In this article, I describe Software-as-a-Service (SaaS), application hosting, virtualization and cloud computing for the benefit of CEO’s, CFO’s, VP’s and other organization leaders outside of IT who often need to weigh in on the these key new technologies.  I also describe how these new approaches have changed technology acquisition for the better – from the old build-versus-buy decision, to the Technology Acquisition Grid. Along the way, you’ll learn some of the factors that will help you decide among the various options, saving your organization time and money.

The Old Model: Build-versus-Buy

When I earned my MBA in Information Systems in the mid-1990′s, more than one professor noted that the build-versus-buy decision was a critical one because it represented two often-costly and divergent paths.  In that model, the decision to “build” a new system from scratch gave the advantage of controlling the destiny of the system, including every feature and function.  In contrast, the “buy” decision to purchase a system created by a supplier (vendor) brought the benefit of reduced cost and faster delivery because the supplier built the product in advance for many companies, then shared the development costs across multiple customers.

Back then, we thought of build versus buy as an either-or decision, like an on-off switch, something like this:

In the end, the build-versus-buy decision was so critical because, for the most part, once you made the decision to build or buy, there was no turning back.  The costs of backpedaling were simply too high.

The Advent of Application Hosting, Virtualization, SaaS and Cloud Computing

During the 2000’s, innovations like application hosting, virtualization, software-as-a-service (SaaS) and cloud computing changed IT purchasing entirely, from traditional build-versus-buy, to a myriad of hosting and ownership options that reduce costs and speed time-to-market.  Now, instead of resembling an on-off switch, the acquisition decision started to look more like a sliding dimmer switch on a light, like this:

Suddenly, there were more combinations of options, giving organizations better control of their budgets and the timeline for delivering new information systems.

What are each of these technologies and how do they affect IT purchasing?  Here’s a brief description of each:

Application Hosting

During the dot-com era, a plethora of application-service-providers (ASPs) sprung up with a new business model.  They would go out and buy used software licenses, then host the software at their own facilities, leasing the licenses to their customers on a monthly basis.   The customers of ASPs benefit from the lower cost-of-ownership and reduced strain on IT staff to maintain yet another system, while the ASPs made money by pooling licenses across customers and making use of often-idle software licenses.

While the dot-com bust put quite a few ASPs out of business, the application hosting model, where the software runs on hardware supported by a hosting company and customers pay monthly or yearly fees to use the software, still survives today.

Virtualization

One of the first technologies to change the build-versus-buy decision was virtualization. By separating the hardware from the software, virtualization separates the decision to buy from the need for new software.  In virtualization, first, computer hardware is purchased to support the organization’s overall technology needs.  Then, a self-contained version of a machine – a “virtual” machine – is installed on the hardware, along with application software, such as supply chain or human resources software, that the business needs at that point in time.

When the organization needs a new software application that is not compatible with the first application, because it runs on another operating system, they install another virtual machine and another application on the same hardware.  By doing this, the organization not only delivers software applications more quickly because it doesn’t need to buy, install and configure hardware for every application, the organization also spends less on hardware, because it can add virtual machines to take advantage of unused processing power on the hardware.

Even better, virtual machines can be moved from one piece of hardware to another relatively easily, so like a hermit crab outgrowing its shell, applications can be moved to new hardware in hours or days instead of weeks or months.

Software-as-a-Service (SaaS)

Like virtualization, Software-as-a-Service, or SaaS, reduces the costs and time required to deliver new software applications.  In the most common approach to SaaS, the customer pays a monthly subscription fee to the software supplier based on the number of users on the customer’s staff during a given month.  As an added twist, the supplier hosts the software at their facilities, providing hardware and technical support, all within the monthly fee.  So, as long as a reliable Internet connection can be maintained between the customer and the SaaS supplier, the cost and effort to support and maintain the system are minimal.  The customer spends few resources and worries little about the software (assuming the SaaS supplier holds their side of the bargain), enabling the organization to focus on serving it’s own customers, instead of on information technology.

Cloud Computing

The most recent technology innovation among the three, cloud computing brings together the best qualities of virtualization and SaaS.  Like SaaS, with cloud computing both hardware and software are hosted by the supplier.  However, where the SaaS model is limited to a single supplier’s application, cloud computing uses virtual machines to host many different applications with one (or a few) suppliers.  Using this approach, the software can be owned by the customer, but hosted and maintained by the supplier.  When the customer needs to accommodate more users, the supplier sells the customer more resources and more licenses “on demand”.  Depending upon the terms of the contract, either the customer’s IT staff maintains the hardware, or the supplier.  In addition, in most cases, the customer can customize the software for their own needs, to better represent the needs of their own customers.

Adding Application Hosting, Virtualization and Cloud-Computing to the Mix – The Technology Acquisition Grid

Remember the dimmer switch I showed a few moments ago?  With the addition of application hosting, virtualization, SaaS and cloud computing to the mix, it’s not only possible to choose who owns and controls the future of the software, it’s also possible to decide who hosts the software and hardware – in-house or hosted with a supplier, as well as how easily it can be transferred from one environment to another.  That is, it’s now a true grid, with build-to-buy on the left-right axis, and in-house-to-hosted on the up-down axis.  The diagram below shows the Technology Acquisition Grid, with the four main combinations of options to consider then acquiring technology.

