» Archive for September, 2005

Teaching the Elephant to Retire

Friday, September 23rd, 2005 by Jonathan Spira

Last week’s $2.6 billion purchase of Skype Technologies by eBay is noteworthy for one thing.  No, it isn’t the $2.6 billion price tag (plus an additional $1.5 billion if Skype hits certain performance targets in the next few years) for a company that only had $60 million in revenue and has yet to turn a profit.

It isn’t the fact that, besides eBay, Google, the News Corporation, Microsoft, and Yahoo were also said to have been interested in Skype at one time or another.

It isn’t even the fact that eBay might have overpaid, or that eBay may not be the best custodian for Skype.  (EBay says it will use Skype technology to add communication channels for buyers and sellers and it may add click-to-call adverts later on. If this is the best they can do, it is truly a waste of talent and technology.)

It’s simply the fact that the purchase of Skype serves notice to the telecommunications industry that voice is merely another service delivered in a data setting, and that the market for voice calling, as we know it today, is simply fading away, albeit a fast fade to black.

In ten or more years, we may look back and think of the concept of a telephone number somehow anchored to a pair of wires terminating in a telephone apparatus as rather quaint.  Even with today’s fairly early Voice-over-IP technology, such as provided by Skype, I can accept phone calls from my “New York” number whereever I might be, from Los Angeles to London to Munich.

Today, there are many different ways to place the same phone call: I could use my home telephone (landline), I could use my mobile, I could use the softphone from my company extension, or I could use a VoIP provider such as Skype or Gizmo Project.  The enterprise PBX market has already moved to open standards and Internet Protocol telephony; that leaves traditional last mile providers such as Verizon and BellSouth and mobile operators such as T-Mobile and Cingular holding the bag.  These companies have huge investments in infrastructure largely designed for voice – and for mobile operators, profits from voice services have helped make up for the failure of 3G networks to catch on as planned.

Ironically, federal regulators are close to approving Verizon Communications’ $8.5 billion purchase of MCI and SBC Communications’ $16 billion takeover of AT&T, while the $2.6 billion acquisition of Skype doesn’t warrant a second glance.  It’s likely that the Justice Department will require the merging companies to sell some assets, moves which they believe will preserve some level of competition for enterprise customers.  Skype, of course, has very few assets in the traditional sense and uses lines owned by others (the users’ Internet connections), having only to pay for the last mile when a user calls a non-Skype user.  Moreover, Skype may be the first true international telecomms company; most companies in the industry are successors of national monopolies.

It is of course no longer a question of whether VoIP will supplant the incumbent telecomms business, but rather a question of how quickly this will take place.  Millions of people place calls for free every day and the number is increasing in geometric progression.

Will the notion of a pay telephone seem patently absurd in five years’ time?  We live in a time where many are probably unaware of the etymology of the word “dial” as in to dial a phone number.  Perhaps this is why Skype has attracted the attention (and money) that it did.  After all, who’s going to teach the elephant to retire?

Jonathan B. Spira is CEO and Chief Analyst at Basex.

Cost of Interruptions: $588 Billion and Growing

Friday, September 9th, 2005 by Jonathan Spira

We’ve just finished some research where the results stopped us dead in our tracks: unnecessary interruptions cost U.S. businesses $588 billion per year.  Such interruptions come from many sources, including instant messaging, spam e-mail, telephone calls, and the Web.  These are the very technologies we see as making companies more efficient.

Our report,  The Cost of Not Paying Attention: How Interruptions Impact Knowledge Worker Productivity, is the first in-depth look at a problem that results in 28 billion lost man-hours per annum in the United States.  Technology promised to make workers more efficient, but it has the potential to cost companies billions unnecessarily.  We surveyed over 1000 executives and knowledge workers to find out how interruptions impact their work and what they do to counter the impact of unnecessary interruptions – and we were shocked by the results.  A new challenge awaits companies in the knowledge economy: the tools which serve as a lubricant and keep knowledge flowing, such as e-mail, the Web, and instant messaging, interrupt knowledge work as well and cause significant downtime.

The first step is admitting the problem.  Managers need to recognize that 28 percent of each knowledge or information worker’s day may be wasted due to unnecessary interruptions.

In looking at interruptions, it is important to determine whether something is important, urgent, or both.  Many knowledge workers simply do not differentiate, or see everything as both important and urgent.  Importance can also vary, based on the needs of the group or organization.

Interruptive events can be divided into several categories.

- Total interruptions.
- Dominant interruptions.
- Distractions.
- Background activities.

In addition to the above, interruptions may be divided into passive and active interruptions.  Active interruptions are initiated by the very person who chooses to be interrupted by them.  Passive interruptions come from others, and arrive via e-mail, the phone, the Web, a pager, a mobile phone, and instant messaging, just to name a few.

Modern technology has increased the variety of ways and the ease by which a knowledge worker can interrupt, or be interrupted.  Compounding this, the manner in which people work has changed dramatically, and all indications are that more change is in the air.  For example, e-mail has become a staple of communication both internally as well as externally.  But compared to five or ten years ago, how many e-mail messages does one receive today?

An additional issue occasioned by the knowledge economy is that the line between work and one’s personal life tends to blur.  The trend began slowly, as knowledge workers were enabled to check voicemail and, later on, e-mail, from home and on the road.  Today, many people feel that they are at work 24×7.

On the other side of the equation, as mentioned throughout the report, it is typical for workers to read their personal e-mail, make personal phone calls, and even surf the Web recreationally from their offices.  The job will fall to companies to ensure that the lines between work and home do not become too blurred.

Work must go on, despite interruptions.  Using the right tool, instant messaging v. e-mail v. the telephone, will minimize the impact of interruptions in many cases.

Still, knowledge workers can be their own worst enemy.  The majority of knowledge workers we talked to tend to open a new e-mail immediately upon notification.

You can read the executive summary for the report and see for yourself.

Jonathan B. Spira is CEO and Chief Analyst at Basex.