Brian Prentice

There’s been a lot of discussion lately about Atos’ CEO Theirry Breton’s plan to implement a zero email policy for internal communications. According to Breton, only 10% of emails received per day are useful. 18% of all email is spam.

I’m curious – what percentage of emails generated internally are deemed as being useless by the people sending them? I’m guessing that would be something closer to 0%.

I’m not being flippant. I think it’s the crux of the problem. While I applaud Breton’s desire to increase productivity and to reduce the encroachment of work into people’s personal lives, I’m afraid he’s misdiagnosed the problem.

The problem with email today is not an ever-decreasing signal-to-noise ratio. Spam filters are doing a pretty good job. And while I concede that I certainly get a lot of unimportant emails every day, I find it takes me no more than 30 minutes to clear the rubbish out. I’d rather spend my 30 minutes doing that than waste it sitting in a meeting room getting nothing done at all. And, prior to the world of email that’s what we spent our time doing. The most common phrase uttered in the 90’s across work cubicles the world over was – “skip the meeting, send an email.” Email emerged as the centerpiece of collaboration and workflow for good reason.

The problem with email is not the volume we see each morning, it’s the stuff left over after it’s been cleared out. It’s the list of things we can’t avoid doing. And that list keeps getting bigger. That’s the true essence of most people’s complaints about email. It’s not a volume problem. It’s an obligation problem. Email “inboxes” have become a misnomer. What we have are email “to do lists.” Woe unto the person that doesn’t stay on top of their email – whether it’s on holidays, at dinner, or on a date. For that person faces a stress-inducing mountain of obligations when they eventually have the heart to log onto their email account(s).

The essence of the email problem is that a global asynchronous one-to-one/one-to-many communication system radically increases the ability of people to seek assistance, create and delegate tasks, update colleagues and coordinate activities.

There is no technology solution to this problem. You can try to parse this out into different applications but the problem remains – as I believe Atos will soon find out.

The only solution, IMO, is to tackle the ballooning administration and bureaucracy overhead in organizations that is fuelling the number of emails being generated. Specifically, our criticism of email as a collaboration tool needs to shift towards the unchecked growth of bureaucracy it enables. And in this context, it is but one piece of IT that is driving the problem. Ask sales reps what they think of CRM. It doesn’t increase their productivity – it drains it as they have to spend increasing amounts of time filling in the system which, in turn, generates more email requests. BPM can standardize best practices – it can also spin out a set of obligations which land in people’s inbox. Every exception to these practices requires streams of emails to associated cc lists, forwards and reply-to-alls.

There are parallels with the argument “guns don’t kill people, people kill people.” Email doesn’t erode productivity and encroaches work into our personal lives, bureaucracy does.”

So don’t fault the tool. Fault what it enables.

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Personally, I think Apple’s new iCloud service is brilliant. Personally, I’ll be making heavy use of it. Personally, I like the idea of being able to synchronise contacts across devices. Personally, being able to coordinate documents across all my Apple devices will probably push me to buy an iPad as my primary travel computer.

I’m sure that a lot you, personally, like iCloud for similar reasons.

Personally, I’m also quite sure iCloud will send a huge number of enterprise IT managers into a state of apoplexy.

For all the cool things that this well designed solution will provide you, as an individual, I can assure you that many, many IT departments will fixate on one single fact. iCloud creates a potential situation where corporate IP will find it’s way into people’s personal clouds thus out of reach and control by the company.

Does iCloud create IP headaches that IT organizations will have to deal with? Yes. Does iCloud provide opportunities for IT organizations in delivering innovative solutions to staff. Yes. But when it comes to Apple, the glass is half empty for many IT departments. It’s easier, and more satisfying, to hit the “ban it” button then to look for creative ways to take advantage of the new solution.

So here’s my prediction. Because iCloud is provided as an automatic and free service with iOS 5 we will see IT departments, fixated on this problem, seek to prohibit staff from upgrading their iPhones and iPads. Whether they can enforce this or not is immaterial. Whether a whole lot of other tools that create the same potential risks will be left unnoticed will also be immaterial. We’re talking about those IT organizations with an inbuilt dislike for Apple getting a taste of blood. If you’re currently working for a company that has blocked access to Facebook and Twitter because they fear a loss of IP, you can count on this happening. If you’re a sales rep working for a company that demands all your client’s contact details are entered the corporate CRM system then prepare yourself for the email telling you that iOS 5 upgrades are banned.

And of course all new iPad and iPhone acquisitions, once they start getting shipped with iOS 5, will need to be put on hold. It doesn’t matter whether they’re company or employee funded or made available through agreements with the mobile provider.

For a whole lot of organizations out there, the battle between corporate users and their IT departments is about to escalate.

And that will be a shame. Because at the end of the day this will just delay the inevitable.

Apple’s vision of personal computing has unleashed a massive, pent up demand amongst people. That is undeniable. But they are just one of many companies having success in reaching out directly to the user rather than granting to the enterprise IT department the status of rightful proxy to these people’s requirements. It is also clear that people are no longer prepared to separate their personal and professional digital lives in the way the IT department would like. These two intersecting trends are challenging underlying assumptions of what enterprise computing is all about. Enterprise IT departments can rage all they want about these providers. The thing is they won’t change for you. Nor will the users. Ultimately the enterprise IT department can, should and will probably be the ones having to change.

