Information Overload

A look back....

2014-04-24T09:26:00.003-04:00

With the news of the FCC ending net neutrality, I thought I'd republish something I wrote 4 years ago. Wish I bought some lottery tickets back then....

Enjoy!

Its been a busy 6 months for Cloud computing and in the information business, most notably: Apple's launch of their iPad and iPhone 4 - including 'Antenna-gate'; Google and Verizon's pitch on Net Neutrality rules; AT&T implementing 'usage-based' charges for data plans; major organizational changes at Thomson Reuters and their launch of Elektron and Eikon; Bloomberg pushing open systems and symbology; Microsoft launching Dallas and Azure; Clare Hart taking over at InfoGroup as they go private; and finally, IDC going private. Normally, this would make a full year of news. But what to make of it all?

Here is what I've learned from the first 6+ months of 2010:

Distribution Networks are the next battle ground. While the platform wars are well underway, the more interesting (and possibly destructive battle) is upstream in the delivery of information. With wireless providers looking to charge for usage over their networks, telcos divided on the Net Neutrality issue and cable providers looking outdated in their models, more and more the issue of bandwidth and guaranteed delivery will dominate the discussion. This means -
Google and Apple are becoming (or already are) media companies - and more. Maybe not in the traditional sense but its happening. With their approach to collection of content and push to own the distribution (and cut out infrastructure owners like cable, telcos and wireless firms), Google and Apple are by-passing traditional media companies like NBC and News Corp and leapfrogging Cablevision and AT&T. As a result -
Content is (still) King. Content providers can now selectively pick their distribution network like never before. Freemium and Premium economic models are gaining prominence allowing the new media companies to garner revenue on both advertising and a toll for leveraging their distribution networks (Apple is the new model for this; cable and satellite, the old model). Which translates to -
Ecosystems are as or more important than the platform. Whether its upstream information or downstream applications, the complete value chain offered by the platform mitigates the intrinsic value of the platform. Why is RIM, the dominate player in the professional smart-phone, market worried? They have a tenth of the ecosystem of Apple and a fifth of Google's. As valuable the Blackberry has been for business, unless RIM can build a better ecosystem, they have a real long term issue. In their favour is -
Apple doesn't care about businesses - or large ones anyway. Apple refuses to go 'up-market' and address the real issues enterprise/large businesses have with Apple's security and 'openness'. As a result, RIM (or maybe Microsoft or Google) can keep them out. Which is interesting since -
Open systems and platforms are in; closed ones are out. News of Android-based smart-phones overtaking iOS based devices for number 3, (behind Blackberry and Symbian), helps close the deal here on the smart-phone market. More generally, adoption of cloud platforms such as Salesforce.com, Azure and others are wide-spread among businesses of all sizes - and growing. And finally -
Social media and networks will be focal point of business for the next 5 years. Firms are starting to realize nothing drives revenue like an engaged customer and yet few really have engaged customers themselves. As firms realize these networks change the way they interact with customers from transactional to relationship-based, customers will become partners not dollar signs.

For information companies, the above present a problem. Most have a closed, proprietary system; have poorly managed their distribution networks (outside of their closed networks); don't use social media/networks as a means to engage with customers; have put more focus on Apple platforms than others; and really haven't fostered the notion of an 'ecosystem' of partners, but a loose confederacy of frenemies. Many will have to change their approach or will find further pressure on not only revenue growth but maintaining existing revenues.

Given the first part of 2010 and the changes, I can't wait for the rest of the decade to unfold.

As always, comments welcome.

Open Letter to Geoff Beattle, Tom Glocer and Bob Daleo

2011-08-09T10:26:00.000-04:00

With the dramatic changes at Thomson Reuters and a long time former employee who still has a soft spot (must be my Canadian ties), I thought I'd offer my advice to the senior executive as they assess what to do next with the firm. I'm not going to name people here or offer my opinion on who is best for which roles, but simply to offer a possible organizational structure for the new Financial Professionals and Marketplaces group. As always, comments are welcome - enjoy!
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Gentlemen,
As a long-time former employee of Thomson Reuters (over 14 years), I took little pleasure in seeing the changes announced last week. It has been a difficult period following the acquisition of Reuters by the Thomson Corporation and it has not been made any easier by upheaval in the world's financial markets and economies. However, change to the organization was necessary to meet the changes in Thomson Reuters customers and the marketplace since April 2008. I have no skin in the game, as it were, and speak only as someone who hopes to see Thomson Reuters continue to grow as an organization and reach the potential we all saw in the days following the acquisition announcement. With that in mind, I humbly propose the following changes and formal structure for the new Financial Professionals & Marketplaces group.

Create a unit focused on top global investment, multi-service banks. Banks have grown increasingly complex and as a service provider, Thomson Reuters needs to dedicate focus to them. Institutions like Goldman Sachs or UBS are not only global, but have investment banking, asset management, wealth management, prime brokerage and prop trading groups. Trying to serve them with a Chinese menu of services from a number of sales and business unit groups makes no sense. Address it.
Unify the Research portfolio. Research is a transactional business now. Sell-side, buy-side and independent providers need better end to end management of the research services they offer and consume. New issues of compliance and readership liability need to be addressed for this market. Further, a more sophisticated retail class is looking for more insight and an opportunity to invest in thought leadership, based on editorial excellent exists. Merge the Investment Banking and Investment Research groups dealing with research and address it in one capability. Having it fractured creates chaos and competing motives.
Hedge Funds are unique - treat them as such. A good move was enabling the Enterprise group and Sales & Trading to work together to deliver a hedge funds trading service. Put the quantitative capabilities from Investment Management (including Starmine) and from S&T to create a group focused on Hedge Funds. Follow that by moving out all direct customer datafeed services into the new Enterprise group.
Mutual Funds are a big enough business to stand on their own. At the end of 2010, approximately $16 trillion dollars according to ICI sat in global mutual funds. Consolidating your view of mutual funds allows you to both deliver into the US market as well as address international opportunities (Islamic Finance funds, BRIC funds), and be flexible enough to look at strict asset-class and multi-asset class funds holistically. As well, consolidating allows you to integrate front and back office much more effectively leveraging assets within existing Sales & Trading, Investment Management and Wealth Management groups.
Merge the M&A and Deals activities into the Professional group. M&A is not a financial activity - it is a legal activity. Underwriting and lending are legal activities. Move the unit to the legal businesses, specifically the newly formed US Law and/or Business of Law units. The Financial unit competes with Lexis Nexis, OneSource and other nascent legal competitive offerings, so move the entire business to compete more aggressively
Don't Sell Risk Business - Sell Corporate Services. At a time with management of risk is becoming the key issue thanks to Dodd-Frank, you want to sell the business? Ask yourself this - are the businesses of corporate investor website hosting, web-casting, corporate communication services and business intelligence services really businesses you ought to be in? Your better served leveraging your data through the Enterprise division than trying to build tools and services outside your main business.
Get serious about your alliances business. Third party data distribution constitutes about 10% of the ex-Investment & Advisory business. The business is high-margin, low cost and high retention - why not focus on it? Its not the threat to your desktop business as many insiders would let you believe. Ask the customers - they love this business and would want you to do more here. Carve a separate unit to show dedication. Your customers will respond positively - and your competitors will hate you.