Here’s where application hosting, SaaS, virtualization and cloud computing fit into the Technology Acquisition Grid:

Making a Decision to Host, Virtualize, go SaaS, or seek the Cloud

If the rules of the game have now changed so much, how do we make the decision to use virtualization, application hosting, SaaS or cloud computing, as opposed to traditional build and buy?  There seem to be a few key factors that drive the decision.

At the most basic level, it comes down to how much control – and responsibility — your organization wants over the development of the software and the maintenance of the system.  Choose an option in the top-left of the Technology Acquisition Grid, and you have greater control of everything; choose an option at the bottom-right, and you have far less control and far less responsibility for the system.

In my own experience advising clients during technology acquisition and leading technology initiatives, decision-makers tend to choose a “control everything” solution because it’s the easiest to understand and poses the least risk.   While this may, in the end, be the best answer, organizations should weigh the other options, as well.  Certainly, more control usually sounds really good, but it almost always comes along with much higher costs, as well as delaying use of the system by months.  Particularly for smaller organizations,  which probably need those IT dollars to serve their own customers more effectively, a “control everything” answer is often the wrong decision.

Which should your organization choose?  Start by making an effort to include software products that take advantage of hosting, virtualization, SaaS and cloud computing among your choices when you start your search.  Then, weigh the benefits and downsides of each option and combination of options, choosing the one that balances cost and time-to-market with your own customer’s needs and your tolerance for risk. A good consulting company like Cedar Point Consulting can help you do this, as can your organization’s IT leadership.  Using this approach, you’re sure to free yourself from the old rules of build-versus-buy, delivering more for your own customers at a much lower cost.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in technology strategy, project management and process improvement. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

As you may have read, Saab’s slow death rattle was halted last Friday. Two small Chinese firms, Pang Da and Youngman, offered again to purchase Saab from the floundering Swedish Automobile, a company born from the ashes of the GM abandonment, Spyker’s purchase of Saab, and then, the subsequent divesture of the Spyker supercar part of the business. 

The time, Swedish Automobile said yes to the acquisition, staving off what would have been certain liquidation of Saab. So, it now looks like Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. will probably be the proud new owners of Saab, and all for the laughably low price of $142 million USD. 

I say, “probably”, because there will have to be a few other sign-offs on the deal, and all of those signatures must be in place by November 15, or Saab is back on the road to court-ordered liquidation. The government of Sweden and the EIB (European Investment Bank) are major creditors and they will need to approve the deal. General Motors, Saab’s former master, is a creditor, major supplier and a major stockholder (with preferred shares) all at the same time, so their signature is also needed. Lastly, but hardly least, the Chinese government has to approve the deal, which is no mere formality – it may be problematic. 

How much of a problem? Hard to say, but the Chinese government has put the brakes on a couple of auto acquisitions in the recent past; the attempted purchase of Saab by Hawtie Motor Group, an SUV manufacturer, in May of this year, and, Sichuan Tengzhong Heavy Industrial Machinery’s play for GM’s Hummer brand in 2010, which frankly looked like a slam-dunk when it was initially announced. 

Beijing has a rigid pricing matrix that they use to determine the viability of any overseas acquisition and since the exact formula used in determining the correct price/value ratio is known only to the Chinese authorities, outsiders can only speculate as to the deal’s chances. However, a statement on November 1 from the Minister of Industry and Information Technology, Miao Wei, said that the government supports the acquisition of Saab “in principle”. Reading the few tea leaves we have available here, I’d say that is certainly a positive sign. 

And what if the deal does go through? 

Pang Da and Youngman plan to invest half a billion euros ($709 million) into Saab, according to documents submitted to a Swedish court overseeing Saab’s reconstruction. The new owners will pay off all monies owed, restart production next year, reduce labor costs by 15% (around 520 employees), launch new models and sell up to 55,000 units in 2012. The forecast is for Saab to sell as many as 205,000 units per year on a long-term basis, and for Saab to be profitable again by 2014. 

Saab sold a little fewer than 32,000 vehicles worldwide in 2010, but halted production in April of this year. The only new Saabs that have been produced in the past several months have been Saab 9-4X crossover models manufactured by GM in Mexico on behalf of Saab through a supplier agreement. A lack of production and uncertainty over the future of the company have sent sales into a freefall; as an example, Saab sold only 429 vehicles in September in the U.S., and only 337 vehicles in October. 

The new owners intend to keep the manufacturing facility in Sweden, and, add production capability in China to supply the previously untapped Chinese market. 

Victor Muller, the charismatic but quixotic CEO of Saab, who desperately wanted to be Saab’s saviour, will remain on in what amounts to an advisory role until the new owners find a new CEO. Saab’s production and purchasing chief, Gunnar Brunius, bailed out today, announcing his resignation after 30 years with the company. There will no doubt be some more defections in the future. 

