Competition, Technology, and Planning: Preparing for Tomorrows Library Environment

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Competition, Technology, and Planning Preparing
forTomorrows Library Environment

• Eric Flower
• University of Hawaii-West Oahu
• uhwolibrary.com
• flower_at_hawaii.edu
• E-Libraries 2003, May 7, 2003

• (Click left mouse button or down arrow to
  advance.)

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Alternate Title Slide
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Five Old Forces, Three New Forces,Six Laws, Two
Critiques,Ten Questions, and One Test For You

• Eric Flower
• University of Hawaii-West Oahu
• uhwolibrary.com
• flower_at_hawaii.edu
• E-Libraries 2003, May 7, 2003

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Competition, Technology, and Planning

• Competition
• Porters Five Forces (Old)
• Technology
• Moores Law, Metcalfes Law, Bandwidth Scaling
  Law
• Bauwens Three Laws of the Cyber-Economy
• Critiques of Porter by Downes (New Forces) and
  Recklies
• Planning
• Ten questions for you
• A 15 second test for you

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Porters Five Competitive Forces Acting on the
Firm

• Model was proposed by Michael Porter in
  Competitive Strategy Techniques for Analyzing
  Industries and Competitors, NY The Free Press,
  1980.
• Threat of new entrants into the industry
• Threat of substitution
• Bargaining powers of buyers (customers)
• Bargaining power of suppliers
• Rivalry among current competitors

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Porters Model For Us

• For todays presentation, change the word
  business to libraries

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Threats 1

• New entrants
• Document delivery services of major online
  services
• How do you compete with the Microsoft Networks
  eLibrary? What if they offered EbscoHosts
  Academic Search Premier?
• For college and university libraries, its an
  institutional threat from online universities and
  distance/distributed education courses offered by
  institutions from virtually anywhere

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Threats 2

• Substitutes
• Your users can seek information from the
  Internet, document delivery services, or other
  libraries that offer virtually the same mix of
  services and resources as you do
• Outsourcing who does what you do and is willing
  to sell the service?

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Threats 3

• Bargaining power of customers
• Library users dont want to pay for anything
  they want free document delivery, free
  photocopying, free printing, and now free color
  printing

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Threats 4

• Bargaining power of suppliers
• As a single library, how much luck have you had
  getting a good price from any of the major online
  database vendors
• How about bargaining for book prices

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Threats 5

• Existing competitors
• Most of the services libraries offer are
  duplicative, the differences are only in degree,
  collection content, or in cost
• Are document delivery services partners or
  competitors?
• What if they aggressively sold their products
  directly to your users without your mediation?

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Porters Five Forces Model
Figure 1-1, Competitive Strategy, p.4
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Porters Five Forces Model
http//www.themanager.org/Models/p5f.htm
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Porters Five Forces Model
http//www.quickmba.com/strategy/porter.shtml
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Porters Model Assumptions

• Assumes identifiable competitors, business
  partners, and customers who engage in more or
  less predictable ways
• Assumes environmentsremain relatively
  staticwith occasional disruptivechanges and
  rare paradigm shifts

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Problems with Porters Model

• Assumes relatively static structures
• Does not fit well with todays rapid changes in
  technology
• Assumes competitors actually compete
• Does not consider strategic alliances, value
  chains, virtual enterprises, illegal activities

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Moores Law

• In 1965 Gordon Moore observed an exponential
  growth in the number of transistors per
  integrated circuit and predicted that this trend
  would continue
• What it means to us today computing power
  doubles about every 18 months

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Moores Law
Cramming More Components onto Integrated
Circuits, Electronics v.38, No. 8, April 19,
1965.
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Moores Law
http//www.intel.com/research/silicon/mooreslaw.ht
m
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Metcalfes Law

• Coined by Robert Metcalfe, inventor of the
  Ethernet network architecture
• The potential value of a network equals the
  square of the number of nodes connected to it
• 2 users, potential value of network 22 4
• 4 users, potential value of network 42 16
• 8 users, potential value of network 82 64

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Metcalfes Law
Line Number of Nodes Columns Potential Value
of the Network
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Bandwidth Scaling Law

