did some online searches and found Egnyte. It wasn't an FTP server. It was a hard drive that was online. We could access the same version of a document from our different office locations. In a business with a large office, you have a shared document folder. But we weren't in the same office. This also blossomed into a service through which we could send documents to people, such as if I have a DVD and I want to send it to a new retailer interested in selling our products. I can't send an 8-gigabyte file in an e-mail. So I just create a link from my hard drive and share it explicitly with them. They have a download location, but they can't access anything else on our hard drive. They just get to see what we let them see.

Another great thing is that we can create a folder for a vendor such as Best Buy and drop stuff in there when we put new information out and they have access to that information immediately. They can't see anything else. But everything they need is dropped in there in real time.

Wasserman: What have the results been?

Thorp: We haven't had to hire an IT staff. That is the first thing. The next thing is the actual hours we need to spend managing this have been cut down. When we were using the FTP server, we were spending at least two hours per week each doing file management. That added up to four hours of wasted time a week when we should have been focusing on running our business. We operate very lean because we want to keep our prices down. This has enabled us to offer our products at a low cost because we don't have to pay for an IT staff and don't have to pay licensing fees to Microsoft.

The Long Tail and the Black Swans

Vijay Chittoor — 2009-06-17T11:01:34-05:00

In his Wired article in 2004, Chris Anderson pioneered the use of the phrase “The Long Tail” as a proper noun. He observed that the reduced costs of distribution over the Internet are making it easier for businesses to serve consumer demand for niche items, and that collectively, the niches added up to quite a significant market for companies like Rhapsody, Netflix, or Amazon. This collection of all niches, “the long tail,” he argued, generates substantial value for a variety of businesses.

The long tail effect liberates consumers from having to buy what everyone else is buying, and enables businesses to serve specialized needs, rather than just serving the lowest common denominator. This idea flies against the traditional distribution networks, which only stocked those items that are most likely to sell a lot of units. Traditional supply chains needed to play this “blockbuster” strategy because their fixed costs of carrying any item and making it accessible to customers were very high. And the only products that could justify that cost were the ones that were likely to sell a lot of units.

For example, in the movie industry, this “supply chain” consisted of theaters, and DVD sales through large retailers, both of which have high fixed costs and limited shelf space. The Internet reduces many of the fixed costs, removes the restriction on shelf space, and makes every item easily accessible through searchable interfaces. No wonder, then, that Internet companies have chosen to carry larger inventories than their offline counterparts, enabling them to cater to niche interests.

Backlash against the long tail

Despite the widespread use of this idea, there has been recent backlash against it. Criticism of the idea recently started with an analysis by Anita Elberse, and was picked up by many others in the media. The critique centers around the idea that long tail companies make most of their profits from a small percentage of items sold; the classic 80-20 rule still applies. Based on this, the critics recommend that entrepreneurs and managers should continue to focus on the blockbuster strategy.

This analysis, however, overlooks the fact that it’s impossible to predict what will be a hit. Consider the list of top 100 rentals on Netflix a good indicator of consumer demand. At least three of these movies are independent films, each with a budget of $6-8 million. Juno, with a budget of $6.5 million, went on to gross 35 times that in earnings, and Little Miss Sunshine, which cost $7.7 million to make, earned more than $100 million in revenues. The Last King of Scotland, with a budget of $8 million, completes the trio.

Compare these 10x returns with a mainstream movie like The Dark Knight, which made less than six times its budget of $185 million -- and that’s among the more successful hits. Before they made it big, movies like Juno, Little Miss Sunshine and The Last King of Scotland seemed like films that would end up in the long tail. And the entertainment executive who focused purely on the blockbuster strategy would have missed out on the financial returns of these movies.

When the critics of the long tail theory account for revenues and profits, they look at data compiled after the masses have picked the winners and the losers. Some of the “winners,” the items that made it to the top 20 percent of revenues, might have come from the long tail of investments (e.g., the low budget movies). So when the critics recommend not investing in the long tail, they’re confusing the tail of revenues with the tail of investments.

The real value of the long tail is that it helps pick the winners like Juno. You might think the cost of picking winners in this way is prohibitive, but that’s no longer true in the new digital world. In the traditional supply chain, an average long tail product would not make any money at all, because it wouldn’t be stocked anywhere. However, in the digital world, even the product that starts life in the long tail and stays there makes some money because it reaches a niche audience. And, who knows, there’s always the chance that some of these long tail products could become popular someday, and make tons of money.

The author Nissim Taleb deals with phenomena like these where the outlier (like Juno) has a significant effect on the average performance. He calls this effect the “Black Swan.” In the blockbuster strategy, which requires heavy investments, the returns on all movies would perhaps cluster around one, and an outlier like The Dark Knight returns six times its investment. The exposure to the outlier, or the Black Swan, is much greater in the tail. As we’ve seen, an outlier in the tail can have a much more significant return.

These effects only get amplified with digital distribution, where shelf space is unlimited and the investment in distribution costs is negligible. As The Arctic Monkeys, Clap Your Hands Say Yeah, and many others have shown, it is possible for small indie bands to rise to stardom by the buzz they create on the Internet.

