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Competition, Technology, and Planning: Preparing for Tomorrow s Library Environment

E. Flower, HLA 2003, 2. Competition, Technology, and Planning. CompetitionPorter's Five Forces (Old)TechnologyMoore's Law, Metcalfe's Law, Bandwidth Scaling LawCritiques of Porter by Downes (New Forces) and ReckliesPlanning with Ten Questions. E. Flower, HLA 2003, 3. Part 1 Competition. . E. Fl

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Competition, Technology, and Planning: Preparing for Tomorrow s Library Environment

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    1. Competition, Technology, and Planning: Preparing for Tomorrow’s Library Environment Eric Flower University of Hawai‘i-West O‘ahu uhwolibrary.com flower@hawaii.edu Hawai‘i Library Association 2003

    2. E. Flower, HLA 2003, 2 Competition, Technology, and Planning Competition Porter’s Five Forces (Old) Technology Moore’s Law, Metcalfe’s Law, Bandwidth Scaling Law Critiques of Porter by Downes (New Forces) and Recklies Planning with Ten Questions

    3. E. Flower, HLA 2003, 3 Part 1 Competition

    4. E. Flower, HLA 2003, 4 Porter’s Five Competitive Forces Acting on the Firm Model was proposed by Michael Porter in Competitive Strategy: Techniques for Analyzing Industries and Competitors, NY: The Free Press, 1980. Threat of new entrants into the industry Threat of substitution Bargaining powers of buyers (customers) Bargaining power of suppliers Rivalry among current competitors

    5. E. Flower, HLA 2003, 5 Porter’s Model For Us For today’s presentation, change the word business to libraries

    6. E. Flower, HLA 2003, 6 Porter’s Five Forces Model Graphics Source: http://www.businessplansoftware.org/porter.aspGraphics Source: http://www.businessplansoftware.org/porter.asp

    7. E. Flower, HLA 2003, 7 Threats 1 New entrants Document delivery services of major online services How do you compete with the Microsoft Network’s eLibrary? What if they offered EbscoHost’s Academic Search Premier? For college and university libraries, it’s an institutional threat from online universities and distance/distributed education courses offered by institutions from virtually anywhere What is eLibrary? A: eLibrary is a comprehensive digital archive for information seekers of all ages. Users can do business research, use it for homework, get background materials for term papers, find out about both current and historical events, and more, all in one vast database designed for both depth of content and simplicity of interface. With its one-stop research access, subscribers ask questions in plain English, and eLibrary searches a billion words and thousands of images and quickly returns the information requested. eLibrary aggregates hundreds and hundreds of full-text periodicals, nine international newswires, classic books, hundreds of maps, thousands of photographs, as well as major works of literature, art and reference. What is eLibrary? A: eLibrary is a comprehensive digital archive for information seekers of all ages. Users can do business research, use it for homework, get background materials for term papers, find out about both current and historical events, and more, all in one vast database designed for both depth of content and simplicity of interface. With its one-stop research access, subscribers ask questions in plain English, and eLibrary searches a billion words and thousands of images and quickly returns the information requested. eLibrary aggregates hundreds and hundreds of full-text periodicals, nine international newswires, classic books, hundreds of maps, thousands of photographs, as well as major works of literature, art and reference.

    8. E. Flower, HLA 2003, 8 Threats 2 Substitutes Your users can seek information from the Internet, document delivery services, or other libraries that offer virtually the same mix of services and resources as you do Outsourcing: who does what you do and is willing to sell the service?

    9. E. Flower, HLA 2003, 9 Threats 3 Bargaining power of customers Library users don’t want to pay for anything; they want free document delivery, free photocopying, free printing, and now free color printing

    10. E. Flower, HLA 2003, 10 Threats 4 Bargaining power of suppliers As a single library, how much luck have you had getting a good price from any of the major online database vendors How about bargaining for book prices

    11. E. Flower, HLA 2003, 11 Threats 5 Existing competitors (rivals) Most of the services libraries offer are duplicative, the differences are only in degree, collection content, or in cost Are document delivery services partners or competitors? What if they aggressively sold their products directly to your users without your mediation?