• Described by Jack M. Wilson, then Professor of
  Physics, Engineering Science, Information
  Technology, and Management, Rensselaer
  Polytechnic Institute
• The bandwidth of communication on optical fibers
  is increasing exponentially just as is the power
  of the microprocessor
• This bandwidth doubling will continue into the
  foreseeable future

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Bandwidth Scaling Law
http//www.ntia.doc.gov/otiahome/top/conferencewor
kshops/2001_outreach_workshops/three_laws.html
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Moore Metcalfe Bandwidth Powerful Networks

• Ubiquitous wired and wireless networks
• Secure
• Reliable
• High speed with Quality of Service
• Seamless access to data and networked resources
  once you have been authenticated

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Media-rich Net-centric Environments

• These conditions facilitate development of
  elaborate networked media-rich working
  environments like the real world NCSA CAVE and
  the future visions shown in videos by Apple,
  Microsoft, and Sun
• These conditions also facilitate the growth of
  mobile computing environments that are not tied
  to place

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Media-rich Net-centric Environments

• Apples Knowledge Navigator
• NCSA CAVE (Cave Automatic Virtual Environment)
• Microsofts Information At Your Fingertips
  2005
• Suns Starfire A Vision of Future Computing
• Microsofts 3D TaskGallery
• IBM/Steelcase BlueSpace collaboration
• Microsofts BroadBench

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Knowledge Navigator(Apple, 1987)
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CAVE(NCSA, 1991)
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Information At Your Fingertips
2005(Microsoft,1994)
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Starfire(Sun, 1995)
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War Room(The Pentagon, 2003)
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TaskGallery(Microsoft, 1999)
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BlueSpace(IBM/Steelcase, 2001)
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BroadBench(Microsoft, 2002)
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EricBench(Eric Flower, 2000)
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Pocket PC 2002(Microsoft, 2002)
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A Young Ladys Illustrated Primer(Neal
Stephenson, 1995)
This is the handheld device I really want.
Stephensons nanotech wonder is . . . an
interactive, computer-driven book. With the
unprecedented power to single-handedly educate
its reader . . . Carl Hays,
Booklist
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Pocket PC 2002(Microsoft, 2002)
802.11b
Toshiba e740
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What Ill Take

• A fast, reliable, secure, ubiquitous wireless
  network with seamless access to resources after
  authentication
• My interface device will have a screen, speakers,
  voice activation, and be water resistant yours
  can have whatever you like
• Are you offering, or planning to offer, services
  for users with these devices?

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• So,
• what does your librarys public face look like?

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Ronald CoaseTransaction Costs and the Firm

• Coase concluded that firms are created because
  the additional cost of organizing them is cheaper
  than the transaction costs involved when
  individuals conduct business with each other
  using the market
• Coase won the Nobel Prize in 1991 for this
  observation The Nature of the Firm Economica,
  New Series, v. 4 No. 16, pp.386-405, 1937

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Moore Metcalfe Bandwidth Three Laws of
the Cyber-Economy

• Advanced by Michel Bauwens in CMC Magazine, June
  1996
• The Price of Information Will Tend Towards Zero
• You can only sell goods that are scarce
  information is easily found at low or no cost
  online on the Web
• Web distribution is cheap
• The Information Wants to be Free cult

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Three Laws of the Cyber-Economy

• The Price of Communication Will Tend Towards Zero
• The Internet provides global reach at little cost
• Costs are distributed all over the system, not at
  any single location

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Three Laws of the Cyber-Economy

• The Price of Transactions Will Tend Towards Zero
• The Internet provides opportunities for the
  elimination of virtually all human intervention
  in transactional and shopping and commercial
  practices

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Transaction CostsMay Approach Zero

• In an online environment, Moores Law and the
  Bandwidth Scaling Law drive transaction costs
  down
• They can approach zero in very large
  organizations with very large numbers of
  non-mediated transactions
• In business this means concentration,
  centralization, or bankruptcy in libraries this
  means concentration, centralization, and, we
  hope, cooperation