While the long tail is exposed to the positive Black Swan (unexpectedly good returns), the blockbuster strategy is only exposed to a negative Black Swan, because the strategy requires heavy investments. A prime example is the movie Waterworld, made with a budget of $175 million, which grossed only $88 million worldwide.

Does this mean that the blockbuster strategy is dead? Not at all. After all, the Netflix 100 has a lot of room for high budget movies. Amazon and Netflix understand this very well, and put as much focus into the likely hit as they do into carrying all the indies. Their infinite shelf space allows them to stock the Harry Potter book or The Dark Knight DVD as well as lesser known title, and their search and review mechanisms help the community vote up an occasional obscure title to become a hit. The lesson? Success is about finding the right balance of long tail strategies and more traditional approaches.

Vijay Chittoor is the director of product management at Kosmix, an exploration engine that offers a 360 degree view of any topic on the Web. A former McKinsey consultant, Vijay is a graduate of Harvard Business School and the Indian Institute of Technology, Bombay. He shares his thoughts on technology at his blog..

Is a CIO a Luxury or a Necessity?

Mike Gorsage — 2009-06-04T14:04:55-05:00

How many things can you name in your business or personal life that are not driven in some way by technology? These days, not many. Everything from your car, your healthcare, entertainment and communication -- they’re all technology-based.

In virtually every sector today, dependence on technology is growing. Just look at the recent flurry of national technology positions created by the Obama administration: a Cyber Czar, a National CIO, a Chief Innovation Officer, to name a few. All signs point to an elevation of the strategic value of IT and the need to clearly define the roles of your technology leaders.

CIOs as strategic partners

Does this trend mean you must have a CIO? It all depends on the value your company places on IT. Consider your website, for example. Very likely, it’s the front door to your business, and it’s a tool that didn’t exist only a few years ago. What value does it represent for your organization today? Chances are, it has changed the way you do business. Technology like this eliminates the boundaries of time and distance in interacting with clients and customers -- a significant contribution, to say the least.

For many businesses, technology is a strategic part of the delivery mechanism for client service, the development and delivery of products or meeting other requirements such as regulatory and compliance issues. When this is the case, having a CIO is not a luxury -- it is a necessity.

Today’s CIOs manage much more than systems and data. They must be as business-focused as they are technology-focused. In fact, the most effective CIOs bridge the gap between the two disciplines. Businesses of all sizes can benefit from their leadership, particularly when going through a growth phase or a transition, such as a move from legacy to enterprise systems. Even relatively small firms regularly need to address strategic issues and make sure current initiatives properly align technology to support the business. A CIO can help streamline your systems, avoid costly mistakes and integrate new technology into your business.

Technology: cost or asset?

If your IT leaders do not view technology as a business asset, then you lose sight of the value proposition that technology provides. Technology for technology’s sake does very little for your organization. You start getting highly fragmented from your technology, and your operations become more complex. By refocusing on strategic planning and integrating it into your business, you are better positioned for future growth and opportunities.

A common mistake firms often make is entrusting high-level technology decisions to a “default” CIO, possibly a lower level IT manager or director, who lacks the experience needed to effectively manage IT resources. These individuals tend to focus on interfaces, hardware and networks, rather than how these systems integrate with your overall strategy. This lack of a truly cohesive strategy can prevent an organization from recognizing the benefits, and in some cases new revenue streams, that a solid technology strategy can bring.

The outsourcing alternative

If you have determined that IT is not a strategic part of your business, you probably don’t need a CIO. You could consider outsourcing the majority of technology -- both your infrastructure and applications. But even in doing so, you cannot ignore the value of strategic thinking. You must still assign a senior level business executive to think about the technology implications of business initiatives that your company takes on, particularly as your company grows or needs to consolidate, re-tool, or reset costs.

Outsourcing may help you become more stable. A large commercial real estate firm recently hired an outside firm to investigate IT practices, revealing that a recent investment in server upgrades wasn’t being put to full use, weakening the flawed, outdated infrastructure. Simple help desk requests took weeks or months to rectify, causing technology deficiencies that harmed sales and prevented managers from growing the firm’s business units. The outsourced firm objectively recommended a new IT staff and a fully operational infrastructure. Within a month, the firm lowered technology costs and cut help desk responses from weeks to just hours or minutes. Once technology was aligned with the overall business strategy of the firm, the business stabilized, frustrations faded, and focus returned to clients.

When handled properly, outsourcing can help you achieve greater economies of scale within your budgets. In fact, if your budget cannot handle a full-time executive, you might even consider buying a portion of time from a consultant with multiple clients, giving you the high-level guidance you need without the heavy price tag.

There is also a downside to outsourcing. It may be difficult to decipher whether a company is advising you on what’s best for your business or what will give them the highest margins, causing a natural conflict of interest. Conducting thorough research on reputation in your industry and prior achievements, along with a healthy dose of skepticism, can help you identify a possible conflict.

