What better way of preparing for a trip to the US than riding 100km around London from midnight?

This last week has been a lot of fun, and a lot of hard work. It started on Saturday night with Nightrider London – cycling from Alexandra Palace in London via all the famous sites in London to Crystal Palace and back again. It was 100km of surprising hills and wonderful sites, and to make it slightly harder, I cycled from home to the start, and the start was at midnight. The aim of the ride was not only the exercise, but also to support the fantastic Kids Inspire charity which help children from challenging backgrounds (it’s not too late to donate).

As soon as I got back from the cycle ride I was off to Endava’s New York office. I travel to New York every six weeks or so to work with the team there. The office is three years old and already has a great client list spread across the United States, and there’s still a lot more opportunity in the market place.

This visit was slightly different because we had a sales presentation in San Francisco. I’ve been to San Francisco once before, also for a sales presentation (back in the IMG days). The last visit was first thing in the morning, so we flew into SF in the evening, had dinner with the client, presentation in the morning and flew straight back out.

This time, the visit was just as short – I was only in San Francisco for 20 hours, but the presentation was in the afternoon so I went for a run around the city centre and the docks in the morning where we saw Alcatraz and some seals. The sun was shining, it wasn’t too hot, and the sales presentation went really well. All in all the city really appealed.

San Francisco has quickly become one of my favourite cities in the World. Clean, geeky, sunny and friendly.

— Bradley Howard (@bradbox) June 12, 2013

Unfortunately I could only stay on the west coast for a short period of time because I needed to get back for some prior meetings on Friday and we’re going on a family holiday for a special weekend (both my birthday – a big one, and a friend’s birthday).

Data privacy in the news

During my time in the US, the media was full of coverage about Edward Snowden, the latest so called whistle-blower who has told the press that the US government stores all the intra- and inter-American phone records.

The media has been balanced, mainly because the public opinion in the US is equally balanced. According to a poll of Americans, 56% found it acceptable that the government has this information. I agree. My opinion is that it’s similar to all the surveillance cameras we have in London – I don’t really care about them because I’m personally not doing anything wrong. And if, Heaven forbid, we get a nasty Right Wing government who might take advantage of all these phone records and cameras, well I expect I’ll have bigger issues to deal with than my phone record analysis.

Two of my favourite pieces of analysis about the Snowden incident were in the San Francisco Chronicle. First was Peter Scheer who wrote in an opinion column:

“The logic of warfare and intelligence has flipped. Warfare has shifted from the scaling of military operations to the selective targeting of individual enemies (think of “body counts” during the Vietnam War). Intelligence gathering has shifted from the targeting of known threats to wholesale data mining for the purpose of finding terrorists.”

And on a slightly lighter side (but there was a serious undertone to the article), Caleb Garling wrote an article with some advice on guidelines to avoid leaving a digital footprint.

“Do all your social networking in person at a local bar or restaurant – provided you pay cash for your drinks, there aren’t security cameras and no one takes your pictures and posts it to Facebook”.

Just imagine that last point – real world social networking!

Dotcom bubble

For my friends and colleagues in the UK who think we’re in another dotcom bubble, you’d have loved the front page of the newspaper. The headline was “Building on tech’s success, Job growth spurs record breaking need for apartments, condos”

The current need for housing the boom in the technology sector in Silicon Valley has exceeded the first Dotcom bubble. Astounding.

And to add fuel to the fire (or perhaps ‘adding washing up liquid to the bubble’), Google has officially bought Waze, which I’ve commented on previously. Google has bought it mainly so that no one else can buy it. Those competitors included Facebook and Apple. Spending $1.03bn on a defensive investment like this, for a company with no notable historical revenue (let alone profit) is a pretty big sign of the market.

We were discussing the music industry. He still buys CDs. He prefers to go to shops to buy CDs, but this is getting increasingly harder, and accepts that from time to time he has to shop on Amazon, which is delegated to my Mum. I use Spotify, which is an alien concept to him. I described this as renting the ability to listen to an almost unlimited music library, on a monthly basis, but never owning a single track.