    12. E. Flower, HLA 2003, 12 Porter’s Five Forces Model http://www.quickmba.com/strategy/porter.shtml From the QuickMBA.com site. Topic is Strategic Management. http://www.quickmba.com/strategy/porter.shtml From the QuickMBA.com site. Topic is Strategic Management.

    13. E. Flower, HLA 2003, 13 Porter’s Model Assumptions Assumes identifiable competitors, business partners, and customers who engage in more or less predictable ways Assumes environments remain relatively static with occasional disruptive changes and rare paradigm shifts

    14. E. Flower, HLA 2003, 14 Problems with Porter’s Model Assumes relatively static structures Does not fit well with today’s rapid changes in technology Assumes competitors actually compete Does not consider strategic alliances, value chains, virtual enterprises, illegal activities According to John Del Vecchio writing for Fool.com, a value chain is "a string of companies working together to satisfy market demands." The value chain typically consists of one or a few primary value (product or service) suppliers and many other suppliers that add on to the value that is ultimately presented to the buying public. Microsoft and its Windows operating systems, the nucleus of the personal computer desktop for which much business software is developed, is often cited as a prime example of a company and product that drives a value chain. The businesses who buy personal computer software may spend far more on the add-on software than on the essential operating system that is the de facto standard for running the software. To the extent that companies standardize on Windows, Microsoft is said to control a value chain. This particular value chain was reported in a McKinsey study to be worth $383 billion in 1998. Although Microsoft's share of the value chain was reported to be only 4% of the total, that was still $15.3 billion. A company that develops a product or service that engenders a value chain by providing a platform for other companies is considered more likely to increase its market share than a company that tries to provide the entire value chain on its own. According to John Del Vecchio writing for Fool.com, a value chain is "a string of companies working together to satisfy market demands." The value chain typically consists of one or a few primary value (product or service) suppliers and many other suppliers that add on to the value that is ultimately presented to the buying public. Microsoft and its Windows operating systems, the nucleus of the personal computer desktop for which much business software is developed, is often cited as a prime example of a company and product that drives a value chain. The businesses who buy personal computer software may spend far more on the add-on software than on the essential operating system that is the de facto standard for running the software. To the extent that companies standardize on Windows, Microsoft is said to control a value chain. This particular value chain was reported in a McKinsey study to be worth $383 billion in 1998. Although Microsoft's share of the value chain was reported to be only 4% of the total, that was still $15.3 billion. A company that develops a product or service that engenders a value chain by providing a platform for other companies is considered more likely to increase its market share than a company that tries to provide the entire value chain on its own.

    15. E. Flower, HLA 2003, 15 Part 2 Technology

    16. E. Flower, HLA 2003, 16 Moore’s Law In 1965 Gordon Moore observed an exponential growth in the number of transistors per integrated circuit and predicted that this trend would continue What it means to us today: computing power doubles about every 18 months

    17. E. Flower, HLA 2003, 17 Moore’s Law

    18. E. Flower, HLA 2003, 18 Moore’s Law Graphics Source: http://www.intel.com/research/silicon/mooreslaw.htm Graphics Source: http://www.intel.com/research/silicon/mooreslaw.htm

    19. E. Flower, HLA 2003, 19 Metcalfe’s Law Coined by Robert Metcalfe, inventor of the Ethernet network architecture The potential value of a network equals the square of the number of nodes connected to it 2 users, potential value of network = 22 = 4 4 users, potential value of network = 42 = 16 8 users, potential value of network = 82 = 64

    20. E. Flower, HLA 2003, 20 Metcalfe’s Law

    21. E. Flower, HLA 2003, 21 Bandwidth Scaling Law Described by Jack M. Wilson, then Professor of Physics, Engineering Science, Information Technology, and Management, Rensselaer Polytechnic Institute The bandwidth of communication on optical fibers is increasing exponentially just as is the power of the microprocessor This bandwidth doubling will continue into the foreseeable future Paper presented by Wilson in 2001 while he was at RPI. He’s now CEO of UMassOnline, the gateway to the University of Massachusetts' online education system.Paper presented by Wilson in 2001 while he was at RPI. He’s now CEO of UMassOnline, the gateway to the University of Massachusetts' online education system.

    22. E. Flower, HLA 2003, 22 Bandwidth Scaling Law Graphics source: http://www.ntia.doc.gov/otiahome/top/conferenceworkshops/2001_outreach_workshops/three_laws.html Graphics source: http://www.ntia.doc.gov/otiahome/top/conferenceworkshops/2001_outreach_workshops/three_laws.html

    23. E. Flower, HLA 2003, 23 Moore + Metcalfe + Bandwidth => Powerful Networks Ubiquitous wired and wireless networks Secure Reliable High speed with Quality of Service Seamless access to data and networked resources once you have been authenticated

    24. E. Flower, HLA 2003, 24 Part 3 Unavoidable Digression on Economics

    25. E. Flower, HLA 2003, 25 Ronald Coase Transaction Costs and the Firm Coase concluded that firms are created because the additional cost of organizing them is cheaper than the transaction costs involved when individuals conduct business with each other using the market Coase won the Nobel Prize in 1991 for this observation; “The Nature of the Firm” Economica, New Series, v. 4 No. 16, pp.386-405, 1937 Ronald Coase in “The Nature of the Firm” (Economica, New Series, v. 4 No. 16, pp.386-405, 1937)Ronald Coase in “The Nature of the Firm” (Economica, New Series, v. 4 No. 16, pp.386-405, 1937)

    26. E. Flower, HLA 2003, 26 Transaction Costs May Approach Zero In an online environment, Moore’s Law and the Bandwidth Scaling Law drive transaction costs down They can approach zero in very large organizations with very large numbers of non-mediated transactions In business this means concentration, centralization, or bankruptcy; in libraries this means concentration, centralization, and, we hope, cooperation

    27. E. Flower, HLA 2003, 27 …And Then There Were Two At the end of 2002 there were only two full-line PC suppliers, Dell and HP They offer goods for all markets—large and small organizations, enthusiasts, consumers with full lines of servers, desktops, notebooks, handheld devices, peripherals, storage systems, etc. Dell did it through internal growth and managing expenses, HP through innovation and acquisition Michael Miller, PC Magazine online, January 9, 2003 Relevant excerpt: http://www.pcmag.com/article2/0,4149,813365,00.asp Print full article: http://www.pcmag.com/print_article/0,3048,a=35331,00.asp Broadband Has Arrived, January 9, 2003 By  Michael J. Miller Relevant excerpt: http://www.pcmag.com/article2/0,4149,813365,00.asp Print full article: http://www.pcmag.com/print_article/0,3048,a=35331,00.asp

    28. E. Flower, HLA 2003, 28 Fuzzy Economics Online 1 Traditional economics are based on the concepts of scarcity and demand Goods are valuable either because of their use and/or scarcity; use it and lose it Online information is non-rival and non-excludable It can be shared, it doesn’t get used up, and it’s cheap to provide

    29. E. Flower, HLA 2003, 29 Fuzzy Economics Online 2 “. . . many readers can use the same digital article without ever "using up" the information; unlike a physical object, information cannot be exhausted. When produced and distributed digitally, information can retain its non-rival, non-excludable form. Information is not a material object, and the explosion of the Web has demonstrated that information is simply evanescent bits of data that are not subject to the conventional laws of economics.” “The Future of the Book in a Digital Age,” David J. Staley, The Futurist, Sep/Oct2003, v.37, #5, pp.18-22. Database: Academic Search Premier, AN 00163317

    30. E. Flower, HLA 2003, 30 EBSCO Acquires InfoToday Databases 1 EBSCO Publishing (EBSCO) and Information Today, Inc. have come to terms on an agreement whereby EBSCO has acquired two popular databases, Information Science & Technology Abstracts and Internet & Personal Computing Abstracts. This development marks another addition to the growing list of database acquisitions finalized by EBSCO in recent months. EBSCO press release July 9, 2003.

    31. E. Flower, HLA 2003, 31 EBSCO Acquires InfoToday Databases 2 "It has become increasingly obvious that users of information services prefer integrated solutions," said Tom Hogan, president and CEO of Information Today, Inc. "They want abstracting and indexing databases to be seamlessly linked to full-text sources. Rather than create yet another full-text aggregator, we chose to find a home for our databases that would better serve the needs of our user community. EBSCO has initiatives in place to provide this sort of integrated service and has a robust sales and customer service organization to take the databases to the next level of market penetration."

    32. E. Flower, HLA 2003, 32 Critiques of Porter’s Model: Three New Forces Critique of Porter’s Forces by Larry Downes in “Beyond Porter,” premiere issue of Context, 1997 Downes describes three forces that are disruptive to existing operations and planning Digitization Globalization Deregulation Text is at http://www.contextmag.com/archives/199712/ technosynthesis.asp in the premier issue Text is athttp://www.contextmag.com/archives/199712/technosynthesis.asp in the premier issue

    33. E. Flower, HLA 2003, 33 Digitization 1 “As computing power and communications bandwidth become cheap enough to treat as disposable, you’ll soon have far more information about your competitors, suppliers, and customers. The rise of public networks will make that information more widely available, increasing the possibilities for collaborating and competing. (Continues next slide)

    34. E. Flower, HLA 2003, 34 Digitization 2 . . . The result of this information explosion won’t just be more/better/ faster. Instead, the result will be vastly changed markets that involve unfamiliar, unpredictable competitors and partners that mutate even before you get comfortable with them.”

    35. E. Flower, HLA 2003, 35 Globalization 1 “The world is rapidly migrating to one very large network, whose attraction is irresistible. Improvements in distribution logistics and communications have allowed many local businesses to become global ones overnight--including discount distributors of everything from contact lenses to bathroom tiles. (Continues next slide)

    36. E. Flower, HLA 2003, 36 Globalization 2 . . . It is also now common for companies to draw on a global network of partners and suppliers. Customers, meanwhile, are happy to engage in border-less shopping for everything from entertainment to software to cars and electronics.” (Oh yeah, information too)

    37. E. Flower, HLA 2003, 37 Answers.Google.com “More than 500 carefully screened Researchers are ready to answer your question for as little as $2.50 -- usually within 24 hours. Your satisfaction is completely guaranteed.” (That’s a guarantee I can’t make.)

    38. E. Flower, HLA 2003, 38 Amazon.com “Starting today (October 23, 2003), you can find books at Amazon.com based on every word inside them, not just on matches to author or title keywords. Search Inside the Book -- the name of this new feature -- searches the complete inside text of more than 120,000 books -- all 33 million pages of them. And since we've integrated Search Inside the Book into our standard search, using it is as easy as entering a search term in our regular search box.”

    39. E. Flower, HLA 2003, 39 Deregulation 1 “The current mania for deregulation reflects a belief by governments and regulated industries alike that the disease (open, international competition) is better than the cure (laws to protect local economies). (Continues next slide)

    40. E. Flower, HLA 2003, 40 Deregulation 2 . . .The open market, which adopts information technology more quickly than did industries with a legacy of regulation, is becoming a viable alternative for many activities. The change is contributing to the radical shrinking, outsourcing, and restructuring of traditional enterprises.”

    41. E. Flower, HLA 2003, 41 The New Forces and Technology Downes concludes that, “Executives in every department must learn that technology has become far more than an enabler of new business strategies. Technology has become the essential disrupter of markets and operating models. Technology, in other words, isn’t the solution. It’s the problem.”

    42. E. Flower, HLA 2003, 42 Disruptive Technologies Technology may be called disruptive because it causes change Technological change may be disruptive, but it need not be bad; witness the following slide which lists technologies that improve data and information flow but may be disruptive when first introduced into an organization

    43. E. Flower, HLA 2003, 43 Ten Disruptive Technologies from InfoWorld 01/06/03 10Gigabit Ethernet Digital Identity Mac OS X Office 11 XML Open source/ Open standards Self-service CRM technologies Virtualization Weblogs Web services Wi-Fi InfoWorld, 01/06/03, p. 16. Disruptive Technologies Platforms: Office 11 XML; Mac OS X; Open source (non-proprietary) Networks: Wireless (WiFi); 10GbE; Virtualization Applications: Blogs; Web services; Digital identity Services: Self-service CRM Disruptive Technologies Platforms: Office 11 XML; Mac OS X; Open source (non-proprietary) Networks: Wireless (WiFi); 10GbE; Virtualization Applications: Blogs; Web services; Digital identity Services: Self-service CRM

    44. E. Flower, HLA 2003, 44 Disruptive Technologies Our job is to turn this around; to understand, explain, and implement “disruptive” technology for the betterment of our organizations and the advancement of their missions

    45. E. Flower, HLA 2003, 45 Dagmar Recklies: Beyond Porter Dagmar Recklies notes that “. . . global and networked markets impose new requirements on organizations’ strategies. It is not enough any more to position oneself as a price-leader or quality-leader (like Porter suggests in his Generic Strategies model). (Continues next slide) “Beyond Porter—A Critique of the Critique of Porter” at http://www.themanager.org/pdf/BeyondPorter.PDF Source: http://www.themanager.org/pdf/BeyondPorter.PDFSource: http://www.themanager.org/pdf/BeyondPorter.PDF

    46. E. Flower, HLA 2003, 46 Recklies: Beyond Porter . . . Rather competitive advantages emerge now from the ability to develop lasting relationships to more mobile customers and to manage far-reaching networks of partners for mutual advantage.” (italics and underline added for emphasis)(italics and underline added for emphasis)

    47. E. Flower, HLA 2003, 47 Porter’s Model Today Use the model as a starting point for further analysis and then factor in changing technologies and computing environments brought about by Moore’s Law, Metcalfe’s Law, and the Bandwidth Scaling Law

    48. E. Flower, HLA 2003, 48 Get Ready for Tomorrow’s Business Environment Individualization and personalization of goods generally produced for mass consumption From “10 Myths About PDAs Debunked” Nancy R John and Dennis C. Tucker, Computers in Libraries, March 2003, pp. 24-30. Only three OPAC vendors advertise that their products can be adjusted to fit the displays of handheld devises: 1. TLC/CARL’s YouSeeMore. 2. Cuadra Star’s XML interface can be used by hand-held devices. 3. Innovative Interfaces AirPAC is a catalog interface designed for wireless devices. From “10 Myths About PDAs Debunked” Nancy R John and Dennis C. Tucker, Computers in Libraries, March 2003, pp. 24-30. Only three OPAC vendors advertise that their products can be adjusted to fit the displays of handheld devises: 1. TLC/CARL’s YouSeeMore. 2. Cuadra Star’s XML interface can be used by hand-held devices. 3. Innovative Interfaces AirPAC is a catalog interface designed for wireless devices.

    49. E. Flower, HLA 2003, 49 Part 4 Ten Critical Questions

    50. E. Flower, HLA 2003, 50 Competition: Competitive Forces Acting on Your Library 1. What competitive forces are acting on your library? Existing rivals, new entrants, substitutes, customers, suppliers 2. How are you handling the added forces of digitization, globalization, deregulation, and personalization?

    51. E. Flower, HLA 2003, 51 Technology: Technological Forces Acting on Your Library 3. Do you plan with Moore, Metcalfe, and the Bandwidth Scaling Law in mind? 4. Who do you connect to, who connects to you, and how fast are your network connections to and from the outside world? 5. Are you going to thrive or merely survive in a digital world?

    52. E. Flower, HLA 2003, 52 Planning 1 6. How are you driving down the costs of the information, communications, and services you provide while maintaining quality of service? 7. What technologies and consortial agreements do you use to lower your transaction costs?

    53. E. Flower, HLA 2003, 53 Planning 2 8. Do you offer a media-rich Net-centric environment? If not, are you preparing for a media-rich Net-centric environment? Is it wireless? 9. Do you have a strategic plan for information technology? How do you deal with “disruptive” technologies?

    54. E. Flower, HLA 2003, 54 Planning 3 The Final Question and the Only One That Really Matters 10. Do you offer the right mix of services, and enter into the kinds of agreements, that will develop and maintain lasting relationships with your clientele and partners?

    55. E. Flower, HLA 2003, 55 Do You Get IT?

    56. E. Flower, HLA 2003, 56 Here’s A Simple 15 Second Technology Application Test 1. Tell the person at your side how to get to your library’s web page; have them explain it back to you without writing anything down If no site, you fail before the test starts If you don’t know how to do it, you fail If they couldn’t report back properly, you fail If they could report it back, congratulations, you pass the test

    57. E. Flower, HLA 2003, 57

    58. E. Flower, HLA 2003, 58

    59. E. Flower, HLA 2003, 59 Thank you.

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