I promised myself I’d follow up on a previous post about who will disrupt old world ISV’s. Ben chipped in with some really salient comments which I’ve copied here.
“Don’t forget to add to your list of companies that might disrupt as those who are in the value chain of the internet, and have every telco, isp and enterprise in the world as customers, and are all looking for more ways to gain revenues from end customers. ie the ones who actually make the internet work. Alcatel-Lucent, Ericson, Cisco, Nokia. You might think of them as equipment vendors, but one thing is for sure, they know what is happening out there and have access to the network at a control layer that no software company will ever get”
I replied, essentially saying that there is massive potential for dis-intermediation here for Telco’s. Ben answered again with
“That’s right, and like every value chain, there are margins to be squeezed all the way. Who’s to say that the end game isn’t left with only Cisco and Google, and Alcatel and Microsoft, and Ericson and Apple as partners for example. ….. What I can’t see is actually the value that a Telco (or other aggregator for that matter) add to that equation as SaaS standards and protocols make integration of apps and networks seamless to the user” (my emphasis added)
Now I think I addressed the aggregation point with my previous post. In fairness to Ben I think he was talking about aggregation in 1.0 portal sense. Ie you just act as a gate, without reframing the content.
Ben and I dropped into and IM conversation in which we argued about this some. Ben took the position that unless Telco’s shored up their SaaS value proposition they’d get done like a dogs dinner because systems, technologies like widgets would effectively automate the value chain, thus neutralising the value that an aggregator would have.
I argued against this. Stating things like automation cannot overcome the archaic and undocumented business rules. For example, if you look at different banks lending rules on a mortgage, you will find that 1) they are all different, 2) its not always formal, 3) the system can be circumvented if you know how.
I also said that aggregators would be able to provide value in an increasingly complex and fragmented world because your everyday business would be overwhelmed by the choice available (if they aren’t already). And that there was real value in someone providing THE application or a shortlist which worked well for xyz vertical.
So it was with great interest that I saw these two articles this week. The first by David Berlind is about BT’s new SaaS offerings. Clearly showing that an ISP has a play in SaaS. ISP’s are actually in a pretty good place to get into this type of play for a lot of reasons. Apart from the ability to bill, build platforms etc. One other reason has leapt to me over the last week. All ISP’s offer email. And given aggregation is about getting users back to a site again and again so you can offer them more, is there a better way do this than through an application you use 20 times a day? UPDATE; I just picked up this feed about Yahoo acquiring Zimbra. (Looks like the words out in the ISP community…. SaaS is in )
The second, (a bit more abstract) discusses how Google *MAY* buy some US mobile spectrum. This would be classic Telco dis-intermediation. They won’t have the content, they won’t have the identity or billing, and they won’t have the access. Google would become both the ISP and the SaaS provider. A really interesting play, and until I saw this from David Berlind it was out of context for me,
"Perhaps the other question raised by providing services at the onramp (as opposed to along the highway) is to what extent this move by BT and similar moves like it by other ISPs may force Google to engage more deeply in the onramp (ISP) business."
Other aggregation plays exist too. MS Live is one companies attempt to do this on their own. Not many companies have Microsoft’s resources at their disposal so I don’t see tis being that common unless you get an opensource equivalent movement going.
Salesforce and perhaps Facebook with their Platform as a Service plays could do this if they could insinuate themselves into the value chain and appease the vendors / offer them enough value to do so.
Another aggregation play would be for someone to do the work for a specific vertical. Health, retail, legal etc. They all have some basic needs (horizontal) which are common like HR etc. But then you could as a smaller player do the aggregation for them. This lends itself heavily to the web 2.0 user generated content play because you could then get a community of recommenders and word of mouth working for you.
Finally, and looping back to Ben's comments. The people that provide the fabric of our communications infrastructure, could partner with ISV's and content providers directly. These guys have potentially more chance to do this than you're average Telco / ISP. This is because of a couple of reasons. They ARE the onramp that David mentions above. Secondly, because just about every Telco / ISP on the globe has followed the global mantra to cut costs by outsourcing. All of the smarts that a Telco think's it owns, aren't really theirs at all….they belong to the likes of Cisco and Alcatel Lucent. As Ben said, Telco's really need to shore up their value or they are goneburger…..