The result of these changes would be an organization along these business lines:

Global Financial Customers - global multi-service banks
Hedge Fund Customers - hedge funds and fund of funds
Investment Management Customers - asset management firms and mutual fund companies
Research & Advisory Customers - wealth advisories, private equity and venture capital firms
Strategic Alliances - in-bound and out-bound content and technology partnerships for the desktop and support market transparency

As well, you will need a horizontal group addressing the various functional needs from a desktop/workflow solution stand point. Within that horizontal, have the following 'capabilities':

Transaction Solutions - delivering order management, trading and market execution capabilities across all asset-classes
Risk and Compliance Solutions - delivering the next gen of risk and compliance solutions for the front office while supporting back-office needs thus unifying the two groups
Analytics and Tools - delivering next gen analytics and tools including visualization and quant tools for hedge funds, traders, as well as performance valuation tools for asset/portfolio managers,
Mobile Solutions - encompassing the next gen of applications and services for non-tethered users
Collaboration Solutions - providing next gen collaboration tools for buy and sell-side collaboration, intra-company communications and collaboration including research access, control and distribution across all sources and consumers

The result is a simplified business with clear focus; capabilities become 'shared services' to be leveraged by each business unit; central management of the strategy sits firmly within the unit, yet flexibility to address unique regional needs exists; clear accountability for business growth or capability development is set; focus on alliances - both content and technology - to hasten time to market, improve acquisition returns and meet customer needs.

With these changes, the existing business lines are broken down and reformed in clear vertical stacks, allowing sales and the business unit to be aligned on customer types. Further, instead of separating front and back office in some customer groups (as today's hedge funds are for example) the business can take a unified view on delivering end-to-end solutions.

Enterprise Solutions can focus on its core competency - data management and distribution - and can seamlessly fit with the new desktop alignment for all customer types. Further, by centralizing the alliance business within the new desktop group, commercial and alliance strategy can be meshed with each desktop unit, thus addressing potential channel and revenue conflicts. Enterprise can continue to focus on data management, distribution alliances to further build out their core capabilities.

These changes will mean selling off the Corporate Services business. The web casting and corporate communications business would have a number of potential buyers (Cisco & PRNewswire come to mind) and the investor website hosting and IR desktop business would draw interest from exchanges as well as number of niche web site providers

The business intelligence portion of the Corporate Services business, is in a highly competitive market. Competitors such as InfoGroup, Jigsaw (backed by Salesforce.com), Dun & Bradstreet/Hoovers and ZoomInfo on the information side and Business Objects, Cognos/IBM and Informatica from the technology and tools side, not to mention the hundreds of niche players, create a very crowded market for Thomson Reuters to operate. A better strategy would be through building content-based alliances to fill gaps in coverage by the other information players or fuel the advanced tools the technology companies offer, rather than trying to deliver packaged application solutions.

Another change would be to break the current Sales & trading structure to merge into these new business units. With a more focused horizontal capability group delivering transactions and connectivity solutions, each segment can easily incorporate those tools as best serving their customers.

The final change, would be moving the support of solutions for mergers, acquisitions and underwriting (deals) to the legal business. Although not trivial, the expertise of the Legal business in addressing this unique workflow will allow for new solutions around deals (such as virtual deal and clean rooms) to be incorporated into a law firm's overall business.

This is my view based on the current state of the Market group's customers. As we've seen, events can lead to significant changes to how customers operate and are structured. Thomson Reuters remains a strong brand with valuable assets, but aligning those assets are key to success. I believe my proposed changes to help further that alignment.

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One final personal note - two former colleagues of mine passed away over the weekend. One, Peter Jackson, died suddenly on August 5. The other, John McHugh, suffered a massive stroke a couple weeks ago and passed away Saturday afternoon.

Both were gentlemen in every sense, never speaking harshly of anyone and always offering to help a colleague. Both had a willingness to learn and expand their knowledge. I had the pleasure of working with John for a number of years and I'm glad I did. Peter, was a mentor, helping me with my first blogging attempt while still at Thomson Reuters, challenging me to push boundaries. I am a better person for knowing them both.

Join me in keeping our thoughts and prayers with both men and their families as they cope with their tragic losses.

2011 - Check In on Predictions

2011-08-01T13:51:00.001-04:00

August 1 - can it be the summer is nearly gone and the year over half way gone? It is true and as a result, I thought I'd take a look back on my 5 fearless predictions for 2011 and see how I've done.

Prediction 1 - Organizational Shake up at Thomson Reuters. I guess I got this one right. After one minor adjustment in February, the much needed shake happened just a couple of weeks ago. More changes are sure to follow as the Woodbridge team look deep into the organization. Whether the changes turn around lack-luster performance in some of the units remains to be seen. We'll weigh in once more becomes available.

Prediction 2 - Factset expands into Investment Banking with more gusto. Ok, I guess Factset hasn't done much here. In reading through their quarterly releases, sell-side business has been 18% of new revenues since early 2010. They remain arguably the choice desktop for portfolio managers and researchers and continue to make in-roads within M&A functions. However, if they did more to tie the buy and sell-side together through research and advisory tools and collaboration, they could hit 20 to 25% growth. For now, this is a miss, but to reach a billion dollar company, diversification of their portfolio of products is needed and Banking makes the most sense.

Prediction 3 - InfoGroup enters into financial services. This might be a 2012 actuality as opposed to 2011, but signs are there. The company, under Clare Hart, has sold off a couple assets and Gemma Postlethwaite has brought on board ex-Thomson Reuters I&A content strategist Christian Ward, who's work in the financial data space is well known. With the pending changes at TR, I would expect Ms. Postlethwaite and Mr. Ward to poach a few former colleagues for InfoGroup to set the stage for an aggressive 2012.

Prediction 4 - Market data accelerates to the cloud. Well, this one was true, and as expected it wasnt a named vendor but an exchange that set the bar. NYSE Euronext made a couple announcements the first part of the year which showed the exchanges commitment to the cloud as a technology solution for the industry. In particular, their announcement of a "Community Platform" in cooperation with VMWare and EMC. As I noted in this research report in partnership with Saugatuck Technology, this move has tremendous upside for customers and NYSE. Will more exchanges follow NYSE's lead? It remains to be seen. As for vendors, they seem to be lagging well behind.

Prediction 5 - Apple acquires Salesforce.com. This one hasn't happened (yet) but it still remains appealing. As noted by Business Insider, Apple has over $76 billion in cash on its books, more than the US government at the time of this post. Saleforce.com market cap is only $19 billion. Apple hardware and Salesforce.com software/platform make an ideal combination for the enterprise. Salesforce.com's annual conference is scheduled for August 30 to September 2 and each Dreamforce they have a major announcement. What will this year's be?

Of the 5, 2 have been correct, 1 is leading to be correct and the other two are still out - not bad. With another 5 months to go, here's hoping I go 5 for 5.

Customers - To the Cloud

2011-03-16T12:33:00.000-04:00

Apologies readers for being away, it has been a busy few weeks. Over the past month, we've seen exchanges begin the consolidation dance - again - and several of the largest financial services firms begin to re-think their technology and data collection infrastructure. The current supply chain of data is on the verge of severe disruption, and will likely change the structure of the industry.

For today's post, we'll focus on the customer side of the equation, (the demand-side if you will), and we will focus at the top of the food chain- the top 25 of so firms.

On the one-hand, we are seeing these customers more than ever recognizing that they have over-invested in data and data management solutions and are looking to lower that investment. Cost control has always been a driver but what's different is that these firms have technology - cloud technology - as enabler of change to the way they acquire, store, manage and deliver that data out to their user population. In the past, customers relied on their Market Data Distribution Systems (MDDSs) to transport data around the enterprise to applications and users. The primary use was for their trading applications and businesses and as latency became more critical to success, they invested in direct feeds to exchanges and used vendor feeds primarily as back-up/secondary service and used the these vendor feeds to power off-trade floor applications - or in many cases simply used the vendor applications and supplemented with niche ISV solutions. Many firms built multiple infrastructures centred geographically to support their local business units - many since leveraging internal/private networks to feed data from say New York to a user based in Sydney was not efficient and carried with is high costs. In essence it was cheaper (and less risky) to build redundant systems and service users locally than centralize the effort and distribute out to the edge.