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And Then There Were Two

• At the end of 2002 there were only two full-line
  PC suppliers, Dell and HP
• They offer goods for all marketslarge and small
  organizations, enthusiasts, consumers with full
  lines of servers, desktops, notebooks, handheld
  devices, peripherals, storage systems, etc.
• Dell did it through internal growth and managing
  expenses, HP through innovation and
  acquisitionMichael Miller, PC Magazine online,
  January 9, 2003

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Critiques of Porters Model Three New Forces

• Critique of Porters Forces by Larry Downes in
  Beyond Porter, premiere issue of Context, 1997
• Downes describes three forces that are
  disruptive to existing operations and planning
• Digitization
• Globalization
• Deregulation

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Digitization 1

• As computing power and communications bandwidth
  become cheap enough to treat as disposable,
  youll soon have far more information about your
  competitors, suppliers, and customers. The rise
  of public networks will make that information
  more widely available, increasing the
  possibilities for collaborating and
  competing. (Continues next slide)

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Digitization 2

• . . . The result of this information explosion
  wont just be more/better/ faster. Instead, the
  result will be vastly changed markets that
  involve unfamiliar, unpredictable competitors and
  partners that mutate even before you get
  comfortable with them.

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Globalization 1

• The world is rapidly migrating to one very large
  network, whose attraction is irresistible.
  Improvements in distribution logistics and
  communications have allowed many local businesses
  to become global ones overnight--including
  discount distributors of everything from contact
  lenses to bathroom tiles. (Continues next
  slide)

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Globalization 2

• . . . It is also now common for companies to draw
  on a global network of partners and suppliers.
  Customers, meanwhile, are happy to engage in
  border-less shopping for everything from
  entertainment to software to cars and
  electronics.
• (Oh yeah, information too)

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Deregulation 1

• The current mania for deregulation reflects a
  belief by governments and regulated industries
  alike that the disease (open, international
  competition) is better than the cure (laws to
  protect local economies). (Continues next
  slide)

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Deregulation 2

• . . .The open market, which adopts information
  technology more quickly than did industries with
  a legacy of regulation, is becoming a viable
  alternative for many activities. The change is
  contributing to the radical shrinking,
  outsourcing, and restructuring of traditional
  enterprises.

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The New Forces and Technology

• Downes concludes that, Executives in every
  department must learn that technology has become
  far more than an enabler of new business
  strategies. Technology has become the essential
  disrupter of markets and operating models.
  Technology, in other words, isnt the solution.
  Its the problem.

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Disruptive Technologies

• Technology may be called disruptive because it
  causes change
• Technological change may be disruptive, but it
  need not be bad witness the following slide
  which lists technologies that improve data and
  information flow but may be disruptive when first
  introduced into an organization

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Ten Disruptive Technologiesfrom InfoWorld
01/06/03

• 10Gigabit Ethernet
• Digital Identity
• Mac OS X
• Office 11 XML
• Open source/Open standards

• Self-service CRM technologies
• Virtualization
• Weblogs
• Web services
• Wi-FiInfoWorld, 01/06/03, p. 16.

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Disruptive Technologies

• Our job is to turn this around to understand,
  explain, and implement disruptive technology
  for the betterment of our organizations and the
  advancement of their missions

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Tomorrows Computing Environment

• Topping the list of trends over the next five or
  more years is the growing popularity of digital
  media, the establishment of global networking, a
  shift to software services delivered over the
  Web, and the development of smaller, more
  efficient microprocessors that could lead to
  consumers owning multiple, powerful, yet low-cost
  PCs.Chris Jones, VP of the Windows client
  team, April 2002.

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Tomorrows Business Environment

• Individualization and personalization of goods
  generally produced for mass consumption

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Tomorrows Business Environment

• Individualization and personalization of goods
  generally produced for mass consumption

Try to personalize your OPAC and then try to use
it with a handheld computer
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Dagmar Recklies Beyond Porter

• Dagmar Recklies notes that . . . global and
  networked markets impose new requirements on
  organizations strategies. It is not enough any
  more to position oneself as a price-leader or
  quality-leader (like Porter suggests in his
  Generic Strategies model).
• (Continues next slide)
• Beyond PorterA Critique of the Critique of
  Porter at http//www.themanager.org/pdf/BeyondPor
  ter.PDF

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Recklies Beyond Porter

• . . . Rather competitive advantages emerge now
  from the ability to develop lasting relationships
  to more mobile customers and to manage
  far-reaching networks of partners for mutual
  advantage.