In the past few weeks I’ve heard a lot about Snapchat, a successful photo sharing service used by a young user base. When I say successful, naturally I don’t mean commercially – I mean in usage terms. 20 million photos a day are shared on Snapchat, by an audience aged 13 to 23 (so they are almost uncommercialisable from the outset).

The fascinating thing about Snapchat is that when you share a photo with a friend (and you can only share with friends), the photo lasts between 1 and 10 seconds. The sender decides on the longevity of the photo.

It’s interesting to think about my Dad, who will only buy music on a physical forma, and my kids who want to send photos which are temporary. It’s a completely different mindset.

Even after using Snapchat for a couple of weeks, I went to my Activity feed (or whatever it’s called on Snapchat) and looked for all the photos that I’ve sent. Only they weren’t there – everything is temporary.

And then it hit me. We talk about the difference between a digital natives and a digital immigrants all the time, and most of ‘us’ which fall into the latter group think we’re natives, but it’s only when we use applications like Snapchat does the divide seem so wide. Especially when I still like to print out my favourite photos.

SAP & Hybris ($1-$1.5bn)

SAP has bought Hybris for around $1b-$1.5bn. SAP provide enterprise application software – from HR to Finance to stock and supply chain management to CRM to Business Intelligence. They have almost all have over a quarter of a million customers, mostly SMEs, although they are best known for their huge implementations. SAP had revenues of $3.6bn in Q1 2013, with profit after tax of $520m.

Hybris is one of the most widely used industrial-strength e-commerce platforms. Hybris generated around $110 million in revenue in 2012 and has about 400 customers worldwide including Levis, Samsung, P&G, GE, Nikon, Ericsson, Oakley and Nespresso.

Salesforce & ExactTarget ($2.5bn)

Wish you bought ExactTarget shares earlier this week?

Salesforce has bought Exact Target for around $2.5billion. Salesforce.com is one of the biggest enterprise SaaS (Software as a Service) offerings, specialising in the full sales and CRM lifecycle. Total Q1 2013 revenue was $893 million with a net loss of $67m.

Exact Target are one of the best outbound delivery systems out there. ExactTarget’s latest earnings guidance was $376-$379m for the year. In Q1 2013 they had revenues of $88.9m and a net loss of $11.6m. Disclaimer: Endava are an ExactTarget partner.

New Google Maps – looks nice, but unusable

In September 2012, Apple considered that Google’s Android was such a competitor to the iPhone since the first iPhone appeared, that it was bizarre to continue using Google’s mapping application. So Apple wrote their own mapping application, which has received some severe criticism, and has caused some of the senior management to leave the company.

Google Maps is excellent, and they saw the opportunity to release an [excellent] iOS map app, which I use on my iPhone.

Google Maps, browser version is also excellent. The Streetview is great for becoming familiar with your destination before starting the journey, and the routing is excellent too, whether walking, driving or using public transport.

“If it ain’t broke, don’t fix it”, said Lance.

Google sent me an invite a fortnight ago to look at the new Maps website, apparently written from the ground up (no pun intended) and I eagerly accepted the invite.

It looks lovely. But it’s awful to use. For instance, the map doesn’t show you where you are. The familiar right-click has disappeared, so you have to type source and destination addresses rather than just right-click on either of them and press ‘Directions to/from here’. Right click now shows a point of interest (usually a business) near where you right clicked, which I haven’t yet found a single practical use for.

Streetview now takes over the page with a tiny map, and you can’t drag the ‘person icon’ to see a different area on the map. To get back to map mode from Streetview used to be obvious – there was a traditional close button, now it’s an almost hidden, size 8 font hyperlink.

Google Maps is a big step backwards. As a client used to say every time he moved up a Windows version, “I’ve just downgraded to the latest version”.

Google Glass. Beware in bathrooms of someone winking at you. Photo courtesy of Giuseppe Costantino on Flickr

In November last year I wrote about how Google Glass will destroy the trust that we naturally have between people.

Last month it was the Google I/O conference, a gathering of developers from all around the World. One of the best articles that covered I/O was from the NY Times, in which the journalist discusses the same issue, from a bathroom perspective (literally).