Today, cloud technology, lower bandwidth costs, increased network efficiencies and security improvements has altered this model. In addition, users are increasingly mobile, pushing their access point from inside to outside the firewall. As a result, the old distribution and network architecture is out-dated and being replaced by one which is centralized, cloud-based and mobile. Thus firms like State Street who have invested in a massive architecture redesign to embrace the cloud expect to realize over $600 million in savings annually AND increase efficiency and user satisfaction.

And State Street is not alone. Deutsche Bank, UBS, Northern Trust and others have publicly or privately announced programs to drive more and more of the collection, storage and distribution of data assets to the cloud. In a webinar yesterday hosted by Waters Magazine on the cloud, Elliot Noma, Founder and MD of Garrett Asset Management stated flatly that without the cloud his firm would not exist. This is not uncommon as more and more hedge funds and asset management firms leverage the utility cost model of the cloud to build their business (more on these firms another time).

However, what is not talked about much, is the net impact on REVENUES for data and technology vendors as a result of these programs and the new way firms are started and operate. Assume for a minute each of these top 25 financial firms realize a savings of $100 million - one-sixth of State Street's target - that's a contraction of technology AND data spend of $2.5 billion. The pie for the thousands of data and application providers just shrank by nearly 10%. Expand that over the tens of thousands of customers across all market segments and the market for data and technology could shrink 20 to 30%.

And folks thought the 2008-09 recession was hard on data and solution providers.

But some might question - will customers realize these savings? Short answer - yes. It should be fairly straightforward actually. Staff reductions will factor as well into the cost savings (State Street expects nearly 5% staff reduction) but the bulk will be through data and infrastructure savings. By eliminating redundant data acquisition fees, (two groups in two different geographies buying two fundamentals feeds for example), buy eliminating MDDS infrastructure that served non-trading applications, and ripping out desktops and replacing them with mobile-based platforms, each firm will realize tens if not hundreds of millions in savings.

Another source of savings will be the applications these firms will use. With lower costs to build, test, deploy and support application built in the cloud (regardless of there being public or private cloud infrastructures), firms can build many of the sophisticated applications they once relied on vendors/ISVs for at a cost that is significantly lower than before. Some firms expect to have as much as 50% of new technology spend to be on cloud-based services. Given that the data used by these applications will be in a cloud architecture, it is a natural fit for these applications to be cloud-based.

The final cost savings - and likely most deadly for the data aggregators - is the push to connect directly to data sources. As firms have realized, their investment in direct exchange connections has paid off. Although there is a higher initial investment in building and supporting the exchange connections, firms have learned they gain greater control of the interface with the source, they get better performance, and they get better support. Firms are starting to realize that this 'model' can be expanded to non-latencey sensitive data as well. Many times as pointed out in prior posts, firms increasingly see less value in the 'normalization' myth and want raw data from their sources. This means some of the services introduced by vendors, (such as entity management) will need to be done by customers but again cloud-based technologies and ISVs specializing in data management solutions (such as Asset Control), make this process easier to run by customer's themselves.

Firms will increasingly look to leverage their direct connections to power their data warehouses as well as seek new connections to pull raw, 'un-managed' data into their centralized repositories. This too will lead to further cost savings on data spend and shrink the market data pie. Spurred on by their customer's demand, exchanges are increasingly seeking to monitize their historical and reference data assets more and more.

All in all, customers are getting smarter in their data and infrastructure strategies and are seeking to leverage cloud technology and other best practices (such as direct-to-source connections) to build the next generation market data stack. The result is substantial, real economic pressures that force data aggregators and application providers to truly show value and differentiation.

Next time, we'll look at the supply-side of the industry - the data owners themselves and the pressure they are placing on the aggregators.

Predictions for 2011

2011-01-18T08:59:00.000-05:00

Happy New Year dear readers and I hope 2011 is filled with success for you all. With the New Year come resolutions and predictions and I've read more than a few. So staying with the theme, I thought I'd venture a few predictions of my own on the information and cloud industries just for fun.

Prediction 1 - Organizational shake up at Thomson Reuters Markets. Although the A-Team group's Andrew Delaney has been on this since mid-last year, I think this year is where changes finally occur. An influx of external talent into the Enterprise and Sales & Trading organizations, a major sales re-org kicked off this year and poor performance by some of the Investment & Advisory segments leads me to think some shuffling is due. Sources also tell me of a general hiring freeze through Q1 of 2011 which also has preceded organizational changes in the past, seems to indicate some shifting of the deck-chairs.

Prediction 2 - Factset finally expands into Investment Banking with more gusto. Reading through the recent Factset filings indicate they have been steadily investing into their stable of content assets with high value into the IB space. Enhancements to the ex-TF Worldscope data (now called Factset Fundamentals), new issues, M&A data as well as other PE/VC data sets, seem to indicate they are ready to go after the junior banker/knowledge worker space. They might not have all the necessary assets for the senior banker but their partnership with Dow Jones supports that sub-segment.

Prediction 3 - InfoGroup enters the financial services space. Clare Hart, CEO of InfoGroup, is too smart and too experienced not to. Add to it her recent hire Gemma Postlethwaite from Thomson Reuters to run products and content, tells me they are shifting from serving only the sales and marketing segments. Ms. Postlethwaite has significant experience in the Investment Banking space and built the latest Thomson Reuters Banking desktop product. As well, her experience in managing the data alliances for the Investment & Advisory division of Thomson Reuters more recently, gives her insight into the other competitors and their relative content strengths. Its a good hire and indicates to me Infogroup to make a push into financial services, specifically in Investment Banking before year end.

Prediction 4 - Market data accelerates into the cloud - and not through big name vendors. As I've mentioned before, smaller cloud-based 'data vendors' are starting to appear to support off-trade floor uses of market data. This is the year one or two make their presence known. While the name vendors - Thomson Reuters and IDC mainly - invest in a 'market data cloud' themselves, I expect firms of all sizes look to other providers. Firms are already realizing the 'standardized' data product of the vendors is limiting and in often interferes with their data strategies. Access to raw, "as prepared" data directly from sources, rather than the packaged data through data vendors, will become increasingly in demand and impact on big-box vendors adversely. A couple firms will start to break-through and will start to erode large vendor revenues for off-trade floor data needs.

Prediction 5 - Apple acquires Salesforce.com. With Mr. Jobs health in question, Apple will need a strong voice and leader to support if not replace Mr. Jobs for the overall good of the company. As Microsoft has shown, putting a good operations guy in the number 1 seat doesn't lead to maintaining a leadership position and innovation. These company traits start at the top and Mr. Benioff's resume is solid enough to replace Mr. Jobs. As I said in a prior post, back in June of last year, the tie-up of Apple and SFDC complete both firms and puts them as the sole competitor to Microsoft, outside of search and gaming. SFDC sees the iPad and Apple technology platforms as the clear winner and placed a firm-wide bet on the Apple products. However, should Mr, Jobs condition be debilitating, and we hope it is not for nothing else than for him and his family's sake, Apple will need to find a new head as the firm faces increased competition on its core businesses and seeks to expand into the enterprise market. That search for a new CEO should start and end with Mr. Benioff.

There you have it, 5 fearless predictions for 2011. Appreciate comments on any or all of them, but we will see in 12 months time if any are actually accurate. If anyone has any predictions of their own, love to hear them.

Until next time....

Database.com

2010-12-13T14:52:00.002-05:00

Last week, Salesforce.com held their annual user conference, Dreamforce. You can read details on the event through the Salesforce.com website or other press sources, (ZDNet.com has some of the best coverage), but Salesforce.com's platform service releases require some attention as they have implications for the information industry as a whole.

If you missed the headliner, Salesforce.com launched something called 'database.com', which is in effect an application database in the cloud. For readers more technically/development oriented, you might take my view as simplistic (or even wrong), but to a strident business/product guy, this is how I see this offering. In effect, it is an enterprise-ready solution competing with cloud storage providers Amazon, IBM, and others (including internal database resources). Further, the database is neutral to the application meaning I can build an app that runs on a desktop, a mobile device, another cloud infrastructure stack (public or private) and use the database.com solution as my source. Why is this significant?

