Disrupting the Disrupters
Can GM disrupt the disrupters from China? Thats my prayer. I think my work has influenced them to do what they are doing to set up their operation to sell $3,000 cars. But theyve got to be purposeful about that. They cant say, We dont play at that end of the market, and come out with $15,000 cars. The OnStar business is a great business, however.Its not really the auto business though, is it?And thats why. Its not. [OnStar has] negative net assets. Its really an IT company. Your car can send you an e-mail every week. OnStar collects 1,500 points of data from every one of GMs cars. Theyll tell you that you dont need to change your oil yet and, at the rate youre driving, you probably ought to do it on July 1. And your brake pads are 80 percent worn, so you need to get into a dealer within six weeks, and your left rear tire needs 15 pounds of pressure, which is costing you a quarter of a mile per gallon. Its a good business for GM. On the vendor side, where do you see disruption coming from in the computer industry? You see it in mobile phonesin the ability to bring content and functionality to mobile phones and BlackBerrys. There are some exciting opportunities in that space. There are opportunities for mobile phone companies to become banks. You take your purchase to the merchant and key in a four-digit code and the price of what you want to buy and press "send." The money transfers out of your phone account into the merchants accountand the phone company becomes a bank. They start to lend when they see which customers regularly replenish their prepaid account. The phone companies can handle a transaction at a fraction of the cost that MasterCard and Visa can. Technologies have been developed in Japan where you can just tap your handset on the merchants counter, and the transfer happens. Its really an exciting growth opportunity. Its hard to draw the boundary around an industry. We think of computers as computers and mobile phones as mobile phones and banks as banks, but things are blurring. In your research, you note the need for larger companies to think small. How can IT vendors do this? Intuits QuickBase is really interesting. Intuit has a business model to market toward small businesses. To them, a medium-sized businessa car dealer, for exampleis a big business. In software, what Intuits QuickBase offers is the abilityin a very simple, convenient, fast wayto build your own ERP [enterprise resource planning] system. Were writing a case study about this now. Theres a car dealership that bought QuickBase. For a car dealership, the functionality in an SAP system makes no sense. So these guys got QuickBase and developed their own ERP system. When a customer makes a reservation to drop a car off for service, the QuickBase system sends a message to the salesman who sold that customer the car, so the salesman can come and greet the customer when he arrives. That ability to customize is the way youve got to compete down at that end of the market. Americas tech demise is greatly exaggerated. Click here to read more. SAP and those guys feel the market is not growing. Oracles got to acquire PeopleSoft so that they can feel like they are growing. Thats really a consolidation in response to that market not growing. But at the bottom of the market, things like QuickBase are just growing [like] gangbusters. Regarding IBM, this year it may lose the No. 1 position in the industry to Hewlett-Packard as CEO Sam Palmisano pursues a profit-first strategy. Is IBM doing the right things? I dont think so. Theyve done some good things. Really, the only way for a huge company to continue growing is for it to become a composite of small businesses. Because a small business can see small opportunities that are going to be big tomorrow, but a huge monolithic business has a hard time seeing small opportunities. The Indian companies believe they will do to IBM and others what Toyota did to GM. Can the Indians disrupt and displace the established players? I think there is a high probability of that. But the very same opportunity exists for IBM and Accenture. They have a big presence in India. But right now, all of those guys are competing head-on for the business of large global companies. The next wave of growth will be small and medium-sized [customer] companies, domestically in India and then abroad. And so the providers also need to be small and medium-sized or have an economic model that can make money solving those kinds of problems. Check out eWEEK.coms for the latest news, reviews and analysis on IT management from CIOInsight.com.