According to those close to the deal, the new prospective Chinese owners are not interested in short-term gain, but rather, a long-term investment and growth strategy. This is identical to what the Chinese owners (Geely) of Volvo, the other Swedish car company, have espoused since their deal was consummated a year ago. 

Now, on to the bonus round, at least for us and our readers. 

The big question is: Does Saab’s previous turnaround strategy change? Should it change? 

Just as a reminder, Saab’s previous turnaround strategy consisted of: 

1. Getting back their “Saabness” – they wanted to make their cars as unique of an offering on the market as they used to be
2. Reducing costs so that their break-even point on volume was lower
3. Bring out new models, including a B-Class car
4. With the new models, move up in the price segment hierarchy where the margins are better on a per-vehicle basis
5. Increase their geographic footprint from a sales perspective 

Regarding the first action item in that strategy, my guess is that getting their quirky Swedish Saabness back is probably going to be a little harder with Chinese owners. But, maybe not. Maybe the new owners will plunge themselves and their new company into all things Swedish. 

Number 2? That is quite possible. 

Numbers 3 and 4? Boy, it’s a tough task just to get new vehicles done and out the door for a small auto manufacturer. Then, after they’re out the door, people have to like those vehicles and buy them. Huge undertaking for a niche vehicle manufacturer. 

Obviously, the possibility of selling Saabs in a big new market like China (courtesy of the new would-be owners) is only good news for the fifth item in that strategic plan, but those sales won’t show up for years. There will be some lag between deciding to sell cars in China and actually doing it, and an even longer lag between deciding to make cars in China and actually doing it. 

From my perspective, the turnaround plan can still be executed, as long as the new owners of Saab have patience and enough capital to stick it out as the company sails through the seas of red ink on their way to dry land and profitability. 

Here’s wishing for approval of the deal, and a subsequent rebirth of this offbeat little car company.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com

In the past, banks have had the wiggle room to both add and increase fees, nudging them up to increase profits or stave off losses.  That, of course, was in the era before the Tea Party, Occupy Wall Street and a myriad of other similar populist uprisings.

Last quarter, NetFlix CEO Reed Hastings learned what it means to draw the ire of the American consumer during tough economic times, when Hastings was forced to apologize for a planned product spin-off that amounted to a 60% price increase by the company.  Nearly 600,000 Netflix customers dropped the service after the price increase was initially announced and before his apology.

Compared to Netflix rate increase of 60%, Bank of America’s $5 monthly fee looks relatively small and would probably have been absorbed by its customers as late as 2007.  In B of A’s defense, they were hoping to plug a revenue hole opened by Dodd-Frank, which cut the fees banks can charge to process debit card transactions, known as interchange fees, roughly in half.  However, B of A failed to weigh the anger felt by many that the TARP financial bailout helped banks and not consumers.  Had B of A not rescinded the planned fee, it was sure to see a max exodus of customers on Bank Transfer Day, scheduled for November 5^th.

Evidently, it’s going to be quite a while before any financial institution – retail bank or credit union – can raise fees to plug a funding hole.  For at least the first half of this decade, they’ll have to put their effort into cutting costs, either by increasing productivity or reducing head-count.  If the don’t, the war on banks will not only continue, the customer will surely strike back.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Just to recap regarding the emergence of Saab’s new Chinese partner, and possible saviour, Pang Da: 

After a deal with Chinese SUV-maker Hawtie fell apart, Saab immediately fell into the arms of Pang da, a more well-known Chinese company that is a vehicle distributor in-country. Pang Da currently imports and distributes Toyota, Subaru and Honda brands in China. 

The initial agreement had a commitment by Pang Da to buy Saab vehicles in two tranches. An initial purchase worth 30 million euros has already been agreed to and a subsequent tranch worth 15 million euros is scheduled right behind that, Victor Muller, CEO of Spyker, told journalists in Sweden in May. Muller then added that the first tranch was already on a train, heading for China. 

Pang Da will also take a 24 percent equity stake in Spyker for a total of 65 million euros, or 4.19 euros per share.

So, besides the money, the working premise here was that Pang Da will have no problem getting the necessary approvals from the government to do the deal, AND, since they are already in the business of buying cars from overseas auto manufacturers, subsequently importing those vehicles into China, and successfully reselling the vehicles in-country. Adding Saab to the mix is merely expanding their existing business. Therefore, the logic goes, far fewer approvals will be needed in the first place. Pang Da is a car distributor, not a car manufacturer.

If the deal can get done (and stay done; more on that in a moment), this is more advantageous for Saab, as they get the operating capital they desperately need in order to start their production lines again, they move a lot of iron (by Saab standards, anyway), AND, they get a partner who has the means and the existing infrastructure to support a sales network in China going forward. 

If you add everything up (the unit purchases and the equity stake), Pang Da will invest around 110 million euro in Saab. 