Well, as I noted in a prior post, one thing many information providers have an issue with is legacy infrastructure that is not Web 1.0 (let alone Web 3.0) ready. Firms like Boomi and other integrators, have made a living deploying web service layers that sit on top of these legacy systems to free them up. Now, instead of building another layer to my complex stack, I can 'copy' or 'replicate' the data to the database.com environment and free it up to any application built anywhere. This is something I explored while at Thomson Reuters. Moving non-time sensitive data such as company performance numbers, people biographies, end-of-day pricing and other information to a cloud-based application database allowed Thomson (and its partners) to leverage the data more easily and eliminate high integration costs as well as reduce support and development costs and quicken time-to-market. You could still keep a master copy on premise, but the application database would be freed from a firm's infrastructure and exposed to application innovation by customers, partners and even other firm groups, unlike today.

One other thing that this type of architecture change would bring is a shift in commercial models to usage-based rather than simple subscription to account for the wide-range of usage patterns within a customer base. Another issue facing information companies is for the most part they have simple commercial models - pay me x dollars for a product, period. In today's consumer-driven market of freemium and premium models as well as utility commercial models, a flat-rate subscription model has little appeal. By 'outsourcing' the application database (and potentially application layer entirely), clearer usage costs by transaction by user is apparent and greater flexibility on commercials can occur.

Finally, database.com allows for greater controls on accessing the data stored within it by applications. By the row-level administration, users (and by extension applications) can be differentiated. Thus I can keep some data away from one user and expose the super-set to another user. Again, this is a complex problem for information providers. Often the data is sourced from 3rd parties or has certain access requirements on it. Database.com could free up administration and access controls lifting administrative and compliance burdens from information providers. Further, with a singular application database, user profiles could be created across applications from multiple ISVs that use the same data more easily than today. A huge benefit to reduce operational risk of data leakage.

Coupled with the database.com release is the maturation of the Force.com application platform represented by Force.com2. Salesforce.com has matured the platform offering greater flexibility for building apps natively on the platform, including incorporation of both Ruby on Rails and Java in addition to its proprietary Apex language. Again, I'll leave the more technology-focused to assess the value here, but from my perspective, I can now build robust apps, faster, deploy to customers more easily, track customer usage and issues more accurately and, build a website for my product to market and promote it more quickly. Integrate the application and the portal with my Salesforce.com CRM and I have a complete, enterprise-class ISV solution out-of-the-box. As a competitive 'offering' to what Microsoft can offer me with Azure and its mixof on-premise and cloud-based offerings, its not even close.

It must be noted that the value of this stack has not been proven (to me anyway) for real-time data or applications that have higher transaction rates that frequent the trading room. The value is in off-trade floor applications. Further, the analytics layer that is needed in many segments is not there either, however, it doesn't mean it can't be or that a powerful 3rd party analytics engine can't be integrated into the Salesforce.com stack. However, it does open more possibilities for ISVs that have huge data centers and legacy infrastructures to manage to simplify their stack and offer innovation to their customers unlike they can today.

Someone will take advantage of this stack and soon I suspect. When that happens, it will change the competitive landscape quickly. It will take some leadership to make the move, but first-mover advantage will be significant.

Data-as-a-Service

2010-12-03T16:19:00.001-05:00

Dun and Bradstreet have fired the open salvo in the pending Data-as-a-Service war, with their D&B 360 product. D&B 360 is an open API which allows customers to access the full breadth of D&;B data to power a customer's applications. Integrated with Salesforce.com, D&B 360 enables a customer to pull in data over 160 million companies stored in the D&B databases for sales and marketing.

This is a big step, as it suggests that D&B is drawing some clear lines for customers, partners and potentially competitors as well, to where D&B is investing and considers its core value to customers. As I noted in my previous post (The Next Great Information Company), information providers need to make some choices as to where they will specialize and consider their core business. For D&B, leadership in financial risk management applications as well as sales and marketing solutions marks the extent of the application business potentially. However, for their data and information, there is an opportunity to grow revenues significantly as other ISVs learn to leverage the D&B data for other business purposes.

At Dreamforce next week, the Salesforce.com signature event, D&B plans to announce additional details and explore with prospective customers and ISVs how D&B 360 can help them. It will be interesting to see where they take this innovative solution.
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On another front, I hear there is a ground-swell of start-ups to deliver a 'data cloud' much like the solution D&B and offers. This is a good thing. Much like Salesforce.com's push to SaaS CRM solutions and the subsequent embrace of the cloud by Microsoft and others, having a healthy vibrant stable of data-as-a-service providers offers customers choice and keeps costs down.

In a conversation with a couple old friends the other night, we discussed if the data cloud truly is viable. Some of the issues they raised were primarily around what traditional providers have stated as their core value - we link all the data bits together and 'normalize' the data. True, but it is still a valid point?

There have been a series of very interesting articles from the A-Team Insight group that highlight to me that the answer is no.

Just this week there were 3 separate pieces that demonstrate that customers are actively looking to work around the vendor data structure, thus paving the way to a seamless data cloud. From this week's A-Team Insight (A-Team Group.com) there were articles from Deutsche Bank, Northern Trust and Goldman Sachs, which indicated each are: a) breaking down internal data silos; b) taking a more enterprise-wide approach to data management; and c) (in the case of Goldman) establishing their own centralized symbology service. Although this in itself isn't news, (larger firms have always had individual identifiers), what is news is that there seems to be more open talk of ending vendor identifiers - or at least their complexity.

This was clearly drawn in the same A-Team report, where David Berry, member of the Information Providers User Group and head of market data sourcing and strategy at UBS, clearly states customers are, to paraphrase from Howard Beale in Network, 'mad as hell and we're not going to take it anymore'. As Berry is quoted in the piece: "Vendors introduce complexity into the market by attempting to differentiate themselves on the basis of instrument identification and this should be eliminated". A clearer line in a sand has never been drawn.

To me, the initial lines of breaking the large vendor monopoly are starting to appear. It will be interesting to see where we are in 12 months time.....

(R)Evolution is in the Clouds....

2010-11-11T07:06:00.000-05:00

As I stated several weeks ago, there is a certainty for fin serv customers to move to the cloud for most of their mid and back-office operations data needs as well as move as much of their non-trading applications. Mobility and cloud platforms/technologies are maturing at a rate that is much faster than incumbent application and information vendors can deliver new solutions on their closed, proprietary technologies.

Further, as exchanges and other information creators begin to realize the power of the cloud, it will become imperative for information vendors to react and stay ahead of the trend and differentiate themselves by something other than simply being an information 'aggregator'. New paradigms are emerging that will apply pressure to entrenched companies and disrupt their businesses.

Recently, NASDAQ has released a tick-on-demand service through Xignite, which offers simplified access to NASDAQ tick data through a standards-based API. Xignite, for those who do not know them, are what I consider one of the 'next-gen' information service providers. The addition of NASDAQ brings the total number up to 33 exchanges or exchange groups, covering Asia, North America and Europe. In addition, they have connected to other data sources such as Morningstar, Dow Jones, Cantor, Tullett and others to offer a very robust list of information assets.

Unlike traditional vendors, Xignite specializes in 'plug-and-play' data access. Whereas traditional vendors like Thomson Reuters or Bloomberg have built a desktop business and allowed data access through APIs to be an off-shoot of their core business, Xignite has come without the baggage of a desktop interface. Preferring to be the plumbing for non-latency sensitive data, Xiginte (and their emerging competitor Flexisphere), have subversively gained traction where the incumbents aren't - data solutions for off-trade floor and corporate web solutions.

This model very much is in line with where the world is moving for non-latency sensitive applications. Now, an application builder for an iPad has only to connect to the Xignite data cloud and deliver a wide range of content into a highly functional application. Further, since the incumbents are directly focused on a ground war within the application space, Xignite, through continuing to build an extensive inventory of data assets, could easily become a data-arms dealer to the off-trade floor market, which is approximately a $10 billion business by my estimates. This does not include other markets where financial data is important and widely used, such as the legal, business/corporate intelligence, etc. and other services such as public and private websites.

The lesson for the incumbents is this - your days are numbered unless you take a swift and painful change of strategy.

In the 80s and 90s you were the only games in town. You had the technology advantage and you had the scalability to allow niche providers to plug into you and 'advertise' their content under your commercial terms and sometimes draconian restrictions which always favoured you. Now, technology is cheap and those same, small, niche content owners, (like other industries such as advertising, music and a lesser degree televised programming), now have other means and channels to get to their customers and can interface more directly with them through things like social media. Cloud-based technologies and services like Amazon or Xignite allow these firms to grant easier access to their information without an intermediary.

Now, to be fair, do I expect the incumbents to disappear overnight or at all - of course not. They are all multi-billion dollar companies with some very viable businesses. But there are cracks in each and some markets they serve are changing dramatically right out from under them. But like Microsoft and Oracle when Salesforce.com finally proved the SaaS/Cloud model, the large vendors will need to pivot and alter their strategy to stay relevant.

The key point is that for these desktop providers, they need to stop being the very thing they are - a product provider - and become a service provider.

While doable, it also is a great threat to their current economics and revenue. The question for these providers is: do you have the right people to rebuild and revolutionize your business? Microsoft had to re-think their very strategy and bring in several new people to redefine what Microsoft was for its customers and its future. Some stayed, some left but they did change.

Next move is yours gentlemen.....

Data Clouds - Part 2

2010-10-21T12:15:00.001-04:00

So, what was my proposal? To refresh your memory from my last post, I was fortunate to explore the capabilities of the Salesforce.com cloud and what it could offer data vendors. As an application platform, although there are some limitations, there are real possibilities specifically in the off-trade floor businesses such as investment banking and wealth management among others. As a distribution platform to enable customers easier access and integration of information sources into existing and new Force.com apps, the platform offers real promise. But there was a third area I explored which I saw as a game changer.

One issue today is accessing clean and accurate data, not to mention the on-going support and maintenance of that data. This includes not only customer and financial data sourced from inside the firm but externally sourced information which a firm depends on. For larger financial institutions, this is getting to be a business onto itself. Firms spend millions of dollars and thousands of person-hours addressing the issue of data and data quality. The cost doesn't include data center space, servers and other infrastructure to support the number of applications needing the data stored therein. In addition, much of this work is duplicated across firms.

Vendors generally offer datafeeds or APIs to push information out to customers who then store and replicate the data across their enterprise - highly inefficient. While looking at Salesforce.com and a firm they acquired, Jigsaw, I saw an opportunity. For vendors, much of what they do is data collection and data quality - why not move this 'business', this function into the cloud? Why not run a cloud-based data management business for customers? Why not do for data management what the cloud did for infrastructure management?

This was my proposal - for TR to get out of providing data collection and management services for one customer (effectively, TR) and provide the same service in the cloud - starting with customer data on Salesforce.com - and go from there.

The response was simply this - TR doesn't run a data management service. Yes, that's right, according to a couple of my former colleagues - one of the world's largest information providers doesn't operate a data management service. Now to me, data management is the core of what TR does (not to mention what Bloomberg or Factset or S&P and others do); the applications and other 'products' each offers are an off-shoot of this core business.

So here's the opportunity for a vendor - go back to your first principles, start offering a data management service for customers. Start moving to where customers store and want their data (and other data) to be located. Use the years of experience in building data management systems to build and run your customer's data systems. Accenture and other consulting firms do it, why can't you? You are all fighting over the same pie, create a new market and expand what you do, don't limit yourselves. What you can't do is try and offer a 'product'. Don't look to sell another software solution or another 'configurable' data platform - its not what people want.

If you can't figure out the difference, well good luck to you.....

Data Clouds - Part 1

2010-10-06T15:37:00.001-04:00

While at Thomson Financial/Thomson Reuters, I was given the opportunity to explore the capabilities of the Salesforce.com platform initially as a proof of concept for integrating Thomson data into the Force.com cloud. During this period, I saw the future of the information industry and a new paradigm of how ‘information products’ are delivered; one which I hoped to see Thomson grab and change the industry. Alas, it was not meant to be but nonetheless, recent events and discussions further enforce my belief that the time is near where there will be a change in how information is delivered to customers.

After I completed the proof of concept, thanks to some smart folks at Okere/Fujitsu in executing my requirements, the future appeared. What I saw was a future where an information vendor, like Thomson, could fundamentally shift its operating model, expand into new markets and leverage Salesforce.com not only as a CRM tool but as an application platform, a distribution network and more importantly, a model whereby they can shift out of siloed mainframe databases and complex delivery systems they have now and open up their content to the mobile/cloud-based world we live in today.

The Salesforce.com platform itself is very flexible and easy to build out some complex functionality and workflow. With the introduction of Java, this likely will result in more impressive visual tools and better usability. Although some functionality needed for financial services might be out of range as this time, I suspect as the platform grows, many of the tools now available through vendor applications, will be available – specifically those within the “off-trade floor” disciplines such as Investment Banking, Investment Management and Wealth Management.

There are some ‘restrictions’ currently in the platform, but they are more a function of how the firm sees itself as a CRM player and can be worked around. Nonetheless, as an application platform, there is the possibility to rewrite many of the solutions vendors offer for those segments mentioned above with added functionality and at a reduced cost.

As a distribution network, Salesforce.com allows for easy integration of bundled services into a firm’s “Org” (or Salesforce.com instance in the multi-tenet environment), which means a customer on the platform using the CRM tools, for example, can be ‘entitled’ for a subset of data from a vendor very easily and with a great deal of confidence of the security. In fact, due to the tiered nature of the platform, different user profiles can be permissioned for different data sets and even data fields. Further, an information vendor can ‘lock down’ their content ensuring the data isn’t changed or altered by the customer (or can be depending on the controls in place). Finally, due to packaging controls offered through the platform, information providers can easily see who is accessing their information and how and offer new commercial models instead of the pure monthly subscription rate.

Using the platform tools would allow an information vendor to offer ‘packages’ of information, tailored for each customer with extensive protection and tracking capability while reducing cost of delivery for both themselves and customers. In effect, once the data source is ‘plugged’ into the platform, any one of the nearly 2 million users on the platform can access the data while being tracked for that use.

Using this model, ISVs wishing to serve a market, but require specific information can also access these data packages and either license directly for the data and pass on the cost to their customers or the information vendor can sell directly to the ISV’s customer for the data.

Effectively, Salesforce.com’s platform can become the “iTunes of data” by information providers leveraging the tools and building the delivery model I pioneered while at Thomson.

Add to it, the cross-platform integration Salesforce.com has natively built and information from a provider can be accessed through Facebook, Linked In, Google, AWS and other cloud platforms.

There is an even more compelling opportunity which I explored, one that was deemed pretty controversial and shifted the definition of what an information vendor did for customers. I’ll explore that next time….

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I would be remiss in thanking those of you who offered their congratulations for my inclusion in the Forrester Research book “Empowered”. The experience and being included in the book is very humbling and one I would do again. Thank you again to those at Thomson that were supportive of both my effort that lead to the mention as well as my being included in the final book, I greatly appreciate it.

The Next Great Information Company

2010-09-02T10:38:00.002-04:00

I've been discussing with several of my colleagues on what the future holds for information companies given the changes in technology, customers and the other factors I've outlined in my prior post. Through it all, I come back to the same thought - what will the information company look like in the year 2015? Although it always dangerous to look 5 years ahead, I do think it’s worth the effort since by that time, I would expect some of the huge technological and demographic shifts that are only starting will have played themselves out.

First, what does the information firm of 2010 look like? Today, firms are focused on delivering content through proprietary desktops and APIs, using proprietary standards and technologies. They build walled gardens around their content, with an attempt to draw customers through exclusion not inclusion. Most have built a substantive business around two or more market segments and have applications that, although highly sophisticated and targeted for specific user groups, aren't well suited for broader appeal into new segments or in some cases even new users groups within their core segments. Those that do have broader appeal do so mainly due to a 'one-size fits all' technology platform and broad content assets that draw customers from many segments and markets. A few 'dabble' in the consumer space but really have tried to drive institutional solutions into a very different market with varying success and results. Finally, they have a very well established culture of build and/or buy with little to no interest in partners except where either tactically convenient or where the partnerships fills a hole in their technology stack.

From a commercial /revenue standpoint, these firms are primarily subscription based licensing for their services with this revenue supplemented by limited one-off revenue from 'consulting' (primarily customer set up and integration), or transaction-based revenue (trades, order flow, etc). Some license their content through other information companies to gain broader access to markets and customers for their data although this model is shifting to smaller niche players as larger firms retrench their content behind their walled gardens.

There are some specific differences to each firm and my description might not be exact but generally I believe this describes the players generally.

But as we’ve seen in other industries impacted by technology and customer behavior changes, firms need to ‘reinvent’ themselves to stay viable. I believe by 2015 information providers will need to change their current operating model to adapt to and take advantage of structural changes in the industry that are just starting to impact them now. Those that don't will be acquired by the new leaders, will fall into a niche market or will die.

So, here’s my take on what information vendor’s need to do to adapt and survive:

Decide if you are a software company or a data company. Many of the top firms (and some tier two firms) offer both proprietary data and proprietary applications. This is unsustainable for a number of reasons: 1) technology costs are lowering allowing new entrants into markets easier; 2) these new entrants offer more sophisticated and more functional products than the incumbents can offer; 3) cost of ‘catching up’ is higher for an incumbent due to legacy, highly customized and proprietary product stacks; 4) proliferation of cloud/mobile computing creates further complexity (and higher support costs) as incumbents build new software offerings on these platforms; 5) niche data providers that have historically used large vendors as a distribution channel now have easier means to market through leveraging cloud and other newer technologies and can go directly to customers and not through large vendors. And I could go on. The net is: costs are rising, revenues are flat or declining and margins are shrinking and size isn’t the factor it once was. Supporting hundreds of developers building sophisticated applications as well as investing in content aggregation increases the chance of both falling short of customer needs. Pick one and be better at it than anyone else – you can’t be best at both, no one is

Change your business models, before they change you. Being predominately subscription based is good, but customers are increasingly looking at the ROI of their spend with you. As a result, it’s time to get creative. Related to the above and the next point below, information firms need to start looking at how they contribute to ROI of a firm – particularly if they offer both content and software solutions. Increased use of utility models is a good place to start. By nature of the complexity and size of a business, each customer gets differing returns on the spend with you. Content, is a pretty constant and very specific item that can be usage based. Some firms have enterprise data licenses for their larger customers, whereby they pay 10s of millions for broad and intensive use of certain content for the firm. This model has never trickled down to the larger or mid-size firms which could benefit of not feeling ‘nickled and dimed’ by vendors. Usage/utility models are good since most customers probably don’t realize how much data they use – that can lead to revenue upside especially if that use made or saved millions of dollars in a year through investments and transactions in financial markets

Focus on providing services, not just data or software. One great advantage these firms often have over their own customers is they have hundreds if not thousands of experts on running complex database systems - data collection , data mapping, maintenance and distribution networks. Why an information provider doesn't establish a cloud-based, database management service, applying the best practices itself employs for its own information and take the cost of running these massive infrastructures and subsequent head-count costs off customer hands (particularly the smaller hedge funds, asset management, boutique banks and corporate customers) escapes me. Consulting firms around the world make millions providing these services - and it’s something information vendors already do. For some, their brand is such they would have instant credibility with their customers. There are other ‘services’ firms can offer. Means they need to re-think their business models but shouldn’t every firm do this?

Build an ecosystem, a real one – now. As Microsoft first proved and others have proven, creating a vibrant ecosystem of partners and hangers on only increases your stickiness and generates more revenue. Apple’s iTunes and App Store generate billions for the firm through simply getting a piece of each song or app sold. Vendors are obsessed with the view they need to ‘hold the desktop’ to be sticky, which results in keeping any possible partner at arms-length, or worse, see potential partners as a purely hostile invader to be crushed. The net is customers pay more, get less and see vendors as suppliers not business partners. Tell me, which is the more sticky situation for a vendor – a customer which uses 3 different vendors offering 3 or more different data sets, sometimes duplicating data sets for different parts of their business since each application doesn’t cover the functionality needs for all the business and the data isn’t covered in all the applications; or, a customer that uses 3 different software packages but all the content needed from one data supplier that seamlessly operates with all 3 applications. Well, given the option 2 likely saves customers money through reduced data integration costs, reduced data discrepancies and lower operational risk not to mention better ROI through leveraging best in class software and data, I’m guessing number 2. Need more proof: people don’t buy the iPhone because it’s a great phone – they buy it for the 100,000 plus apps. If you have a vibrant, thriving ecosystem with partners that actually like working with you, they tell customers that and provide free marketing and sales leads as a result. And besides – it’s always better have others touting your benefits than you doing it yourself.

Look to new distribution/paths to market. Similar to my point with new models, there are new channels of content distribution that are popping up all over the place which are ripe for an information vendor to capitalize. For example, the ecosystem of nearly 80,000 customers and nearly 2 million users built by Salesforce.com is a money field ready for harvest. Think of it this way – if a well-positioned information company can get $1 a month from every user on the SFDC platform, that’s over $20 million in top line revenue. And really all they have to do is plug their information into that network and allow customers to use it – no product builds, no infrastructure builds, no complex integration costs. The Apple ecosystem, the Microsoft Azure platform, Google’s Android/App platform and even Amazon’s Web Services stack is possible new channels to market without building new products and infrastructure to serve them. There are delivery, support and commercial considerations to work through, yes, but far less complex ones than building a whole new infrastructure or product stack. This dove tails with the ecosystem point above. With happy partners ‘selling’ your services for you, a firm has increased its sales coverage without adding headcount – and lowered costs of sales as well.

So there you have it. The winning firms in 2015 will be focused on what they do best and shed the rest; leverage a partner ecosystem to offer a full suite of solutions and/or data; offer services in addition to the software and/or data they offer already; adapt new commercial models to meet customer ROI scrutiny; and leverage multiple channels to market.

There are other clear benefits to my suggestions which I skipped due to space considerations. Should readers have some other thoughts on my proposed changes, I’d appreciate the input.

What I've learned over the last 6 months

2010-08-13T17:48:00.000-04:00

With the news of the FCC ending net neutrality, I thought I'd republish something I wrote 4 years ago.

Enjoy!

Its been a busy 6 months for Cloud computing and in the information business, most notably: Apple's launch of their iPad and iPhone 4 (including 'Antenna-gate'; Google and Verizon's pitch on Net Neutrality rules; AT&T implementing 'usage-based' charges for data plans; major organizational changes at Thomson Reuters and their launch of Elektron and Eikon; Bloomberg pushing open systems and symbology; Microsoft launching Dallas and Azure; Clare Hart taking over at InfoGroup as they go private; and finally, IDC going private. Normally, this would make a full year of news. But what to make of it all?

Here is what I've learned from the first 6+ months of 2010:

Distribution Networks are the next battle ground. While the platform wars are well underway, the more interesting (and possibly destructive battle) is upstream in the delivery of information. With wireless providers looking to charge for usage over their networks, telcos divided on the Net Neutrality issue and cable providers looking outdated in their models, more and more the issue of bandwidth and guaranteed delivery will dominate the discussion. This means -
Google and Apple are becoming (or already are) media companies - and more. Maybe not in the traditional sense but its happening. With their approach to collection of content and push to own the distribution (and cut out infrastructure owners like cable, telcos and wireless firms), Google and Apple are by-passing traditional media companies like NBC and News Corp and leapfrogging Cablevision and AT&T. As a result -
Content is (still) King. Content providers can now selectively pick their distribution network like never before. Freemium and Premium economic models are gaining prominence allowing the new media companies to garner revenue on both advertising and a toll for leveraging their distribution networks (Apple is the new model for this; cable and satellite, the old model). Which translates to -
Ecosystems are as or more important than the platform. Whether its upstream information or downstream applications, the complete value chain offered by the platform mitigates the intrinsic value of the platform. Why is RIM, the dominate player in the professional smart-phone, market worried? They have a tenth of the ecosystem of Apple and a fifth of Google's. As valuable the Blackberry has been for business, unless RIM can build a better ecosystem, they have a real long term issue. In their favour is -
Apple doesn't care about businesses - or large ones anyway. Apple refuses to go 'up-market' and address the real issues enterprise/large businesses have with Apple's security and 'openness'. As a result, RIM (or maybe Microsoft or Google) can keep them out. Which is interesting since -
Open systems and platforms are in; closed ones are out. News of Android-based smart-phones overtaking iOS based devices for number 3, (behind Blackberry and Symbian), helps close the deal here on the smart-phone market. More generally, adoption of cloud platforms such as Salesforce.com, Azure and others are wide-spread among businesses of all sizes - and growing. And finally -
Social media and networks will be focal point of business for the next 5 years. Firms are starting to realize nothing drives revenue like an engaged customer and yet few really have engaged customers themselves. As firms realize these networks change the way they interact with customers from transactional to relationship-based, customers will become partners not dollar signs.

The End of No Software?

2010-06-24T18:24:00.011-04:00

The other day, I caught a story how Salesforce.com - the pioneers of No Software and Cloud Computing - are building an app for the iPad and Android devices both expected in 2011.

That's right: the leader of the cult of no software is developing - gasp - a software application.

Clearly I am missing something. Yes I understand how important mobile computing is and the rest of it, however, I am at a loss to understand why Salesforce.com would step out of the cloud and onto terra firma in the world of deployed software. I am wracking my brain to understand why they would do this. Their applications and platform work just as well on Safari and Chrome as they do on IE and Firefox so why divert valuable development resources into building a closed box application on the iPad.

Then it struck me - might some merger or the like happen between Apple and Salesforce.com some time in the very near future?

It makes perfect sense (to me anyway). Salesforce.com are completely complementary to Apple in so many ways and together they are devastating. I'll explain:

Apple has:
1) Great devices
2) Great application platform for mobile computing for consumer apps
3) Great ecosystem of firms building consumer apps
4) Great customer loyalty and numbers
5) Market cap of over $240 billion
6) Strong central leadership and a CEO who is a visionary and thought leader

Apple hasn't:
1) Trust of enterprises/large corporations around security or application development
2) Any real revenue from corporate businesses
3) A clear successor for Steve Jobs (sorry - they don't)

Salesforce.com has:
1) Great application platform trusted by large corporations
2) Great customer loyalty and growth
3) Market cap of just under $12 billion
4) Strong central leadership and a CEO who is a visionary and thought leader

Salesforce.com hasn't:
1) Any consumer-based revenue
2) No device business
3) A tough road to go from $1 billion in revenue to $5 billion as planned

So what if you put these two firms together, what do you have:
1) A firm that can deliver end to end applications - browser or device-based
2) A huge ecosystem of partners building apps for either businesses or consumers
3) A firm ready to merge consumer and corporate apps into one channel
4) Technology trusted by businesses and consumers
5) A firm to really compete with Microsoft and Google and win - big
6) A successor for Steve who is 10 years younger than he is

I might be enjoying the glorious Friday weather too much but this makes way more sense than those Google-Salesforce.com or Oracle-Salesforce.com rumours/stories we've all heard. Imagine - the power of the device leader with the cloud computing leader. Wow.

It would be an absolute game changer for the industry and complete the shift to cloud/mobile computing. Businesses would be able to buy in more heavily into the mobile cloud story with the combined entity. Parker Harris and his team would address any security concerns with the OS and take the Apple productivity tools into their cloud with relative ease (that's my guess). The ecosystem could tap into two channels - consumer and business - and start to develop huge revenues through each.

RIM would be done and really have no choice but to sell to Microsoft to give them a viable device business. Microsoft would need to double-down on Azure and hope their .NET developer community can win out over the Apple OS and Java developer community that the Apple-Salesforce.com entity would carry.

If there is something to this hypothesis, it would be a good year or so away (didn't Salesforce.com say they would have an iPad app by mid-2011) and does assume Mr. Jobs is ready to pull back a from running Apple much like Bill Gates has done with Microsoft. I think Mr. Jobs concern is he has a Steve Ballmer type ready not a Steve Jobs type. No offense to Mr. Ballmer but he isnt in the 'visioning thing'.

Marc Benioff is - big time. There are parallels between Mr. Jobs and Mr. Benioff in that Mr. Benioff worked for a time at Apple, has been the slayer of giants and mover of mountains in leading the cloud computing charge. Mr. Jobs we know has done similar in the mobile space. And both have a passion for getting Microsoft.

What if......

Dallas - Threat or Opportunity?

2010-06-14T09:38:00.009-04:00

I just finished reading a little article from InfoWorld on Microsoft's Dallas project. For those who don't know what Dallas is, Microsoft hopes Dallas to be "the iTunes for data" according to Douglas Purdy, Microsoft's Chief Technology Officer for data and modeling. Dallas is important for Microsoft's cloud strategy since it promises to be the data warehouse/store for apps running on Azure, Microsoft's cloud infrastructure.

According to a Dallas program manager, Microsoft intends Dallas to be "broker for discovering information", something well underway with data from InfoGroup, NASA, Zillow and the Associated Press available through Dallas. At a high-level, the plan is to expose information from providers through a series of APIs (application programming interfaces) or hosted within Azure by the data owner. One assumes if the data is held off-Azure, Dallas/Azure will offer a standardized api with support tools to allow scalability for data providers - essentially a proxy service whereby users wishing to consume data from a number of sources need only program to one service yet call multiple content offerings - a data nirvana for a number of heavy data users such as investment banks and hedge funds.

Thus the challenge - is Dallas a threat or opportunity?

Well, like most things depends on who you are, quite frankly.

For a firm like Mashery, a API management provider, Dallas and Azure might very well be a huge threat to their business. Mashery currently boasts customers such as Thomson Reuters, Hoovers, ZoomInfo, the New York Times and Trulia (a real estate information provider), Dallas effectively could offer a competitive solution, with the backing off an industry leader with a distribution network of millions of firms. Ouch.

For tier-two information providers, Dallas offers a huge opportunity as a data distribution channel whereby customers can access their information easily and integrate it with their office productivity tools. For example, for a firm like Dow Jones, plugging into Dallas would in theory allow for an investment banking customer to seamlessly integrate data into hosted pitch-books that leverage Microsoft Excel and Powerpoint, thus simplifying the work flow in which a junior banker needs to simply update the template, (i.e. replace company A with company B) replace the data, update the book and publish it through the Azure cloud to others within the firm - a far easier and cleaner method than exists today.