The quest for identity management continues
Credit: http://www.flickr.com/photos/brenda-starr/3509344100/

Key points:

• We need a Single Sign On across the web, from a truly trusted brand
• Sellers need to know who customers are, just as much as we need to identify real retailers
• Web sites that build a reputation score will need to transfer their data

To give you an idea of how ridiculous passwords have become, let’s look at my bank. My bank is one of the most technically advanced banks, and has created some great innovations.

I use their website banking, which uses a log in process that has been designed to deter users from using the service. It takes two screens, a physical device to generate a random number, and various other forms of identity.

And then take their mobile app. With a simple 5 digit numerical passcode, I can do almost anything I can do via the website equivalent. Either the security department went on holiday when the mobile app was released, or they came to their senses to make it easier for customers to access their account. I hope it was the latter but it was probably the former.

Passwords are one of the biggest nuisances of the Internet. Another nuisance is multiple accounts. The number of accounts we have, and continue to keep creating, has got out of control. Not only is it out of control, but we then have security experts telling us not to use the same password on multiple sites. And personally I won’t use a password manager because I fear they are all run by some spotty (but clever) teenager from his bedroom, and one day he’ll have access to lots of people’s accounts and go on a spending spree at Amazon.

If I see a website offering to use my Facebook or Twitter credentials to register or login to a website, I’ll always take the offer. It’s so much easier.

The problem with websites offering Facebook or LinkedIn or Twitter is that the social network gets to keep the customer data, not the website we’re registering with. And also, whilst I’m happy to use a social network to log me on to various websites, I’m not sure I would use Facebook connect for my healthcare or pension site.

We need a Single Sign On system across the internet from a trusted party. It needs to be trusted by both users and website owners – from my bank to the Inland Revenue (whose authentication system is extremely rigid).

Once we have the Single Sign On system, it needs to keep a track of our various reputation scores. I have an eBay account with 100% positive feedback amassed over a few years and over 500 ratings, both buying and selling. So when I join a site such as TripAdvisor, or AirBandB, that eBay should count for something.

As the Internet continues to become more complex, retailers need to know their customers are who they say they are, and can be trusted. We’ve been using SSL security certificates on the Internet for a long time now, and as a means of ensuring we are buying from a company who is who they say they are. It’s now time for the other way round – for customers to prove who they are.

This type of system is called VRM (Vendor Relationship Management). It’s all about making the Internet a level playing ground, establishing trust that we take for granted in the real world, and migrate it to the virtual one. All with the aim of being treated as a real human being rather than an IP address and cookie jar.

Browsers are too basic and need to mimic the 3D world that we live in

Key points:

• The future of browsing will be a 3D immersive ‘World’ experience
• It will solve the discovery issues of current ecommerce web sites

If you had ever worked with mainframe technologies, you probably wondered what the fuss was about when the first web browsers were released.

Mainframes work on a transactional basis. Technically, the entire interaction with a mainframe is to ask something (which in the web world is called a Request) and your program receives an answer (in the web world is called a Response).

In between the mainframe and web world, there was ‘thin-client’ architecture which was the same model again.

In between mainframes and this clients were fat clients. Fat clients are programs which can do complex number crunching using data on the computer in front of you. Common examples are Word, Excel, Access, Desktop Publishing Systems, and most computer games.

So in the 1980s and 90s we had these complex local programs, fat clients, and when the Internet came along, we took a big step backwards. We went from good looking interfaces to white pages with lots of Times New Roman text.

Very recently, browsers have taken advantage of more interaction (using technologies such as Ajax and jQuery) without users needing to refresh a page. It wasn’t that long ago that to use a map inside a web browser that users had to click on a link to see further in one direction, took the user to a different web page. Now, we’re able to zoom in and out and drag a map around and effectively stay on one page.

But we’re all human, and the web browser isn’t good enough. We need to see a 3D style environment to visualise the web.

The first attempt at this was Second Life. In fact Second Life was a very good first attempt as far as technologies go, and big players such as IBM spent a lot of money in the first virtual world if its kind.

Retailers opened stored on Second Life because the shopping experience is more natural n a 3D environment that a single product per page.

Unfortunately, Second Life was too far ahead of its time. It was too early in Internet adoption. The Internet wasn’t as ubiquitous as it has become.

At the time of writing, Google’s Chrome browser is on version 26. It’s sad that after 26 versions, it’s still showing you white pages with text on.

