PS Consultants - ideas & solutions

More than just another medium

The Internet is the most visible and talked about symptom of the Information Age. It has many imperfections, but it is certainly the nearest thing we presently have to an embodiment of the technical foundations that have created a whole new ethos for society based on the management and transportation of information.

It's broke, so let's fix it...

'What are the most recurrent themes that blight the lives of those living in a "developed" society today? The order of perception and reality of the following list tends to vary according to individual viewpoints, so in no particular order, how about these for starters:

  • Job security and attaining general "survival income"
  • The ever worsening traffic problems
  • The environment
  • The crime rate
  • Coping with an ageing population and general "welfare" issues
  • Unresponsive government
I put Job Security top of the list, because this is the most immediate issue for many, and the reason why the so-called "feelgood" (incidentally, the Word6 spell corrector suggested "fleeced" for "feelgood".... is it trying to tell us something?) factor has eluded the UK, despite favourable economic fundamentals. It is also one of the driving factors developing the homeworking/self employment culture, which is very closely allied to the driving force of the commercial application of the Internet.

The current theme of business is to consolidate and do everything possible to reduce staffing levels by displacement with technology, because in any developed country, the social costs of employment are probably the biggest burden facing any business, although no one has ever met the fellow, Nat Insurance is generally the most highly paid servant of any business. And so if we accept the principles of free trade, economic reality requires that businesses must be eager to escape from this cost. A firm making bearings in Coventry is competing in the world market with a firm making bearings in Bombay; so there is very little prospect of UK manufacturing industry ever being able to employ more people. The prospect of sustainable full employment through expanded manufacturing is hokum unless the people are happy to accept the living conditions of those workers in Bombay.

The alternatives are the politically contentious expedients of direct employment by the state and its many agencies, (a traditional favourite), or the encouragement of self employment, which is of course where the Internet has come to the rescue, and is being recognised by politicians of all hues as the answer to everything.

Here's a very simple illustration: on a parochial level, I can't find anyone in the Chelmsford area to paint the house for anything I consider to be approaching a reasonable sum; nor can they start for a couple of months. But with 500,000 allegedly unemployed building workers in the country, this seems strange. Clearly there is an immediate need to create the newsgroup so I can post the spec of this job and start getting bids in.

Contrary to the suggestion that this advanced culture will take a generation to filter down to the level of the building trade, builders are not at all averse to technology and were amongst the earliest adopters of the benefits of cellphones. When did a plumber last visit you with a cellphone stuck in his pocket? The UK has a long track record of the eager adoption of "enabling technology", and this will be no different.

Value added, employment subtracted

The argument that the developed countries could somehow keep one jump ahead of the second and third world manufacturing industries and thereby deal in "added value" is getting more tenuous every year. It's not just that the pace of information exchange is instantaneous - it's been pretty quick for the past 10 years - it's that the means of access to the information is now almost universally available. The speed at which the Pacific rim counties have progressed in the past ten years ought to tell us that there really is no employment solution in manufacturing industry, we have to find those jobs elsewhere.

Most of the people turfed out in the latest waves of technoredundency are white collar workers and many have some management skills. There is a surge in self employment and its variants, as reflected in the SoHo computer and office equipment markets.

Well, thanks to the same technology that put many out of work, they can fend very effectively for themselves and use the Internet to communicate in the same way that the multinationals have used their private networks for the previous 20 years. The playing field is levelled with the Internet, and the scope for breaking up large organisations into more socially interesting "cells" is easily available.

The dangers of experience

Beware of the gratuitous use of the expression "Experience". How often have you discovered that "20 years' experience" just one year's experience repeated twenty times ?

In large companies where statistics figure heavily (sic) in the management process, there's a tendency to take the experience of the past and apply this in the form of solutions for the future. Although it's seems like a nice structured and somehow "safe" approach, it doesn't actually work very well, and the evidence is that is the premise upon which the science of economics has been allowed to operate for the past few hundred years. The only we learn from the past is the past, and whilst I don't entirely subscribe to the Henry Ford view of history, his vision of manufacturing owed little to his antecedents.