I am not advocating that IT governance controls simply melt away to make room these consumer-oriented providers. But I am suggesting that some creative thinking might yield innovative solutions that can integrate this very different class of provider into the fabric of the IT environment. Consider something like PC fleet management. How can this process be adapted to deal with a range of devices that will be acquired directly by the employee (there is no such thing as a global iPad rollout driven by the IT department)? How should software version control be governed when some systems will be updated automatically by the supplier through the cloud? You get the picture.

It has been my observation that enterprise IT organizations are some of the most resistant departments to change. Conversely, when change becomes absolutely unavoidable they display an amazing ability to craft intelligent, finely-tuned governance controls to deal with the new reality.

I’d like to suggest to all of you in enterprise IT organizations that changing to adapt to a world of what I call DTTU providers (that’s “direct to the user”) has become absolutely unavoidable.

You might as well start adapting with iCloud.

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Ah, serendipity.

It’s 5am. I’ve been up for the last two hours. It seems the Tylenol PM didn’t do it’s job of knocking me out senseless for the 8 hours I needed to avoid the jet-lagged induced fog I’ll be dealing with around 3pm this afternoon.

So, I’ve been up in my hotel room here at the Hyatt Regency in Old Greenwich reading some great articles I’ve been meaning to get to. One of these is “Feature Bloat: The Product Manager’s Dilemma.” The other is “The Laws of Simplicity” by John Maeda. Both sets of authors stress the need to proactively reduce feature sets in products in order to maximize the long-term value that users obtain from them while, at the same time, increasing the organization’s brand value.

As I’m digesting the implications of this message on the way we think about software design I decided to get myself my morning cup of coffee. In fact, I’m slightly surprised I lasted this long without some caffeine cursing through my system. I look, and look…and look. No coffee machine. How could this be? So, I call down to the front desk and I’m told by an extremely polite young man that the hotel doesn’t provide coffee machines in the rooms. Instead, there is complimentary coffee by the elevators which is available from 6am onwards.

Arguably, the Hyatt Regency in Old Greenwich did exactly what Maeda, Rust, Thompson and Hamilton told them to do. They removed a feature. Namely the existence of a coffee machine, a couple of packs of ground coffee and some sugar and non-diary creamer from a guest’s room. And I can see the logic of the hotel’s management. After all, they haven’t actually removed free coffee from the hotel. They simply changed the location of where it’s obtained. And, in the process, they reduced the capital cost of putting coffee machines in every room and the ongoing cost of providing the coffee and condiments.

Win-win. Right?

Wrong!

See, first of all, I don’t want to have to wait for the time hotel management feels is appropriate for me to have my first cup of coffee in the morning. And, if I’m sounding a bit surly, it’s because I’m writing this before I’ve had any coffee. Second, and more important, I feel that the appropriate attire needed to make coffee in the morning is a bathrobe and a pair of glasses. However, I do not believe that the sight of a bathrobe-clad, groggy, stubble-faced middle-aged man wandering around the corridors of a hotel in some caffeine-depraved state of confusion mumbling something about Ethiopian blends is something people should have to deal with in a five star hotel. I know I don’t. So, when the coffee finally arrives, I’ll need to throw something on and make myself slightly presentable. Just for a cup of coffee.

The management of this hotel apparently sees coffee as an amenity of the hotel. They’re missing the point that the coffee is not a feature of the hotel – it’s a feature of the room. A hotel room is an experience and when it comes to the business traveler the experience they’re aiming for is a home away from home. When I’m at home I make coffee when I feel like it and in my PJs. I don’t slip some clothes on and walk up to the top of my street.

Am I then suggesting that Maeda, Rust, Thompson and Hamilton are wrong about reducing features? Absolutely not. The process of removing superfluous features from a product is as important for a hotel as it is for a software designer. The question is how you make the decision. The essence of making the right decisions comes back to the need to get the conceptual design of the product accurately defined at the very outset. What is this solution achieving for the user? Does a feature enhance, or detract from that objective for a majority of the people this solution is designed for? Do we know who those people actually are? Do we have effective feedback loops to assure our decisions are accurate after they’ve been implemented?

The less you understand about the users’ objectives the more likely you’ll make mistakes either in expanding, or contracting, the feature set of a solution.

Now, if you’ll excuse me I need to get myself ready to get my cup of coffee.

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It’s gotten to the point where patent infringement actions in the mobile technology market are about as numerous as offshoots of The Real Housewives reality TV series. And the patents which feature so prominently in these cases seem to share many characteristics with the women in the TV shows – they’re more likely to be found in the middle of a confrontation then in any type of actual money generating activity and they’re convinced of their own unique talent when, in fact, they’re unoriginal and uninspiring.

Sadly the default solution to most patent infringement cases is a confidential, negotiated settlement. I say sadly because everyone else is left to wonder whether it was the quality of the patents that brought the defendant to the table or whether it was a simple economic decision that the cost of the agreement was cheaper then the cost of litigation.

So then, a big, fat shout out to Barnes & Noble. After having been sued (along with Foxconn and Inventec) by Microsoft for infringing a few of their patents in their Nook e-reader, they’ve decided to submit a court filing refuting Microsoft claims. And it looks like they decided to take the gloves off before doing so.

It has been my long held view that software and method patents are needed to support innovation in the IT industry. Especially since they’re a better option than the available alternative. Unfortunately, software and method patents are being debased as an entire category of IP protection by a slipshod review process. It’s gotten to the point where it’s nearly an act of faith to assume a software or method patent is valid before it runs through the court system. The presumption of patent validity, I might add, is a key point that Microsoft is arguing against in the Microsoft v. i4i case being heard by the Supreme Court at this moment.

If you’ve ever had the patience to wade through the dense and overly complex claim language surrounding most software and method patents you probably found yourself muttering “I’m pretty sure I’ve seen this before,” or “well, duh!” These are the types of responses that would indicate a patent claim is not valid. So it was quite insightful to read Barnes & Nobles’ careful examination of the novelty and non-obviousness of Microsoft’s patents they’re being accused of infringing upon. Consider their observation of patent 6,891,551 – Selection Handles in Editing Electronic Documents

“The asserted ’551 patent relates to using handles to change the size of selection areas for selected text. By 2000, when the ’551 application’s provisional was filed, text was routinely selected when reading, review or editing, and handles were routinely used to change the size of selections. The simple act of using handles for their very purpose–changing the size of selections—was neither novel nor non-obvious.”

Or how about patent 5,889,522 – System Provided Child Window Controls

“The asserted ’522 patent relates to nothing more than putting known tab controls into an operating system for use by all applications, rather than providing these tabs on an application-by-application basis. However, the specification of the ’522 patent makes clear that before the filing of the patent, prior art operating systems were already providing applications with a toolbox of common controls to utilize. While the prior art purportedly did not disclose the claimed tab controls in this toolbox, numerous applications already employed tabs to allow users to navigate between pages of information in the application. Simply putting existing tab controls into the toolbox already provided by the operating system was not inventive or patentable.”

On face value I think Barnes & Noble are making one heck of a compelling rebuttal. Of course, we need to wait for the courts to sort this out and I for one am hoping Barnes & Noble is prepared to see this through. Should they do so, and should the courts agree with their position, then that might well give many organizations pause to consider the veracity of Microsoft’s claims to a high quality patent portfolio.

But that’s not all folks! This filing also sheds light on manner in which Microsoft seeks to reach licensing agreements around their patent portfolio. Based on Barnes & Nobles comments it would seem Microsoft is prepared to use a negotiation style reminiscent of the its pre-DOJ days.

When this suit was originally announced, Microsoft Corporate Vice President stated “We have tried for over a year to reach licensing agreements with Barnes & Noble, Foxconn and Inventec.” Apparently a significant part of that time was negotiating an agreement simply to see where Microsoft believed their patents were being infringed. As Barnes & Noble points out:

“Microsoft had prepared claim charts purportedly detailing the alleged infringement but insisted that it would only share the detailed claim charts if Barnes & Noble agreed to sign a non-disclosure agreement (“NDA”) that would cover the claim charts as well as all other aspects of the parties’ discussions. Noting that the patents were public and that the infringement allegations pertained to Barnes & Noble’s public product, Barnes & Noble refused to sign an NDA”

Sorting this out took nearly five months but once an agreement was reached Barnes & Noble asserts:

“Tellingly, although Microsoft had insisted on entering into an NDA covering these claim charts, the charts did not contain confidential information but instead did nothing more than set forth the published claims of certain Microsoft patents on the one hand and publicly known features purportedly employed by the open source Android™ Operating System and the Nook ™on the other hand”

This certainly begs the question of why an NDA was being sought. I’m guessing that some people might conclude that a primary motivation could have been to limit the ability an organization using Android to coordinate a defensive response. Just as interesting was Microsoft proposed pricing. As the filing states:

“After sending the proposed license agreement, Microsoft confirmed the shockingly high licensing fees Microsoft was demanding, reiterating its exorbitant per device royalty for Nook™, and for the first time demanding a royalty for Nook Color™which was more than double the per device royalty Microsoft was demanding for Nook™. On information and belief, the license fees demanded by Microsoft are higher than whatMicrosoft charges for a license to its entire operating system designed for mobile devices, Windows Phone 7.”

Here again, if these assertions are accurate this would call into question the extent to which Microsoft is prepared to support a regime of reasonable and non-discriminatory (RAND) licensing around its patent portfolio.

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The day before yesterday I posted the response by Ian Birks, CEO of the AIIA, to my blog on the recent changes to intellectual property rights (IPR) considerations in Australian Commonwealth and State Government procurement policy. Since this is a topic of considerable importance, I feel compelled to respond and reassert my position.

One issue Birks has with me is what he sees as a misrepresentation of AIIA’s focus relative to it’s member base. Specifically he takes exception to the assertion I made that the “AIIA’s position on IPR represents the aspirations of the world’s largest, multi-national IT vendors.” As Birks sees it, this statement unfairly paints AIIA’s position as uniquely focused on the desires of large multinational IT providers when the AIIA is representing a much broader group of industry participants, particularly local small and medium enterprises (SME).

OK, duly noted. But this was a passing comment in a blog almost entirely dedicated to questioning the logic behind the AIIA’s own published reasons why governments should grant IP rights to suppliers as a default contract negotiation position. The point I was trying to make is that this is not a parochial Australian issue. Regardless of the composition of AIIA’s membership, or the process it uses to elect board members, the multi-nationals’ advocacy of this position on IPR means this is a topic of interest to readers outside of Australia. Needless to say, I really don’t think any more keystrokes need to be wasted on membership debates – it’s a red herring. The real issue is whether their position on IPR makes sense to the government – or any of their clients for that matter.

And on that topic, the needs of SME IT suppliers is a central theme in Birks’ rebuttal. So much so that he states:

“This SME consideration is connected with another fundamental point you seem to have skipped, which is that all Australian governments, and particularly state and territory governments, have a very heightened interest in supporting local ICT industry development through their activities and including in their procurement and policy positions.”

Birks’ position is based on the premise that providing benefits to individual suppliers manifests itself as a collective benefit to the industry as a whole. After all, that’s what they’re advocating – that individual suppliers are granted the rights to newly-created IP that the government paid for. But when it comes to intellectual property, things don’t work out that way. Suppliers can leverage this IP to obtain patents which grants them ownership over the underlying algorithms in the code they’re paid to produce. They can use non-compete clauses to keep staff with specific areas of commercial expertise from moving to competitors. The reality is that IP is increasingly being used as the basis to constrain competition rather than foster innovation. IP is also increasingly being used to source licensing fees from 3rd party product development rather than it being used exclusively for internal product development.

There is another very important dimension to IP that Birks perhaps doesn’t realize himself. Specifically, the value of IP increases with mass. Individual pieces of IP are notoriously difficult to value. But when they are combined into a portfolio they provide an organization a unique set of capabilities in their ability to seek license fees from third parties and to fend off requests to pay license fees themselves. The growth in IP portfolios is an indisputable trend in the IT industry.

But this is a particular problem for SME suppliers. It takes a lot of resources to be able to craft, maintain, and exploit IP portfolios and that essentially limits this activity to all but the largest organizations. That means that Birks’ assertion that:

“In truth, the freeing up of IP on a specific piece of Government business is highly unlikely to be a make or break issue for a multinational as their ICT business models are varied and diverse…”

is not actually correct. For one, we are not talking about specific pieces of government business. We are talking about the collection of IP coming from all government business. That will naturally be much larger for the big multi-nationals because of their market position. More importantly, it is these organizations which have the resources to exploit these assets in the context of a larger IP portfolio. The differences in business models are immaterial.

Therefore, if the broader objective of the AIIA in advocating the changes to IPR policy in procurement policy is to support local SME ICT suppliers, than this strategy is misdirected. In fact, I can think of no better way to harm local SMEs over the long term than to gift, by default, the rights to newly-created IP to suppliers. The growing use of IP portfolios will create one of the biggest obstacles to SMEs in their ability to freely innovate and to flexibly respond to market requirements.

On the other hand, supporting local SMEs could be achieved if the AIIA insisted that newly-created IP from government contracts was placed under an open source license agreement by default. That would provide open access by SMEs to the IP even coming from contracted business with the largest multinationals. Such a position is entirely consistent with The Statement of Intellectual Property Principles for Australian Government Agencies. But such a suggestion is nowhere to be found in the AIIA’s white paper to the NSW Government.

But the part of Birks’ response that I find most troublesome is the point where he says:

“It is very progressive of governments in Australia to recognise that the IP is far more sensibly held by the supplier in the vast majority of cases. Those governments that follow this course of policy are directly recognising that they are not typically in the business of commercialising IP and that by being innovative in this sense that they are providing a very real support to local ICT industry development.”

This can only be described as squatter’s logic. It’s the belief that if you don’t use your property in the way I would use it then I have a valid claim over it. This is the thinking that pervades the AIIA’s position on IPR.

I’m operating from a different principle – no one has the automatic right of ownership for something that someone else pays you to produce for them. Nor does a person, or organization, have the right to dictate to their customers the manner in which their property should be used.

Do I believe that a nuanced approach to IPR can help organizations achieve broader strategic aims? Absolutely! But progressive organizations don’t do that through isolated procurement policy changes. Progressive organizations focus on establishing, and implementing, comprehensive IP management programs. Doing so allows them to understand the value of discrete pieces of IP. That would allow an organization to quarantine IP that is important in differentiating itself. It would allow organizations to seek a fair market price for IP that they grant to to third parties, like their IT suppliers. It would allow them to assess the broader benefits of providing open access to the IP.

The bottom line is that the AIIA’s position on IPR will result in some short term gains in expediting ICT contract negotiations. That will come at the long term cost of a needless loss of assets and revenue to the Australian taxpayer. And the benefits which supposedly will flow to local SME suppliers are not only dubious but impossible to quantify. The trade-off is simply not worth it.

There is nothing that Ian Birks or the AIIA has said so far that would have me change that assessment.

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After my recent post, Dissecting AIIA’s Flawed Position on IP Rights, the CEO of AIIA, Ian Birks, took the time to write a detailed response which he submitted as a direct comment. Unfortunately a glitch with our moderation settings resulted in Ian’s comments not being posted. While we’ve identified, and can fix the problem I don’t believe it is fair to Ian, or to the AIIA for me to simply add a comment weeks after the initial posting. So in the spirit of having a open dialog I am providing his unedited comments here as a discrete blog post. I will respond in a separate blog posting very soon. My apologies to both Ian and the AIIA for any inconvenience.

AIIA’s Response
On behalf of the AIIA I think I need to directly counter some of the misrepresentations provided in your blog piece and also enlighten you on the broader view to the so called “bad policy” positions that AIIA has been working hard to achieve.

Firstly, in your blog you appear to characterise AIIA as a group that is working to uniquely achieve the aspirations of large multinational ICT vendors. This is absolutely false and ignores the past history of the organisation and its current composition.

The AIIA has over 400 company members and more than 75 percent of these are domestic Australian Small Medium Enterprises. The association features 6 domestic ICT company representatives on its Board and also other domestic ICT representatives represent the vast majority of AIIA’s state and territory branch committee leadership.

You should note that the AIIA Board composition is primarily made up of elected industry leaders who are voted for by AIIA member companies on a one-vote per company basis – and therefore even if there is currently a majority of multinational companies represented on the board, the important point to understand is that this situation has come about because they have been democratically elected by a membership which is comprised of 75 percent SMEs.

It is critical to understand that AIIA takes its role as the leading organisation representing Australian ICT SMEs very importantly and that role has been highly instrumental in the changes to Government procurement terms and conditions that you mention at the start of your article. Of the 12 major contract outcomes featured in the AIIA’s recent negotiations with NSW Government a number of them are specifically focused on benefits for SMEs such as lower caps on insurance levels and limitation of liability changes.

Furthermore, the primary motivator for the push from AIIA to address the treatment of IP in Government contracts is not as you suggest in your blog a move specifically motivated to help multinational ICT firms, but much rather a move designed to all industry, and most significantly assist SMEs that are doing business with government. In truth, the freeing up of IP on a specific piece of Government business is highly unlikely to be a make or break issue for a multinational as their ICT business models are varied and diverse but I am aware of specific situations where it has directly assisted local SMEs stay in business or considerably enhance their business by being able to further promote IP they have developed in one government contract into other government business elsewhere. If you like I will directly introduce to a significant number of local Australian software developers SME CEOs who will unashamedly reinforce this value point. Which makes me wonder – how often to Gartner analysts talk to local industry SMEs about their research positions? How many SME customers do Gartner have?

This SME consideration is connected with another fundamental point you seem to have skipped, which is that all Australian governments, and particularly state and territory governments, have a very heightened interest in supporting local ICT industry development through their activities and including in their procurement and policy positions. It is very progressive of governments in Australia to recognise that the IP is far more sensibly held by the supplier in the vast majority of cases. Those governments that follow this course of policy are directly recognising that they are not typically in the business of commercialising IP and that by being innovative in this sense that they are providing a very real support to local ICT industry development.

Brian, I would close by advising that AIIA would welcome your considered input to the development of our industry positions which are achieved in an open and consultative way with our broad membership. We have a number of member-driven forums in this area including our Government Business Taskforce and our Legal Forum. Within these groups the industry companies that choose to be involved develop industry-wide propositions on how to best take our sector forward. I’m sure the members of these groups would be very pleased to explain to you why streamlined Government procurement, and treatment of IP in particular, are vitally important issues for the industry and government to address.

Ian Birks
CEO, AIIA

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Two weeks ago, the New South Wales state government became the third government jurisdiction in Australia – along with the federal government and the Victorian state government – to change the intellectual property rights (IPR) provisions of their IT procurement policies so that ICT suppliers would, as a starting position, retain ownership of the IP for software developed under contract.

This is bad policy. It is far from best practice. It is not in the best interests of citizens. It will not help the local IT industry as a whole. An alternative strategy to the one now being adopted is something that I’ll be exploring very shortly in a separate research note. But what I want to do here is to dissect the logic of the Australian Information Industry Association (AIIA), the industry body that has been at the forefront of lobbying the government for these changes. I would suggest you all pay attention to how this plays out whether you’re private or public sector, in Australia or out. The reason is that the the AIIA’s position on IPR represents the aspirations of the world’s largest, multi-national IT vendors.

While the AIIA’s mission, as stated, is to “lead and represent the ICT industry in Australia,” its board is comprised almost entirely of large multi-national providers like Intel, Google, Microsoft, EMC and CSC (Gartner has the only non-IT vendor board seat). Several of AIIA’s board members I know personally. Several I’ve met over the course of my career. The personal integrity and reputation of these individuals is beyond reproach.

But the role of any industry lobby group is to advocate what’s in its member’s best interest. And they do that by trying to convince governments that a special consideration to one segment of society results in a benefit to everyone. This is regularly done by wrapping arguments in the respectable garb of lofty and generally-agreed principles like increased employment or free trade. Of course, that calculus doesn’t always work out as promised. Often, special considerations end up entrenching inefficiencies and limiting competition.

So, what are the arguments the AIIA is using to support their lobbying efforts? Those can all be found in the document “Key Issues with NSW Government’s Procure IT v2.1.3” Sadly, their diagnosis of the problems associated with customers seeking to own intellectual property in newly created items is either misleading, illogical, or demonstrably wrong. Let’s consider each:

AIIA Assertion 1

Development of the local NSW ICT industry will be curtailed. If Government owns the IP in newly created IP then it is „locked up‟ as the Government almost never exploits it. However, if the supplier retains the IP then it is likely to exploit it, and so bring jobs and investment into NSW.

Why This Assertion Is Flawed
If by “locked up” the AIIA means owned by someone else who can determine the conditions of use use then yes, that’s true. And that’s the whole point of intellectual property. It’s property.

If by “exploit” the AIIA means “to seek separate commercial settlements with the IP,” then that might be true – might be. But it’s a nonsense to assert that newly created IP paid for by the government is not exploited. It’s exploited as systems, or parts of systems, that facilitate the operation of government and which provide services for the public good. Furthermore, if the government was paying more attention to the asset value of their IT- related IP then those rights which, by default they want to grant to their suppliers, could form the basis of revenue-generating “user-pays” solutions which can offset the cost of government. This has a clear precedence as many government higher education institutions, for example, have IP departments charted with commercializing the IP coming through their own research efforts. Or consider the success of the CSIRO in securing royalty revenue for their wireless LAN IP.

But the biggest flaw here is the logic that client retention of IP somehow limits suppliers’ ability to exploit IP which brings jobs and investment. First off, it depends what type of IP we’re talking about. When the IP in question is copyright the reality is that client ownership does not inhibit a supplier’s commercial opportunities. They simple take the knowledge and experience that comes from the engagement and apply it to the next client-paid engagement (a point they make in assertion 3) through a distinctly different set of code expressing the algorithms at the heart of the solution. More importantly it must be understood that IP rights today are increasingly being used by the supplier community to limit competition. That is abundantly clear by the raft of patent infringement cases dotting the landscape of the IT industry along with the growing use of non-compete and confidentiality clauses to limit the flow of staff between organizations.

AIIA Assertion 2

If the supplier exploits the IP then the customer is likely to benefit from much reduced support costs, and will have an on-going product development path, which the
customer is not paying for. It is uneconomic to support and further develop custom systems only for a single customer.

Why This Assertion Is Flawed
A classic fallacy of the false dilemma. First we take two positions as given; 1) customers benefit from lower support costs if the supplier maintains it, and 2) it is uneconomic to support and develop systems for a single customer. Then we draw a direct conclusion – support costs go up if IP isn’t managed as collective pool by a vendor. But if either statement isn’t true than neither is the conclusion. And that’s exactly the case here.

First, support costs are not necessarily reduced if the IP is controlled by the vendor. Let’s consider packaged off-the-shelf software – the pinnacle of vendor-controlled IP. Accessing support for most of these products usually requires a maintenance agreement which, theoretically, should go down in price as the user base increases. But exactly the opposite is happening – maintenance fees are going up. The reason is simple – it comes down to exit costs. The cost of moving from one software product to another is often so prohibitive that it creates a micro-monopoly that vendors can exploit. So, in fact, the more IP is controlled by a supplier the higher the long-term support costs can become.

Second, it’s not true that the IP relating to a specific customer’s requirements is developed further by the vendor. In all likelihood, if further development is required it will create a separate services engagement that needs to be paid for again by the client.

AIIA Assertion 3

Many customers insist on “we pay for it therefore we own it” when it comes to ownership of new IP in an engagement. This view ignores the fact that IP creation is an iterative process and a customer often engages a supplier due to the supplier‟s skill and knowledge in an area. The customer is not paying for this development of skill and knowledge over time so cannot be seen to be “paying” for the resulting IP that may be created on an engagement.

Why This Assertion Is Flawed
Let’s agree, for a minute, with the assertion that IP creation is an iterative process. Let’s also assume that those iterations involve the client’s “skill and knowledge in an area.” Shouldn’t that then lead to a sharing of IP assets? Why then does the AIIA lobby for supplier IPR retention as a default position instead of a shared public-private partnership (PPP) model? Yet how many agreements do you see where IT suppliers enter into long-term revenue sharing agreements with their clients from shared IP creation? Those are as rare as the proverbial rocking horse manure.

This argument also conveniently neglects to acknowledge that some projects represent the automation of their customer’s trade secrets. There is no real “iteration” in this scenario – the IP is essentially the customers. Why should any customer – government or private – voluntarily concede the rights to their IP assets simply because they sought the assistance of someone else in codifying the concepts or integrating it with existing systems?

Let’s also call out a little inconvenient truth – by and large, suppliers aren’t paying for the development of skill and knowledge over time either. The skill and knowledge that is required is manifested through the individuals doing the work, not the organisations they work for. How do they acquire that skill and knowledge? Some of it is through the formal training they themselves pay for prior to their employment. The more practical, hands-on knowledge comes through their work on all the engagements other clients are paying their employer for. What this means is that a government client can still achieve it’s goal of fostering IT industry growth while retaining IP rights because these engagements are ultimately growing the knowledge of the people which are its backbone.

If governments really wanted to support the growth of the local industry through an IP strategy, they would move to limit, if not eliminate, non-compete clauses that restrict the free flow of this expertise – like in the State of California. It doesn’t appear, however, that the AIIA is clamouring for that change to be made.

AIIA Assertion 4

It is less risky for the customer. This is because if all customers sought to own the newly created IP inevitably some of the code/documentation that was created in customer A‟s project would be re-used by the supplier at Customer B‟s project thus infringing Customer A‟s IP. This could mean that the customer was prevented from using the deliverables from that supplier (or would have to pay an additional fee). The whole point of engaging a supplier with experience and expecting the supplier to use its pre-existing tool kit is predicated on the premise that the supplier can maintain and onward develop its tool kit at each customer engagement.