After announcement of the deal, Muller stated that he expected production to start up again within a couple of weeks. Production was halted because Saab’s suppliers refused to make deliveries until they were paid the amounts owed to them in arrears. 

Okay, so what has happened since that time? 

Well, production in Sweden is still stopped. Pang Da (and in a minor role, Chinese company Zhejiang Youngman Lotus Automobile Co.) has not yet been able to invest in Saab because the investment has not yet been approved by various regulatory overseers. The Saab production lines have now been idle for approximately two months. There has also been a new wrinkle added to the production issue, which is that Saab no longer has enough money to pay staff, and the workers’ union was threatening to sue Saab for their past wages, which would certainly push them into bankruptcy proceedings, which certainly adds another layer of complexity to any possible resumption of manufacturing at the Swedish automobile company. 

Just as an aside, it is worth noting that there is one supplier that has not halted shipments to Saab during their capital funding ordeal. It’s a big supplier and they’re delivering a big “component”. That supplier is General Motors and what they provide to Saab is the new 2012 Saab 9-4X crossover vehicle. GM is still producing the Saab crossover for their former subsidiary and taking what amounts to an IOU in lieu of payment. 

Back to the matter at hand, the cash crunch – On Monday, Saab announced that an unnamed Chinese company (that is not Pang Da) signed an order for 582 Saab vehicles and that full payment was expected by the end of Friday (today, July 1). On Tuesday, Saab announced that the company had reached a memorandum of understanding to sell 50.1 percent of the shares in Saab’s real estate holdings to a consortium of Swedish real estate investors led by Hemfosa Fastigheter, a Swedish holding company, in a deal valued at 28 million euros. 

Additionally, Saab has been able to secure two short-term “bridge” loans from Saab shareholder Gemini for a combined 25 million euros. 

Once all of these loans amounts are remitted, Saab hopes to prevail upon the EIB (European Investment Bank) for a loan drawdown of 29.1 million euros, which it will be able to do only after payments to suppliers and employees remove them from default status vis-à-vis the terms of the business credit line. 

But Muller, the CEO, says the employees have been paid everything they’re owed, and Saab’s suppliers have been paid considerable amounts on their balances owed, and production should start up again in (wait for it) two weeks. 

No so fast, says the head of the group representing Saab’s suppliers. A statement from that group states that there is not yet an agreement in place with Saab that will allow supplier shipments to resume on a regular basis. Although the statement also mentions that they don’t want Saab to go bankrupt, and that Saab going bankrupt is in no one’s best interests, that is not exactly a ringing endorsement of the two-week timeframe for resumption of production that Muller claimed. 

Meanwhile, none of this is occurring in a vacuum; Saab is experiencing some level of opportunity cost by not having production going, and so are their dealers. The negativity around the shutdown and the possibility of imminent collapse is also certainly not helping the public perception that Saab is either, 1) out of business, or, 2) going to be out of business shortly.  

And, what is Pang Da’s view of this financial roller coaster called Saab?  

Surprisingly sanguine, actually. 

Pang Da board secretary Wang Yin, says Pang Da has not wavered in it’s commitment to Saab and things are proceeding apace regarding Pang Da’s investment and partnership. Yin stated, “”There’s no change to our previous plan. Saab is having temporary financial difficulties, and the problem isn’t fundamental.” 

Spoken like a true turnaround maven. Stay tuned and keep your seat belts fastened. . .

Brendan Moore is a Principal Consultant with Business Turnaround Specialists, a management consulting practice based in the Washington, DC area, where he advises businesses in rebirth and rejuvenation. Business Turnaround Specialists can be found at http://www.business-turnaround-specialists.com

The share price of RIM has plummeted over 50% since the beginning of 2011; a trend that has accelerated recently because of the brickbats thrown at the new BlackBerry tablet by reviewers, the fact that no new smartphone product/update has been announced, and, a drop in earnings. 

RIM is No. 3 in the smartphone market behind Apple and the Google-platform Android platform smartphones, but that spot is looking more and more tenuous everyday as RIM continues to lose market share. Comscore says RIM’s market share in the smartphone sector has taken a massive dive from 40% in 2010 to the current 26%. And, BlackBerry sales last quarter have experienced their first quarterly drop in sales since 2005. Lastly, the market cap of RIM now sits at $14 billion USD, down from $80 billion a scant 36 months ago. 

Would-be usurpers HP Palm and Nokia are waiting in the wings as RIM continues its descent into market Hell. There are some others as well, but they’re dark horses at this point, and HP’s reborn Palm unit and Nokia’s phone business are the main belligerents vying for RIM’s third-place spot. 

The fact that RIM has fallen and can’t get up is bad enough by itself, but there are also serious doubts as to whether the senior management at the company, recently beset by resignations, is robust enough to pull off a turnaround. There is also the lingering question of whether the two CEOs (not a misprint; two people “share” CEO duties) have realized just how dire things are, since they seem to be sleepwalking these days and not as concerned about the urgency of the situation as they ought to be. Will the company come out of its stupor early enough to save itself from being relegated to a niche business? 