Whether or not you outsource or bring on a CIO, consider how your IT efforts are positioning you for the future. Some businesses thrive without a fully functional CIO, while others seek outside guidance to develop systems that support business strategy. Whatever your choice may be, don’t relegate your infrastructure to another line item on the balance sheet. Take a look at your technology platform and make sure you have the resources in place to gain competitive advantage and prepare for what’s to come.

Mike Gorsage is a Partner and Technology Practice Leader for Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership nationwide.

Traditional CRM vs. Social CRM

Brent Leary — 2009-06-04T13:57:31-05:00

Connecting with potential customers is one of the biggest challenges facing small businesses today. A recent study by Network Solutions and the University of Maryland shows that marketing/innovation is the single biggest competitive disadvantage confronting small business, after access to capital. In fact, converting marketing leads into buyers and finding efficient ways to promote and advertise, are two areas small businesses say they struggle the most with. This finding is supported by a recent Microsoft small business study, which found customer acquisition and retention to be the biggest challenges facing their small business partners.

To help overcome customer acquisition challenges, many small businesses are looking into customer relationship management (CRM) tools and strategies. In the past, many viewed CRM as being too complex and expensive to implement for the expected return on investment. But over the last couple of years, software-as-a-service (SaaS) offerings from the likes of Salesforce.com, NetSuite, and a host of others have allowed companies of all sizes to implement CRM products and services at a fraction of the cost, time and effort needed in the past.

Traditionally, CRM’s strong suit has been improved operational effectiveness, easier access to information, and improved interdepartmental collaboration. While these are critically important to the success of any business, the focal point of these areas are internal to the company. And while a more efficient company should have a positive impact on customer interaction and responsiveness, does it really help us to meaningfully connect with those potential customers empowered in a Web 2.0 world?

Social media adds this missing dimension to the traditional, operational areas of CRM. And according to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site -- what they refer to as "member communities." The integration of social media into CR strategy -- called Social CRM -- differs in focus from traditional customer relationship management in a few key ways.

Data-driven vs. content-driven

Businesses began investing in CRM applications in the ‘90s mainly to store contact data. Before contact management software was available, businesses had to store their valuable customer information in Rolodexes, spreadsheets, and even filing cabinets. It was important to have a central location to store the data that was also easily accessible to communicate effectively with contacts. And with multiple people “touching” the customer for various reasons, it quickly became important to be able to track activities, appointments, potential deals, notes, and other information. Consequently, traditional CRM grew out of this need to store, track, and report on critical information about customers and prospects.

Social CRM is growing out of a completely different need -- the need to attract the attention of those using the Internet to find answers to business challenges they are trying to overcome. And nothing captivates the attention of searchers like relevant, compelling content. Having the right content, and enough of it, will help connect you with those needing your product or service. Creating content in formats that make it easy for your target audience to consume it increases the probability that you will move them to action -- starting a conversation with you. Whether it be by developing a blog post, podcast, YouTube video, or Webinar, creating attractive content is a key pillar of social CRM strategy.

Process-centric vs. conversation-centric

Traditional customer relationship management is heavily focused on implementing and automating processes. Companies looking to implement processes like lead and activity management would turn to CRM. Management would turn to CRM to standardize on sales processes to increase the accuracy of sales forecasts. And customer service requests could be tracked, routed, escalated, and resolved in a uniform fashion to ensure proper handling. Traditional CRM helped make it possible to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences.

While there are processes involved in building a successful social CRM strategy, conversations are at the heart of it. Having meaningful conversations with those searching for the help you can provide is the turning point in transforming clicks into customers. The processes involved are aimed at making it easy for people to find us (through our content) and invite us into a conversation -- on their terms. This may take the form of a comment left on a blog post, following your company on Twitter, or possibly embedding your PowerPoint presentation on their webpage. There are numerous ways to participate in meaningful conversations with people looking for help in solving challenges. Formalizing a strategy to increase the likelihood of engaging in these conversations is a tenant of social CRM.

Operationally-focused vs. people/community-focused

As mentioned above, managing customer information is a major concern to businesses of all sizes. It plays a key role in the ability of businesses to respond to customer requests, manage resources needed to close deals efficiently, and provide management with reports to keep track of sales performance. This helps executives achieve operational effectiveness, and is particularly important for businesses expanding their sales and marketing operations, needing to implement new processes to manage growth. Businesses have typically turned to CRM to improve communication between sales and marketing operations, as well as to improve data-access to positively impact decision making.

Whereas traditional CRM activity focused heavily on operational effectiveness and its impact -- both internally and on the customer -- social CRM is all about people and community. It’s about how your company intends to participate in the ongoing conversations taking place in the industry. How you embrace non-traditional influential people like popular industry bloggers, and social sites on the Web frequented by your audience. And fully understanding the importance of contributing to discussions, in a transparent manner, will help you build the kind of reputation needed to become a valued member of the online communities important to your business.

So if you’re turning to CRM to help bring on new customers, you’ll have to go beyond traditional CRM focuses by integrating social media infused tactics and strategies. But it’s important to remember social CRM is not a substitute, but a much needed complement to traditional areas of customer relationship management. It gets us close to what we’ve needed all along.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary.