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Considering The Path Less Taken IBM recommends the investment in and development of infrastructures over betting on Business Models Michael E. Dillon Director, Digital Communities Integrated Communications Service Product Line IBM Global Technology Services Americas

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slide1

Considering The Path Less Taken

IBM recommends the investment in and development of infrastructures over

betting on Business Models

Michael E. Dillon

Director, Digital Communities

Integrated Communications Service Product Line

IBM Global Technology Services Americas

February 13, 2007 – W2i Tempe, AZ

slide2

Rationalization

(1) in psychology is the process of constructing a logical justification for a decision that was originally arrived at through a different mental process.

Source: Wikipedia.com

mental process 1 get the vendor to foot the bill
Mental Process 1: Get The Vendor To Foot The Bill
  • Trendy approach
  • Other cities doing it
  • No financial burden to citizens
  • Positive impact on Digital Divide and Economic Development
  • Elected officials make a difference

Realities

  • Community gets increasingly involved in business model with vendor
  • Greater understanding of subscriptions and other revenues required for success transfers
  • Concerns for long-term sustainability arise
  • New compromise posture begins making concessions
  • Workable model emerges, differently than originally planned.
slide4
Mental Process 2: Get A Good Vendor And Model To Foot The Bill, But Participate In The Success Meaningfully
  • Pre-planned enablement and replacement strategy
  • Well-understood efficiencies and benefits
  • Financial commitment is offset by financial relief from more costly services
  • Positive impact on Digital Divide and Economic Development spurred
  • Elected officials make a difference

Realities

  • Community is key to the business model with vendor
  • Community can leverage its financial strength to use vendors financing
  • Deployment is sure and predictable due to available funds for build out
  • Long-term sustainability ensured by community Anchor Tenancy
  • New compromise posture begins making concessions
  • Workable model emerges, differently than originally planned.
philadelphia pa u s department of labor statistics
Philadelphia PA – U.S. Department of Labor Statistics

Yes I know we’re in Tempe . . . . Broken Laptop Screen . . . . FEDEX here by 10 a.m.

u n conference on trade and development
U.N. Conference On Trade And Development
  • Governments have an important role to play in improving access to broadband through infrastructure and policy.
  • Wireless technology and satellites can help circumvent the cost of infrastructure for sparsely populated, remote or rural areas.
  • Policies can either encourage or be a disincentive to competition, and thus have an impact on availability and prices.
  • Broadband is becoming vital for businesses, offering competitive advantages being compared to water and electricity.
  • Broadband enables companies to engage in more sophisticated e-business processes . . .
  • Use of Broadband directly increases competitiveness and productivity
two models for one community

Digital Video Surveillance

Fixed and Mobile

Emergency Response Interoperability

Public Utilities (e.g. Automatic Meter Reading)

Two Models for One Community?

DIGITAL COMMUNITY

Community Broadband Networks

PUBLIC USAGE MODEL

Community Broadband Networks

GOVERNMENT USAGE MODEL

Public Broadband Access

  • Close the Digital Divide, bringing broadband access to the masses
  • “For the People”

Intelligent Transportation Systems

Economic Development

  • Attract / retain businesses & citizens
  • Promote healthy tax base through increasing property values

Workforce Mobility (e.g. Building Inspections, Case Management)

ibm s focus on business drivers for digital communities
IBM’s Focus On Business Drivers For Digital Communities
  • Safety, Security & Service Improvements
  • Alternate Communications capability
  • Leased Line Replacement
  • Operational Efficiencies & Process Improvements
  • Delivery of existing web-based apps and data to constituents
    • Neighboring Agencies/Mutual Aid
    • Common Focus or Joint Initiatives
  • Situational Networks
    • Special needs (Public Safety & Emergency Response)
    • Cross Agency Sharing
    • Limited duration or permanent use
    • Mobilization of employees and contractors
  • Innovative Delivery Venues
  • Connectivity and Equal Access
  • Delivery of web-based services to disadvantaged citizens
  • Accessibility
  • Regional Initiatives

Cost Savings

G2G

G2E

G2C

Digital Divide

Offerings & Capabilities

Attractiveness

Economic Development

  • Fee-based access for convenience
  • Community Competitiveness (Brain Drain)
  • Economic Development Imperatives
  • ISP Ownership/Involvement

Public Access

Get A Service Provider To Build It And Wholesale It Retailers

Build It And They Will Come

slide10

Assessing Appetites For Using Public Access Networks

Effectiveness

Public

Safety

Public Trust

Other

Government

Entities

Economic

Development

(Public Access)

Money

Politics

Service

Provider

Or

Other Network Owner

Community Interests

Profit

Shareholder Value

in the news washington post sunday 10 22 06
In The News: Washington Post Sunday 10/22/06

1

$

Yahoo Shortcut

2

Sponsor Results

$

3

4

$

citizens as assets in the models
Citizens As Assets In The Models

Advertising Revenue Models can result in:

Targeting unwitting users so they will make spontaneous purchases

  • Information is filtered to entice spending rather than delivered to answer questions or to provide information.
  • Unplanned purchases can drive household debt.

Advertisers pay more for as users are brought closer to content at the point of buying decision-making.

Free enticements exert additional pressure on users to click again, identifying users with higher levels of interest.

Users are placed in a position to begin giving up information about themselves.

Is advertising success as reported by Search Engines reliable as to validity and what impact does it have on business model attainment?

1

2

3

4

5

considerations
Considerations
  • Avoid getting hooked on Business Models
  • Weigh the price of Free as well as its viability
  • Remember what you’ve learned over the years:
    • If its true, it isn’t new, and if its new, it isn’t true.
    • There’s no free lunch.
    • Beware of stranger bearing gifts.
  • Decide a level of commitment for your initiatives commensurate with the goals and objectives.
  • Remember that form follows function:
    • If the network is intended to be free, then the business model rules
    • If the network is intended to solve problems and present opportunities, then purpose rules.

There’s a point when the communities and the vendors get on the same side of the table . . .

how does the dc service provider make money
How Does The DC Service Provider Make Money?

Subscriber

Revenues

CAPEX

Advertising

Revenues

(-c)

a

d

e

OPEX * d

Anchor Tenants

X

= Profit

X

Philanthropy

Other Costs * d

Community

Contributions

Other Income

Wholesale Rents

a = Incomesc = Churn d = Duration (years) e = Expenses

slide17

Q&A

Innovation that matters . . . .