Because there are some things they could do. They could: 

• Exploit their leadership position abroad – BlackBerry is very, very popular overseas. 
• Open up their secure server enterprise platform by renting space on it to other providers. That platform is what closes the deal for corporate IT chiefs when they’re deciding what smartphones to allow at work. Talk about some fee-based income. 
• Take a broom to the senior management ranks and get a single CEO. 
• Make it as easy as possible for application developers to riff off of the platform, and go on a corporate charm offensive to convince them to do so. RIM’s efforts so far in this area are laughably inadequate – there are around 20,000 applications for the BlackBerry platform compared to 350,000 for Apple’s iPhone and around 200,000 for the Android-based phones. 
• Focus more on features consumers will love. Business users are consumers, too, and it sure wouldn’t hurt. 
• The new QNX platform looks good, so why not change every product over right now, thereby making sure every BlackBerry product has no need to apologize for its technology shortcomings? 
• Spend more money marketing to consumers. 

But, whatever they do, they’re going to need to do it soon. One of the things left unsaid so far is that RIM’s weakened state makes it a prime acquisition target. Google could buy them tomorrow, and convert everything over to Android. Microsoft, who has been trying to crack the code on the smartphone sector for awhile, could do the same thing, except they would convert BlackBerry to the new Microsoft operating system, which would also dovetail nicely with BlackBerry’s core business users. 

The clock is ticking…

Brendan Moore is a Principal Consultant with Business Turnaround Specialists, a management consulting practice based in the Washington, DC area, where he advises businesses in rebirth and rejuvenation. Business Turnaround Specialists can be found at http://www.business-turnaround-specialists.com

Yes, "Pick Any Two" generally applies to content as well

A common complaint from businesses, large and small, is that they have a Twitter feed, a Facebook page, a website, a blog, they’re on LinkedIn and YouTube, etc. and they’re doing everything right in terms of being present in social media, but nothing is happening. 

Upon inspection of their customer source data and other metrics, it turns out that they called that pretty accurately; there is nothing happening as a result of their presence in the digital online world. 

Then you look at what is on their Facebook page, or their blog, or their Twitter feed, and it becomes obvious why nothing is happening. They have little or no content, and/or the content is awful and boring. 

As we mentioned in this piece titled, Business Blog Primer, having smart or funny or informative or engaging or thought-provoking content is key to making social media work for your company, whether that’s on a blog, or on YouTube, or on Facebook, or even if you’re simply participating in a discussion on LinkedIn. And it needs to be consistent, as we mentioned in that same piece from a few months ago. There is nothing more pathetic than a business blog that has three posts in the past 12 months. 

Social media is all about conversation, albeit in a digital vein. And just like regular conversation, if you don’t have something interesting or humorous or thought-provoking or relevant to say, people lose interest and don’t want to talk to you anymore, and they also don’t want to talk about you. And just like regular conversation, if it is interesting or humorous or thought-provoking, etc, then people will want to repeat it to others, in this case online. It will be tweeted, or re-tweeted, quoted, linked to, etc. 

Can you create your own content? Should you create your own content? The answers to these questions are, in the order they were asked: “Yes”, and, “Probably not”. 

Time for some brutal honesty here – most people cannot write very well. And most people are not skilled and creative enough to make good videos or podcasts. You might be one of those people in the minority that can create good (and hopefully, occasionally) great content, but you’re probably not. 

Which is okay; most people that can create good/great content are really awful at calculating P&L costs or managing a call center or doing statistical modeling around account acquisition. Or, for that matter, leading a company or a business unit. 

So, if you are truly skilled in the area of creating content, then you should do it. If you’re not, then you should get as much content as you can for free (legally!), and pay someone to create the rest. 

Why is this worth the money you’re going to spend? 

Because it’s important to your company’s brand and to the bottom line, and the online competition for eyeballs is fierce. Remember this when you’re thinking about social media: When you are competing for someone’s attention online, you’re not just competing with other providers of your product or service (your market competition), you’re competing with everything a person has available to them online. You’re competing with tweets they’re getting from their friends, tweets they’re getting from famous people, visits to the CNN.com website, all the posts and links they’re getting on Facebook, that website about sports they go to every day, emails their friends have sent them that have a link enclosed and text in the email saying, “You HAVE to read this”, dating sites, and on and on and on. There is a finite amount of things any person can look at online every day, and everyone makes an unconscious calculation of just how much time is going to be allocated to whatever single item they’re reading or viewing online. You’re competing with all of that other digital stimuli. 

Furthermore, there are millions of teenagers and young adults that now rely solely on Twitter links or Facebook links to get whatever information or news they receive on a daily basis. They don’t visit news sites or blogs on a recurring basis, they merely respond when something is “pushed” to them by someone they know, with perhaps a descriptive four or five word blurb attached, and then they will follow the link to something on a blog or The New York Times website. Those of you with teenagers still around probably know that some teens visit Facebook dozens of times per day. All done while receiving texts from their friends, by the way. 

If your social media content isn’t good in some way, it will be ignored. Period. You’ll never get anyone’s attention. And, if it is good and you get someone’s attention, and then don’t follow up with consistently good content, they will simply flutter away to some other distraction in the social media universe, like a butterfly that you cannot catch, and will never see again. 

Good content is paramount to effective marketing via social media. Here are the ways to get good content on a consistent basis: 

1)    Create your own.

2)    Get some for free – reprint articles from other sites AFTER getting permission from the owners of the content, link to other content, have guest writers, podcasters, videographers, etc.

3)    Hire talent to create content – either as a full-time employee or hire freelancers.

4)    Allow comments on your blog, Facebook page, etc. so that people can talk to you and each other about your company and its products, people, etc. When someone asks you a question, respond immediately and in a thoughtful way. This is all content as well, in case you’re wondering. 

Don’t skimp. Don’t become lackadaisical and ignore putting out new content. Don’t expect immediate results. Don’t set up a blog or a Facebook page or a Twitter profile until you have first determined where your content is coming from and how often it can be generated. And, finally don’t get discouraged. This is not as daunting as it seems. 

But it is necessary. If you’re going to play in the social media sandbox, you need a strategy for content.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Why has Nvidia changed its product strategy, and therefore its market strategy, and therefore its company strategy?

Well, because it feels it has to, that’s why. It’s current market is not only slowing dramatically because computer sales are down, it is beset by competitors like AMD and Intel who now include very adequate graphic processors in their standard setup, thereby effectively cutting Nvidia out of the picture in terms of selling an add-on graphic processor to the target PC manufacturer. Nvidia, and more specifically, Nvidia’s CEO, Jen-Hsun Huang, has made a tough decision that staying in their current market will lead to slow, but certain death, and is now striking out for the frontier of mobile chips.

The writing is certainly on the wall. As noted, Nvidia’s graphics chip business is taking some hits, and so is the segment they supply. Meanwhile, the obverse side of the coin has the Android operating system, which Nvidia has built its chip for, forecast to comprise over half the smartphone and tablet market within three years. Android is such a strong newcomer that most credible market analysts in the mobile industry believe that tablets with the Android operating system will outsell the current market champion iPad by over 50 million units by 2015. As a sidebar to this forecast, it certainly doesn’t bode well for the just-introduced Blackberry Tablet, but let’s focus on the matter at hand for today.

Okay, it’s one thing to make the decision, another thing to make a product, and then yet one more thing to actually sell a whole lot of whatever you make. There is little doubt that Nvidia has made the right strategic decision for their business, but can they execute on their new strategy?

Nvidia has a new chip called the Tegra 2, which is already in the new Samsung Galaxy Tab 10.1 and the new Droid X2 smartphone, the new Motorola Droid Bionic, the new Atrix 4G, and others and has gotten good reviews.

Nvidia also has an even newer quad-core processing chip called Kal-El (yes, that was Superman’s real name from his parents on Krypton) that is still not yet on the market that promises to make some serious waves. Nvidia has released a video of a homegrown game called Glowball that shows off the new (and obviously expensive) processor’s capabilities, and those capabilities are very impressive. The company says the new chip will be in Android-powered smartphones and tablets by September of this year.

If you’re wondering what the main competitive thrust is with improving the Android platform as it compares to the iPad, it’s mostly all about the ability to get movies and music on the device, and play that media back without crashing the device. The iPad is better than Android-powered devices at doing those things right now, but the new processors developed for Android by companies like Nvidia are closing that gap very quickly.

The Achilles heel in all of this is battery life. Nothing is free, and those processors suck up a lot of juice.

Which brings us full circle back to whether Nvidia can execute on their change in strategic direction. In fact, it is probably giving this scenario short shrift to describe what Nvidia is doing as a change in strategic direction; it is much more accurate to call it a reinvention of the company.

My personal opinion is that Nvidia has a very good chance of executing this massive reinvention. They read the tea leaves of where the market was going, and acted early. Huge kudos to them for their alertness in this regard. This, folks, is how you’re supposed to look out for your company’s future. But, praise aside, I think they’re doing everything they can to be successful in their new market. The next few years will be the test.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Since that time, Saab has plunged into a financial abyss, been forced to shut down production, and taken on one Chinese investment partner (Hawtie), and then been forced to abandon that deal within two weeks because the Chinese company could not get the required permissions from the Chinese government to do the deal, and then, take on another Chinese business partner (Pangda). 

What bought on the aforementioned sudden fall, you might ask? 

To put it succinctly, the CEO’s rash actions. Saab had been paying all of their suppliers late for months, trying to conserve their cash flow, more or less “stealing from Peter to pay Paul”, which in this instance meant they were trying to put more money into sales, marketing, research and development; the first two things they desperately need to do to get more cash now (by selling some cars), and from the development perspective, they need to get the next generation of the 9-3 moving along, which is their volume model, and which needs an update. 

So, when a major supplier demanded more money on their account than what Saab was willing to pay, the supplier then threatened to stop deliveries. Victor Muller, CEO of Saab, has admitted publicly that he decided to call the supplier’s “bluff”. 

It wasn’t a bluff. The supplier halted deliveries, word quickly got out among the other suppliers to Saab, and like dominoes falling, Saab’s suppliers started clamoring to be brought current on their account one by one. Soon Saab production ground to a halt, Saab needed far more capital then they had available, and rather abruptly, just like that, Saab’s future was very much in doubt again. 

Saab then hooked up with Hawtie, a small Chinese manufacturer of SUVs that no one outside of China had  heard of. This was going to save the day for Saab, but, almost immediately, the deal fell through. The consensus is that little Hawtie jumped the gun and signed the deal before the people who matter in the Chinese state gave them permission to do so, although there are now whispers that Hawtie backed out once they got full financial disclosure from Saab, but this is believed to mostly a case of sour grapes and a way for Hawtie executives to save face at having their hands slapped by the government. 

Saab immediately fell into the arms of Pangda, a more well-known Chinese company that is a vehicle distributor in-country. Pangda currently imports and distributes Toyota, Subaru and Honda brands inChina.

This current agreement has a commitment by Pangda to buy Saab vehicles in two tranches. An initial purchase worth 30 million euros has already been agreed to and a subsequent tranch worth 15 million euros is scheduled right behind that, Victor Muller, CEO of Spyker, told journalists in Sweden several days ago. Muller added that the first tranch was already on a train, heading for China. 

Pangda will also take a 24 percent equity stake in Spyker for a total of 65 million euros, or 4.19 euros per share.

So, besides the money, the working premise here is that Pangda, who is much, much larger that Hawtie, the previous would-be investor, will have no problem getting the necessary approvals from the government to do the deal, AND, since they are already in the business of buying cars from overseas auto manufacturers, subsequently importing those vehicles into China, and successfully reselling the vehicles in-country. Adding Saab to the mix is merely expanding their existing business. Therefore, the logic goes, far fewer approvals will be needed in the first place. Pangda is a car distributor, not a car manufacturer.

If the deal can get done (and stay done), this is more advantageous for Saab, as they get the operating capital they desperately need in order to start their production lines again, they move a lot of iron (by Saab standards, anyway), AND, they get a partner who has the means and the existing infrastructure to support a sales network in China going forward. 

If you add everything up (the unit purchases and the equity stake), Pangda will invest around 110 million euro in Saab, and Saab will then not die a slow death.

Saab is like a Swedish cat with 9 lives, but it is using up those lives one by one. 

This real-life drama around Saab is a great example of what companies have to do in order to turn themselves around. 

First, they have to survive to live to fight another day. In this instance, a miscalculation and a gamble by the CEO put the company in a precarious position. That ill-advised misstep may yet still put Saab under. 

Second, you hope for the best and prepare for the worst. You better have a Plan B ready, and a Plan C ready to go if Plan B fails. You have to be prepared because you will need to quickly do whatever it is you decide to do. 

Third, even in the face of adversity, you need to keep delivering a consistent message, whether that is to potential investors or to customers. 

Muller told journalists, “I had a pretty good negotiating position. I positioned what I could sell as a stake in the last premium, independent European car company,” describing his effort to form an alliance with the Chinese investment partners. 

And Saab representatives portrayed the shut-down and scramble for new capital to dealers and consumers as mere hiccups on the way to their wonderful rebirth as a company. 

Now, whether those statements are 100% accurate is debatable, but the company stayed on message. 

So, the saga continues. It isn’t often that we get such a birds-eye view of an attempted turnaround, since smaller, less well-known companies don’t get this type of press coverage, and large corporations generally get far more done behind closed doors. Saab, probably to their consternation sometimes, is inside a fishbowl. Fascinating to us, and torturous to them.

Brendan Moore is a Principal Consultant with Business Turnaround Specialists, a management consulting practice based in the Washington, DC area, where he advises businesses in rebirth and rejuvenation. Business Turnaround Specialists can be found at http://www.business-turnaround-specialists.com

Social CRM is the enterprise version of Web 2.0; it enables businesses to share organizational knowledge easily, it gathers information from various sources on the internet, it allows companies to become more social in terms of how information flows back and forth across the organization, and, is specifically designed to help sales teams and developmental teams. 

That was pretty painless, right? 

But, why Social CRM? Don’t businesses already have CRM systems out the wazoo? What’s wrong with those systems? 

Having led some large sales teams, I can answer that question. 

1. Most CRM systems are awkward to use, they’re not user-friendly and they’re not intuitive, meaning they mimic something else in the way they’re set up, so that you can sit down and know how to use most of it pretty quickly. 

Think about when you get in a rental car. You might not know where everything is (where is that fuel filler door release?), but you know where almost everything is, and you can drive the thing out of the parking lot pretty quickly and be on your way. 