There is growing evidence that as organisations like banks and building societies continue to consolidate in pursuit of the eighties notions of efficiency, that they might just have lost touch with the mood of the nineties. And not just the mood, but the technology and capabilities of a population increasingly empowered by personal computing and information technology. In the face of this future, the only certain thing is that benefit of reducing the numbers of employees to the barest minimum and substituting with technology at every opportunity.

A classic example of this presumptive approach breaking down seems to be the debit card. This was launched by the banks as a means of simplifying cash transaction management for the "convenience" of the customer. I, like many others, wonder what on earth is the point of a debit card when a credit card would do "nicely" in virtually every case, and where the consumer benefits from deferred payment and an increasing range of benefits such as Air Miles and other points incentives.

The Debit Card was of course launched with much publicity and hype primarily as a means for the banks to cream a percentage on yet more of the transactions going on, based on the notional value of the convenience for stores, who a reputed to dislike cash management and all the implications for its secure handling.

And just as the stores don't like handling real money, the banks really despise the human element of handling the stuff these days, and cannot race fast enough towards a cashless society. Although money in the bank in current accounts may earn a meagre rate of interest, the value to the bank lies in the multiplier where they are able to lend several times the amount of their actual deposits.

Although I'm sure that none would admit it in public, the debit card gives banks a means of allowing customers it deems less than ideal credit risks to have the convenience of portable money without having to bother their ATMs; something else banks would rather do without in the long run. So whereas the credit card carries a certain cachet which "says more about you than can cash ever can", the debit card also has come to suggest a certain absence of credit worthiness that has reduced its appeal.

So the assumption that the debit card was a naturally progressive successor to cash handling has been largely wrong, and the debit card seems to have ended up being used as a means of collecting demographic information for supermarket operators, in return for their agreeing to accept it at all.

Compounding the desire of banks to make their simpler and more profitable, for after all, that is the still the prime directive for any business in a competitive market, we are faced with the so-called smart card. An even more extraordinary feat of the marketeers' smoke and mirrors on the part of the operators, where a card can be "charged" with funds that are directly debited from your account. The cash on the card thus immediately no longer earning any interest for the card holder, but the money remains working away for the benefit of the bank until redeemed. Like travellers cheques.

But here's the really remarkable sleight of hand: if the card is lost, stolen of broken, then the money is gone. There is apparently no record anywhere that can or will permit the dispossessed owner of the card to redeem the loss. I imagine that it will only take a few such tales to do the rounds of the Apocrypha in the local pub before the idea of this format of smart cards is deemed only suitable for dumb people.

Of yes, and guess who benefits from the loss of the cards? That's right, our beneficent and caring listening banks. You may have gathered I am not a fan of the role and demeanour of recent practise, which has all but lost all semblance of service to the business community and its customers.

But given that electronic money is a necessary development, especially since the security that can accompany it using something the GIS/OKI technology, it seems inevitable that it will need to be evolved into a three-way transaction, with a trusted third party maintaining a record of the transactions, before smart people will trust it. And thanks to the Internet, there is no reason why that trusted third party cannot be in any jurisdiction the users' choose. That is, no technical reason.

The government has a vested interest in a cashless world operating in a closed-circuit of UK financial institutions: the black economy would cease to exist, and the management of the proceeds of crime would become ever more complex. At least for the "little people" who pay taxes, to quote the famous phrase of Leona Helmsley a few years ago.

Large multinational corporations that can make cash disappear from an account in one country and reappear anywhere in the world in the twinkle of a modem rarely see the folding stuff any longer anyway. But thanks to the Internet, so can the citizens now. A whole new vista opens up, and politicians have started to cotton on. Expressions like "the need to create a framework for regulation" have started to appear in Labour Party press releases. But is this genie so far out of the bottle? It probably is, and so we cannot look to traditional solutions any longer unless the government is prepared to unplug the Internet or introduce a scheme of packet header identification that would require unprecedented levels of international co-operation.

What has enabled all these cash management schemes that have helped banks cut staff and services to the bone whilst accumulating enormous power in what amounts to a cartel for their services? The common theme is access to sophisticated data communication.

But putting world wide secure data communication in the hands of any individual and business who wants it has the potential to completely change the rules of the game for world finance. It may not necessarily be the Internet as currently perceived, there may well be a series of connected "Internets" specialising in various types of transactions, ranging from the delivery of music, to the specialised management of smart money.

The current technology permits a wide range of these options without any radical new developments. It is now an issue of just doing it, and a number of virtual banking projects are ready to take on the task. But be prepared for a rocky ride, there are some enormous vested interested at stake: indeed, the very fabric of the financial community is challenged.

The World Mall

The Internet is the ultimate efficiency of scale if we want it to be: if there is a store operating on the Internet, and its prices are the lowest for recognisable branded goods, and everyone on the planet can log in to this "virtual store"; then what scope is there for a competitor?

This of course presumes that the virtual store can manage the logistics of servicing the entire world marketplace for the goods it offers. Actually, judging by the lengths of the queues at the local Argos, maybe this store already exists in Chelmsford.

All sorts of head scratching is required to think this dilemma through. The trend towards direct consumer supply that apparently started in earnest with IT products will doubtless develop and spread to other.

But there is no need for a retail "store" like this, whose market influence and power would be awesome beyond belief, since the offering of the diverse manufacturers and source supplies can be seamlessly integrated through the interface. At least this way diversity is maintained and enhanced as new sources can join in the fray.

It does seem that the distributor in the current model of the marketplace is going to be squeezed pretty hard though.

But in terms of finding out what the future holds in this area, we really have only just begun to explore the Internet and its facilities, and it will be one of the most fascinating developments to watch as the process evolves. If anything, the distributors will enjoy a period of growth before universal connectivity places the entire consumer market directly on-line to the distributors' sources.

What next?

The preceding is my summary of why things can never be the same, and why we have to look forward to new ideas to solve new problems. Because if money isn't the same, what else can remain untouched? This presentation has so far concentrated mainly on commercial implications, but a lot of the fuel for fundamental change will come from the way the Internet is manoeuvred to tackle the other issues at the head of this paper:

  • The ever worsening traffic problems
  • The environment
  • The crime rate
  • Coping with an ageing population and general "welfare" issues
  • Unresponsive government
Briefly: is your journey really necessary? Will there be any fuel for it anyway? It's plain that transport issues can and will be tackled by better use of communication technology. If bandwidth is delivered free to the citizens, then the immediate saving on the consequences of the current transport situation would more than pay for it.

The environment gets an immediate dividend from the possible transport revolution.

Crime is a more complex issue, but fewer idle hands can be achieved by sharing the enthusiasm for the information with the presently despairing generations who believe that they will never work. The educational opportunities of the IT revolution will make a big impact: it's a very rare kid that doesn't have some underlying interest in something, computer based learning can treat them individually and give them something completely absorbing.

A more tangential idea that has been mooted to help deal with crime is a side effect of homeworking, where the idea of the community and parental presence can be revisited. Here I have no problem looking back to solutions of a bygone age, because the extended family is clearly one of the factors that manages youth crime very effectively.

If one or both parents is able to work from home and keep on top of the family, then many fundamentals about our society can be improved.

This also conveniently draws in the issue of an ageing population. The extended family is again a time honoured solution that still works well in many societies. A sense of purpose is probably a better prophylactic in old age than all the prozac in the world.

And the last item on this brief list is the issue of a government that is "out of touch with the people". I happen to be a big fan of referenda.

Why base a system of government on the principles of the communications of the middle ages? It makes no sense? If Noel Edmunds can arrange a phone vote to gunge some celebrity who will do anything for a bit of publicity, then we can arrange a phone vote that decides if income tax goes up 5% to throw more money at something like the NHS.

This would encourage a far higher standard of debate and presentation than is presently the case, and the people would be motivated because they would feel that their vote, and maybe their on-line participation, actually made a difference, more than once every five years.

Some hope, or some hope?
Current technology offers all these solutions if we choose to use and develop it. We even have the cash from the proceeds of the current GNP if we choose to budget in a daring and creative way. In fact, I'm assured that we even have the bandwidth already in the ground in the shape of dark fibre that is not being used.

Perhaps the best solution we can provide is to enable every citizen with the bandwidth and the tools to compete in the marketplace with their skills, either for free or at some very basic rate, and pray that enough money comes into the Treasury to keep the nation in the manner to which it has become accustomed.

And do this before our more enlightened competitors in the world market spot the inevitable good sense of the notion and get there first.