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Porters Model Today

• Use the model as a starting point for further
  analysis and then factor in changing technologies
  and computing environments brought about by
  Moores Law, Metcalfes Law, and the Bandwidth
  Scaling Law

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Competition Competitive Forces Actingon Your
Library

• 1. What competitive forces are acting on your
  library?
• Existing rivals, new entrants, substitutes,
  customers, suppliers
• 2. How are you handling the added forces of
  digitization, globalization, deregulation, and
  personalization?

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TechnologyTechnological Forces Actingon Your
Library

• 3. Do you plan with Moore, Metcalfe, and the
  Bandwidth Scaling Law in mind?
• 4. Who do you connect to, who connects to you,
  and how fast are your network connections to and
  from the outside world?
• 5. Are you going to thrive or merely survive in
  a digital world?

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Planning 1

• 6. How are you driving down the costs of the
  information, communications, and services you
  provide while maintaining quality of service?
• 7. What technologies and consortial agreements do
  you use to lower your transaction costs?

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Planning 2

• 8. Do you offer a media-rich Net-centric
  environment? If not, are you preparing for a
  media-rich Net-centric environment? Is it
  wireless?
• 9. Do you have a strategic plan for information
  technology? How do you deal with disruptive
  technologies?

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Planning 3The Final Question andthe Only One
That Really Matters

• 10. Do you offer the right mix of services, and
  enter into the kinds of agreements, that will
  develop and maintain lasting relationships with
  your clientele and partners?

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• Were not quite done.Its test time.

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Heres A Simple 15 Second Technology Application
Test

• 1. Tell the person at your side how to get to
  your librarys web page have them explain it
  back to you without writing anything down
• If no site, you fail before the test starts
• If you dont know how to do it, you fail
• If they couldnt report back properly, you fail
• If they could report it back, congratulations,
  you pass the test

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uhwolibrary.com
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(No Transcript)
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The Penalty for Failure to Understand, and
Continue to Understand, Competition and
Technology is Severe
Showed Digital Equipment Television Ads About
the Internet Broadcast in 1993
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Compaq Closes DEC Merger

• Press Release Compaq to Acquire Digital for 9.6
  Billion
• New York, January 26, 1998
• Compaq Computer Corporation (NYSE CPQ) and
  Digital Equipment Corporation (NYSE DEC) today
  announced the completion of a definitive merger
  agreement. As Compaq continues its drive to
  become the global leader in enterprise computing
  solutions, this latest acquisition greatly
  accelerates its momentum and strengthens its
  value proposition to customers.

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HP Closes Compaq Merger

• Press Release HP Closes Compaq Merger
• Palo Alto, Calif., May 3, 2002
• Hewlett-Packard Company (NYSEHWP) today
  announced that it completed its merger
  transaction with Compaq Computer Corporation
  (NYSECPQ) as planned. The trading of Compaq
  common stock will be suspended before the opening
  of the market on May 6, 2002, and HP will begin
  trading under the new NYSE symbol HPQ. The
  launch for the new HP will take place on May 7,
  2002.

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IBM Closes HP Merger
Confidential
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IBM Closes HP Merger

• Press Release IBM Closes HP Merger
• Armonk, New York, May 3, 2006
• International Business Machines Corporation
  (NYSEIBM) today announced that it completed its
  merger transaction with Hewlett-Packard Company
  (NYSEHWP) as planned. The trading of HP common
  stock will be suspended before the opening of the
  market on May 6, 2006. The launch for the new
  IBM will take place on May 7, 2006.

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Thank you.
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Further Readings

• Michio Kaku. Visions How Science Will
  Revolutionize the 21st Century, 1997.
• 1. ScienceMethodology. 2. ScienceForecasting.3
  . TechnologicalForecasting. 4. Quantum
  theory.5. Molecular biology. 6. Computers and
  civilization. 7. Twenty-first centuryForecasting
  .
• James Martin. After the Internet Alien
  Intelligence, 2000.
• 1. Computers and civilization. 2. Artificial
  Intelligence.3. Internet.