Knowing customers well
Credit: http://www.youtube.com/watch?v=kAG39jKi0lI

Key points:

• Big Data could be the digital equivalent of the friendly shopkeeper who has a good idea of what you want, as soon as you enter the shop
• But probably isn’t.

My family is quite traditional. We shop at a greengrocer for vegetables, a local butcher for meat, a local baker for bread and a local wine merchant. We use supermarkets mainly just for tinned products.

The greengrocer, butcher and wine merchant know the products that my family want to buy as well as my wife or I do.

A few years ago, Big Data was the IT industry’s silver bullet to provide online stores with the same knowledge as my local greengrocer, butcher and wine merchant.  Surely, Tesco thinks, if I buy nappies, I want to buy some baby food as well.

So Tesco began promoting baby food on all my receipts and offers in the post. However the only food we buy from Tesco is vegetarian. They can see that from all our shopping history. So there really isn’t any point promoting the latest chicken or beef baby food varieties.

And I think everyone who has bought Christmas presents for a young child through Amazon has been through the process of wondering why they receive endless children’s toys promotions afterwards.

My bank is another example. By definition my bank can see where I shop, how much my wife and I earn and how much we spend. My online banking website lists our current accounts, savings account and credit card all in one place.

I know through my work at Endava how much the bank spends on Big Data annually. So why does my bank promote the same savings account every time I log on? There are probably a gazillion more appropriate products they could be selling me than the same savings product every time. In the end I did take up the (poor) savings account just to stop the splash screen promotion.

I should note, one of my colleagues pointed out the first time I told this story “So the bank won. They promoted a product and you applied after a few placements.” He’s right of course, and I’d made it worse for all the other customers!

Big Data will help Internet websites get to a point where they mimic the traditional shopkeeper. However it’s in danger of becoming too scientific and will need to become much more customer focussed.

When will the advertising bubble burst?
Credit: http://www.turquoisebranding.com/2011/blogs/06/01/mad-magazine-billboard-advert/

Key points:

• The marketing super bubble will burst
• Look at Asia for real money
• But we still need advertising for the discovering new products

The advertising industry has developed from a simple promotional industry, to the main business model for some of the biggest Internet companies.

In 2010, spending on advertising was estimated at $142.5 billion in the United States and $467 billion worldwide.

In the first quarter of 2013, Google advertising revenue was $11.9 bn. Advertising revenue was 92% of Google’s revenues for the quarter.

For the fourth quarter 2012, Facebook’s revenue from advertising was $1.33 billion, representing 84% of total revenue.

Google & Facebook earn advertising revenue by selling clicks on adverts, called CPC (Cost Per Click). CPC is a fantastic business model because advertisers bid for the keyword using two variables – the maximum they’re willing to pay for a user to click through to their website, and the maximum budget they’re willing to spend per day.

CPC is a great business model because companies will keep coming along and outbidding their competitors. Industry magazines contain articles asking their members to stop outbidding their competitors because it is out-pricing everyone in their market and increasing advertising costs for them all.

There’s a deeper problem with advertising though. Users don’t go to Facebook or blogs to shop.

I’ll even question whether people go to Google to shop. For instance, I’m writing this post on a Friday afternoon. According to Google, the top searches in the US today are:

• George Jones
• Nfl.com
• Jarvis Jones
• NFL Draft

Here in the UK there’s only one item in the top trend – Sarin. (To provide some context, there’s some evidence Sarin has been used in Syria).

Here’s another interesting fact. If you look at the top searches on Google, try looking for any searches you can actually buy. I’ve tried combinations of time periods and locations, and the majority of the searches are for specific websites – facebook, youtube, hotmail, and so on.

We are beyond the tipping point of advertising products to users.

We’re already inside a huge industry bubble, with too many businesses reliant on pure advertising.

There is a requirement to continue advertising though – for product discovery.

Like thousands of other homes across the country, we do our grocery shopping online. And the typical grocery shopping website is awful. It’s completely single-product focussed, based on Amazon ten years ago. A single page contains a single product for sale, and perhaps some small thumbnails along the side or the bottom of the page for recommendations.

Customers need to know what to search for to find this product – what about other varieties?

Heinz soup varieties
Credit: http://www.flickr.com/photos/45501032@N00/3726589535/in/photostream/

Look at the image opposite, a tin of soup from Tesco supermarket. Compare this with the soup shelf in my local Tesco supermarket. The shelf contains many varieties of soup, so when I go to the shop and I’m looking for a specific flavour of soup, in my peripheral vision I’ll notice a number of other flavours.

This analogy can work in two ways. First, it can help Heinz sell more varieties of soup, and secondly it can help me to discover flavours of soup I might not have previously considered.

Another analogy of discovery is music. I use Spotify, which contains all my favourite music tracks, and listen to the car radio to discover music I might not have discovered on Spotify. If I hadn’t listened to the radio, my playlist on Spotify wouldn’t have changed since I started the service.

We need advertising to help us discover products and services outside of what we search for. The Internet, as great a tool as it may be, is still based on users searching for what they already know.

During a recent conversation with a client, I realised that one of the key discussions that I have never documented are five key Internet trends, or what they would now be termed ‘megatrends’.

These megatrends are based on several years’ experience working across multiple sectors – including sport, insurance, retail, banking and recruitment.

This is the first of five posts, each dealing with a specific trend. Once I’ve covered all the trends in detail, I’ll put the full presentation on Slideshare.

I’m happy to discuss each of the trends, either here on the website, or to discuss on Twitter, or just give me a call.

1. Nanopayments

Coins for micropayments – what about the electronic equivalent?
Credit: http://www.flickr.com/photos/labyrinthx/1955692114/in/photostream/

Key points:

• High quality content and services can’t be free for much longer
• It costs too much money to send someone a very small amount of money
• When we can solve the small payments problem, piracy will significantly reduce

Our children will look back on this period of the Internet and be shocked at how many services we receive for free. Google searches, music from Spotify, news from Sky, an encyclopaedia from Wikipedia, photos from Flickr, email from Microsoft, word processing and spreadsheets from Google, the list goes on and on. It’s quite easy to use the Internet at the moment without paying a penny.

It’s unsustainable. It can’t be ad-funded for much longer – and I’ll discuss this later on in another trend “Real money”.

Content web sites such as those from newspapers and films are moving to a subscription model, but this is an inflexible model. I want to read The Sunday Times on the weekend, the Metro during the week when I use the Tube, and once a fortnight I’ll read The Financial Times.

On the Internet, this model isn’t possible. At the moment, users need to subscribe to The Sunday Times or The FT on a weekly basis. I only want to read for one day, and next week I want to be able to go back to the content without paying again. It’s not possible.

The newspaper model is the opposite to the music industry’s. You can’t just buy a single track on a CD, you need to buy the entire album. On the Internet however, you can buy just a single track.

There are authors who earn a reasonable living from successful blogs. When I say successful, it’s in terms of traffic levels. The blogs have advertising, and the authors rely on readers to click on the adverts. Neither authors nor readers want advertising. Authors would much rather a model where each reader pays a small amount for the content.

At the moment, if a content producer or service provider wanted to implement a paywall, they could use PayPal and charge users a few pence per article. A major problem is PayPal charges 3.4% of total amount plus 20p per transaction. Actually, PayPal has a micropayment model, however it is only available within a country, which on the Internet isn’t useful.

In the future, we’ll have a central company which will have a pot of our money. As we visit websites, the central company will provide the websites we visit with nanopayments, which are tiny amounts of money – perhaps less than a penny, on a per-page or per feature (e.g. sending an email, or searching the Internet) basis. This will be an automatic process, and we’ll have some sort of browser plug-in which shows how much money we’ve given to this website, and the remaining balance in our centralised wallet.

As a result, nanopayments will significantly reduce piracy. If the price point for content can be reduced to nanopayments, perhaps on a per-play model, users will find this model as easy to use as the illegal models. (This is one of the was the music business combat piracy – buy allowing legal downloads at less than a dollar per track, the price point is acceptable, and piracy is less desirable).

Currently, content owners need to charge a higher price partly to cover the transaction processing costs. If the transactions costs are significantly reduced, we could move to a per-play model. So instead of paying 89p for an mp3 track, users could pay under 5p for the track each time they listen to it.