Why This Assertion Is Flawed
I’m pretty sure the AIIA is familiar with the concept of “indemnification.” So the scenario that they’ve painted probably isn’t going to happen given that indemnification clauses are common.

The real concern for clients is not a scenario of customer A infringing on customer B’s IP. It’s customer A infringing on vendor A, B or C’s IP. Gartner has been warning clients for years that the IP battles that have been playing out between vendors would start to be extended to the user community. And that is exactly what is happening now. We are seeing vendors with huge patent portfolios seeking cross licensing agreements with end users based on their internal, custom-developed solutions. We are seeing some vendors working through patent aggregation organizations to drive litigation-avoidance licensing deals with customers so they don’t have to deliver the bad news.

The only way for customers to manage this scenario is to start building up their own IP portfolio. It is the only way to either have a meaningful defence position for potential egregious infringement actions or to shape out the best cross-licensing terms should that be necessary. Granting suppliers IP rights by default makes the establishment of an IP portfolio extremely difficult.

AIIA Assertion 5

Many suppliers simply will not bid if there is any doubt as to whether they will retain the IP in the IP that they create.

Why This Assertion Is Flawed
And the problem is, exactly? Successful procurement is not based on how many suppliers bid for your business. It based on whether you find the right supplier based on your business requirements. Retention of key IP assets should be part of the client’s requirements – if the supplier doesn’t like that it’s not the customer’s concern. Additionally, this could be a problem if the demand for services was outstripping supply. But there is a global market for service delivery capability – it’s a buyer’s market.

AIIA Assertion 6

There are almost certainly methods of meeting a customer‟s business requirements through appropriate contract clauses, without assigning IP to the customer.

Why This Assertion Is Seriously Flawed
So why then is it not possible to meet the suppliers commercial requirements, through appropriate contract clauses, while still allowing customers to retain the IP they are paying for? Or, to be more specific, can the AIIA please demonstrate, with facts and figures, exactly where client retention of IP rights has materially constrained the IT industry?

In many cases the underlying IP has no particular value to a customer. But that’s not really the point. If the IP has value in the market it is the responsibility of people overseeing the supplier agreements to assure their organization gets the maximum possible value from the assets they are paying to create.

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Last week Horatio Gutierrez, Microsoft’s Deputy General Counsel, made some interesting comments regarding the intellectual property implications of cloud computing. One insight that I think is particularly profound is that the ability of patent holders to detect infringement is going to become much harder. That makes a lot of sense. After all, cloud computing is about the provision of IT-enabled capabilities as a service. Trying to determine if your patents are being infringed upon if they are components supporting a cloud service will very difficult.

Does that mean organizations committed to building, and exploiting patent portfolios are going to be chucking in the towel while saying to themselves, “oh well, this patent thing was good while it lasted.” Doubtful…very doubtful. In all likelihood they’ll be shifting their focus to those patents which will be easier to take advantage in a cloud computing environment. Gutierrez made exactly this point when he said:

IP to do with the user interface – the part of the service that’s actually exposed – will become more important, and will become the identity of the person providing the service. We need to go back to our toolbox of IP rights and dust off some.”

I think he’s right. And I think you – the enterprise IT organization – had better absorb this quickly. Why? Because if you think the cloud computing phenomenon is strictly about IT vendors delivering infrastructure, platform and software services to you, then you’d be missing a key part of its disruptive potential. Cloud computing enables every company – whether they’re IT providers or not – the ability to deliver their own IT-enabled capabilities. IT-enabled supply chain services, for example, might just as readily be consumed from supply chain management companies as they will be from SCM application providers that offer a cloud computing option.

The seemingly never-ending stream of patent infringement cases has largely been a sideshow for enterprise IT organizations. This has been saga played out between the IT vendors and only rarely becomes a problem outside that community. But the expanding desire of IT vendors to directly commercialize their IP portfolios will slowly start to erode the reticence they have had in pursuing organizations they currently deem as being their customers.

And here’s the thing – cloud computing, over time, will blur the lines of what it means to be an IT provider. And that means every organization becomes a potential patent infringement target for those companies with portfolios bulging with UI and design patents. The chances of stumbling into a UI-related infringement action will be very easy given both the range of overly-broad patents in this area and the serious lack of attention that most non-IT vendors pay to their own potential infringement in the realm of information technology.

Sadly this will likely drive more organizations to start building their own patent portfolios. After all, one of the most consistent motivations for organizations’ interest in creating, and growing a patent portfolio is to secure a meaningful defence against patent litigation.

The patent arms race will only continue.

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Travelling through South America at the moment I was struck by a couple of statements which are being attributed to Microsoft’s President of Latin America, Hernán Rincón (here’s the report in Portuguese).

I really hope that he was either misquoted or something was lost in translation because in a meeting with Latin American journalists, Rincón says, in comments targeted at the Brazilian government, that

when you do not can compete, you are declaring open. This masks incompetence.

Hold on Mr Rincón, to quote Microsoft’s own stated position on open source:

We are actively participating in open source and share the common industry view that software users will continue to see a mixed IT environment of open source and proprietary products for years to come.