That is not the case with CRM systems. You need some training, you need to keep the users manual on your desk, you need to call the service desk, you need to ask someone else why what you’re keying in is not populating the other screens, etc. It’s a pain, it takes up a fair amount of time, and sales people hate doing it because it ends up being an activity trap. So they don’t, except when they’re forced to, and then you’re getting incomplete tracking data. 

2. CRM systems don’t make your salespeople better, the system you use just makes your salespeople report on their activities in a way that suits the system. It doesn’t mold itself to the way the salesperson works more effectively; it molds the salesperson’s activity to what the system requires. 

3. Relationships and knowledge matter when you’re trying to sell something to someone, and if there is an existing relationship or there is existing knowledge about a potential client within the organization, that fact is many times unknown to the salesperson/business development resource. I can tell you from experience in large organizations like Citigroup, AT&T and Wachovia/Wells Fargo that there were many instances where we had a target customer that was a customer of the organization in some other fashion, or, had been a customer of one of our current employees while that employee was previously employed at a competitor or partner. Sometimes we figured that out beforehand, but many times we weren’t aware of it until the customer themselves told us. 

4. Selling something is getting tougher and tougher. Every potential customer has a tremendous amount of choices, they’re all getting inundated with ads on every media platform everywhere, which means costs are going up, closed deals are going down, which of course means customer acquisition costs are increasing on a per-account basis, and salespeople are worked into a frazzle. They feel like they’re in the middle of a hurricane of sales activities every waking hour, but it’s all a lot of sound and fury that signifies nothing – most of the time (with apologies to William Shakespeare). 

5. Almost nothing that a salesperson uses up precious time inputting into a traditional CRM system is given any context in terms of the sales department’s overall activities, or, for that matter, the organization’s overall activities. Salespeople do this by email, phone calls and the rare in-person conversation with friends of theirs at the company, but there is no way to extract the organizational entity’s institutional memory, or, the organization’s collective knowledge repository using these methods. 

Social CRM platforms claim to solve/mitigate these problems, and they claim their software can easily integrate with existing CRM and ERP that the companies have already spent good money on, without spending any more money getting the people in IT involved. All you need to do, these companies (Salesforce.com/Radian6, Oracle, etc.) say, is simply plug and play after the people in your company huddle up and figure out how all of this dovetails with your needs for security and scalability. The information-gathering functionalities in these programs don’t require input by the sales staff, the program simply gathers information as the salespeople proceed through the day, as it’s also gathering information off the web and through RSS feeds, blogs, social networks, etc., and more of less acts like the company version of Google, Facebook, LinkedIn and Twitter all rolled into one.

I say, kudos to the people that developed these platforms, but I do see one huge problem looming. The problem is that, once turned on, this could be like drinking from a fire hose in terms of the incredible amount of data coming in through that pipe. It’s very clear to me that that amount of information and inadequate provisions and filters for archiving and segmenting it, analyzing it, and metering it out will have an insalubrious effect on organizations. Too much information, too much raw data tends to produce paralysis in a lot of people and in a lot of decision processes.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

But what does being “authentic” really mean?

This term has been bastardized a bit in the intersection between entrepreneurship and personal development. Many coaches and consultants are advising people to “live their passion” and “live an authentic life” and to find careers and businesses that “authentically” play to their strengths. This is all great advice.

But some business owners confuse “authenticity” with “only the stuff I care about.” And that’s not really what we’re talking about from a branding perspective.

Having an authentic brand means that you deliver what you promise. Period. You do what you say, You walk your talk. When I go to Walmart, I don’t expect great service or quality fashion. I expect what they promise: low prices. That is authenticity. It has more to do with company values, service quality, product line and image. It means that if you advertise your brand as hip, sexy and cool, then your products, your company – heck, maybe even your people – need to walk that talk. It means if you are going to tout “Customer Service is our #1 Priority” that you authentically take care of your customers, go above and beyond, and empower your call center employees to do whatever it takes to solve their problems quickly and painlessly. It means that if you claim to be cheap and disposable, that you ARE cheap and disposable, because that what people want from you if you are promising that.

It means don’t write brand checks your business can’t cash, to use a phrase I love.

Too often I hear the battle cry of “authenticity” used to defend an unprofitable business. “But I’m following my passion, I’m doing what I want to do.” Great. But if customers don’t care about that – or are not willing to pay for it – you don’t have a business: you have a hobby.

Having an authentic brand means starting with the values and practices you believe in and delivering on that promise to customers – but it only matters if your target customers care and respond.  Personal preference is great and should be your foundation. After all, it’s your business – you should do what you like. But if you’re not making any money, you need to evolve or adapt to still play to your strengths but in a way that offers value for which customers are willing to pay.

Maria Ross is the founder and chief strategist of Red Slice, a branding and marketing consultancy based in Seattle. Her passion is storytelling and she has advised start-ups, solopreneurs, non-profits and large enterprises on how to craft their brand story to engage, inform and delight customers. Maria is the author of Branding Basics for Small Business: How to Create an Irresistible Brand on Any Budget (2010, Norlights Press).
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