And a quick look at the list of their open source projects shows a pretty comprehensive number of initiatives across a very broad range of their product portfolio.

And here I was thinking that Microsoft was demonstrating a nuanced understanding of open source that was deftly supporting the company’s strategic aims. Could it be I was wrong and they’ve just been masking their incompetence all along?

He goes on to add that

free programs require more work and investment from the government to keep them running and updated – which does not happen when companies take care of that for the government.

This, of course, is just bizarre. There are many, many IT staff in government who are needed to run and update proprietary software. And a fair percentage of those people are software developers using Microsoft technology and products to create needed solutions which will never be run or updated by Microsoft themselves. Not only that but those solutions could easy be placed under one of Microsoft’s own open source license agreements – like Ms-PL or Ms-RL and posted on Microsoft own open source hosting site Codeplex.

But the insights don’t stop there. Rincón also says, “governments have to ask: what business is to serve their citizens and develop software? Innovation is at private sector. ”

Thank goodness the US government didn’t considered this advice prior to inventing the internet.

For Microsoft’s sake I sure hope this was a misquote. They don’t need their own executives shooting their open source foot

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Last week Gartner launched our special report on Application Overhaul (a Gartner subscription is required). There are a number of different facets to this research – how to strategize, modernize, rationalize, standardize, govern and simply the application portfolios managed by enterprises today.

I’m the guy working on the simplicity workstream.

So, I thought I would try and kick off an ongoing conversation about application simplicity on the Gartner Blogger Network by disagreeing with a giant on the topic of design, Don Norman (author of books such as The Design of Everday Things, Emotional Design: Why We Love (or Hate) Everyday Things, and The Design of Future Things).

I hate to do this but I have no choice! Because while I’m saying that simplicity is absolutely essential in the way we plan and construct applications, Norman is on record saying that simplicity is overrated. Specifically, he says:

Why do we deliberately build things that confuse the people who use them?

Answer: Because the people want the features. Because simplicity is a myth whose time has past, if it ever existed.

He goes on to make the point:

Make it simple and people won’t buy. Given a choice, they will take the item that does more. Features win over simplicity, even when people realize that it is accompanied by more complexity

The essence of Norman’s initial point is perfectly valid – people want features. But in reality they only want features that make a product do what they want it to do. They’re not interested in the features needed to get the product to do things that other people want it to do.

But Norman presents a false dichotomy – it’s either features or simplicity. Inherent in this position is a view that simplicity’s primary characteristic is the absence of features. In fact the defining characteristic of simplicity is the relevance of features. An increase in features is not mutually exclusive with simplicity. It is only when the next additional feature has no particular value to the majority of it’s intended audience that you enter into the world of confusing products.

Simplicity’s biggest obstacle is not fickle customers. It’s lazy design. It’s really hard to craft product segments based on the careful observation of people, the challenges they face and the varying different capacities they have using a product. So product developers don’t bother. They either throw every conceivable feature into a product and let a user interface designer, or the customer, figure it out. Or they segment features based on marketing-crafted product bands which are created not with people in mind but on margin maximization.

So, is it true that when given a choice people will take the item that does more? That, of course, depends on how the choice is being framed.

In his article, Norman highlights a specific example of a Siemens washing machine which was purposely designed with more controls and buttons even though the machine could effectively automate most everything itself. According to Siemens usability expert, automation was akin to a loss of control (how uniquely German). But Norman goes on to make the following observation:

Would you pay more money for a washing machine with less controls? In the abstract, maybe. At the store? Probably not.

That is not a question about the value of simplicity. That is a question of justifying a company’s banding strategy. If your goal is to get a customer to pay $2000 for a washing machine then yes, I guess I can understand the desire to add some fancy doohickies.

Of course, this example obviously misses the alternative most people would prefer to be presented with – is there a lower-priced option that only does the stuff I need it to do. What is that right mix of price vs. features? Ah, there’s the hard work. But banding is the easy way out. And if a low-end product exists only to capture customers not prepared to pay for the premium product then chances are it won’t be successful. And chances are that a bunch of marketing types will be saying to each other, “see, people want more stuff – we made it simple and they didn’t buy.”

But if the work is done to understand the customer and what they need then you get a different result. Just consider something like the Flip Video Camera. Here we have a product, designed to simplify video by removing features superfluous to the requirements of many people while being offered at a much lower price. The result – a highly successful product which is now being copied by competitors.

Where Norman and I agree is in the importance of design. But most technologists see design as being an aesthetic and structural activity. That all we need to do to tackle complexity is to re-order, re-package and re-present a growing list of features.

But what I’m asserting is that complexity will never be tackled, nor simplicity achieved, without a central focus on conceptual design. The central question of design is not how a product does something but why it does it in the first place. And that question can only be answered with an intimate understanding of the people we’re designing for. If we get conceptual design right than what naturally falls out is the realization that every product has an inherent functional vanishing point. Identifying that is the essence of simplicity.

Make no mistake – simplicity is not overrated. It is critical. And while I’ve been looking at the consumer product space in this blog, the lessons here are as relevant to the enterprise IT organization and the technology they manage. Simplicity equals relevance. And IT organizations that continue to ignore this will find that they will have a growing relevance problem with their users.

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