For Salesforce.com, Dallas is also a threat. Despite the acquisition of Jigsaw by Salesforce.com, Salesforce.com lacks broader information that is needed across the enterprise - Jigsaw's contact and company data is targeted more for sales and some marketing types. With the right content sources, Dallas can address Jigsaw's competitive advantage and move beyond the Salesforce.com value due to broader need for information. Salesforce.com hasn't fully (or at least publicly) stated a broader content strategy to compete with Dallas although I do know someone did pitch this need last year to them. Perhaps Jigsaw is the start of such a strategy - it remains to be seen.

For customers, particularly the large investment banks, hedge funds and asset management firms that consume huge quantities of information for a number of different business purposes, Dallas is a huge opportunity. These firms use a number of sources - internal and external - for both business operations and compliance purposes, Dallas offers a single warehouse/api to pull this information together. And, with Microsoft allowing storage of data by customers, the opportunity for a single master copy of data is within reach. Clearly there are operational risks and regulatory issues to be considered but there is the possibility.

Finally for those large information providers such as Bloomberg, Standard & Poors and Thomson Reuters, Dallas is both a threat and opportunity. The threat really lies in what's possible. If customers or 3rd party application providers can build complex, .NET apps on Azure that are as good or better than what these vendors offer themselves, customers may simply move to these hosted apps and away from the terminal products these firms offer. This shift would then dictate customers wanting 'only the data' something I'm not sure these firms want to provide. Should they resist, the opportunity exists for the raft of smaller tier-two and niche information providers to grow.

However, there is an opportunity as I said. If one of these leaders can embrace the Azure platform, the distribution channel it offers and get the commercials right - they can readily gain to the expense of the others. Since Microsoft has hundreds of millions of users of its software and office productivity tools, a new economic model can significantly shift the playing field to the detriment of the others - perhaps for good.

Poisoned Apple?

2010-06-02T22:01:00.009-04:00

Sitting here in Times Square between meetings, gazing at the ad on the Nasdaq board for their new iPad app a thought occurred to me - if AT&T has introduced a new 2-tier data plan (which I predicted 6 months ago to my ex-colleagues at Thomson Reuters), won't this have an impact on the usage (and value) of this app?

In looking at the new AT&T models, it appears most users will stay under their $25/month plan - but those numbers are not with devices running multiple apps simultaneously, something only recently can mobile devices do on the AT&T network. The usage described in their press release is very single-threaded and does not factor streaming updates to devices (if it does I missed it) which begs the question I asked my ex-colleagues - if the wireless carriers govern last-mile delivery of information, who holds the power for mobile computing?

Add to it the proposed alliance of over 20 of the largest carriers to build an app platform themselves, have information firms offering apps on the Apple devices jumped the gun? Have they now boxed themselves and have those who have yet to move into mobile computing have an advantage?

Have, as I suggested to my ex-colleagues, info providers made a error in jumping on the Apple bandwagon, only to be hung out by carriers themselves?

I'm sure many will say, no, Apple rules, but Apple has a terrible habit of imploding at their height. I'd argue they are on the verge of doing it again. For example:

- they aggressively push a closed, proprietary platform which they offer at a premium over their competitors

- they aggressively sue competitors or competitor's partners to defend their near-monopoly position

- their strength rests on the harmony of hardware and software

- their products follow a linear path and are not significantly different then their flagship product

Looking at Apple today and Apple of 20+ yrs ago, I see a similar company behaving the same way. Will history repeat? We'll know in 5 years......

...Of Trojan Horses

2010-05-03T15:47:00.033-04:00

Thank you for those that took the time to read my initial post - I appreciate it.

In my first post, I indicated that traditional information vendors Bloomberg and Dow Jones have taken a lead position in expanding their footprint through mobile computing. I also noted that both are breaking down the walls they have built up around their content, they have opened the doors to expanding their user base. However, I also noted there is a catch - a Trojan horse - in mobile computing. I'll explain:

If information vendors continue to focus on delivery at the edge to mobile devices, they will run into issues with the following: a) the device manufacturers and their unique standards and demands; b) the pace of innovation at the user/device level to increasingly devote limited resources into mobile computing solutions and away from core competencies; c) address the the ever-increasing combinations of browser, operating systems and devices by diverting even more resources into mobile computing solutions.

The net result is a firm either becomes 'locked in' to a mobile device ecosystem, and effectively cuts itself off from the others or they become trapped in an money pit of development, testing and QA to maintain a strong presence on each device/browser combination.

It could be argued that by adopting standards, a firm can play the field and rely on standards and user tastes to dictate the direction of what devices to invest in. As we've seen with Apple, many device manufacturers and mobile OS providers aren't necessarily interested in standards - other than their own - unless of course it strengthens their grip on the device market (more on Apple another time).

With Microsoft now making a serious play into the mobile market, you have at least 3 or 4 dominate operating systems and device platforms, plus an equal amount of browsers to contend with. So singular adoption of a leading manufacturer and platform isn't going to happen any time soon (plus I doubt the EC and DOJ will allow a single player without stepping in anyway, but that's another discussion too).

One escape for information vendors might be to build devices themselves - not a bad proposition, but unlikely. By building devices, they would by building another walled garden and perpetuate their exiting business model. Also, they would run into adoption risks due to the fact their existing user base has already adopted Apple or Blackberry or other mobile devices, and getting these users to switch to an unknown commodity would be near impossible. I wouldn't put it by at least one to try this strategy. Who knows, it might work - but I doubt it.

Most so far have chosen to build applications serving each mobile platform and ecosystem. The result is either a nice app but not one that generates any revenue, or one that replicates to some degree the desktop experience which is a fee service or bundled with their desktop service.

It will be seen how long they can sustain this approach, especially as users require more and more capability/functionality at the device level but have become accustomed to getting their 'app' for free. I've always questioned the value of the free services by companies like Bloomberg and Thomson Reuters. Free isn't a model they are familiar with and in my experience, they've shown a tendency with their pay products to put more and more content and functionality without corresponding fee increases. My suspicion is they will follow their same tendency and put more content into their free apps to maintain a presence.

This is the true trap of the mobile Trojan Horse. Unless there is a sound commercial strategy behind the freemium model, they will feel the pinch on their fee-based services. Customers will start to ask - why am I paying for something which I can get for free. Once this happens, that will spell the end of their walled gardens and they will need to figure out how to get those pesky Greeks out of Troy.....

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One final note - I think Bloomberg might understand this trap and has demonstrated such through a partnership with Major League Baseball.

They've created a Fantasy Baseball service through MLB.com which leverages some of the Bloomberg analytics to baseball stats to help Rotisserie players better manage their teams - a brilliant use of existing capabilities. Given a good percentage of traders - Bloomberg's core customers - play Rotisserie baseball, they've secured another way to keep their customers happy and attached to the Bloomberg brand. This is a fee-based service, and clearly they are showing value of their analytics outside of financial data - which strengthens their financial information desktops and differentiates it from their free services. Good move all around.

More on the implications of this another time.....

Castles Under Siege

2010-04-26T15:51:00.018-04:00

As my first post, I have been struggling with where to start. Over the past few weeks, there have been some interesting events inside - and outside - the industry which I believe will change the way information providers operate to remain successful.

Inside the industry, the biggest move arguably is the announcement of Bloomberg to not only allow freer use of their proprietary symbology by industry participants but also their agreement with the NYSE/Euronext for the exchange group to use the BSYM, effectively replacing the exchange's own ticker symbol for datafeeds. These moves put Bloomberg at the forefront for the effort standardize symbology that the industry has been requesting for decades. Could BSYM be that industry standard?

Staying with the Bloomberg theme, Google has hired ex-Bloomberg FX head, Philip Brittan to run their Google Finance franchise. This would seem to indicate Google's desire to revamp their finance portal and 'professionalize' the experience. As well, Bloomberg lured a former senior Product Manager from Google to the Bloomberg multimedia team to drive Bloomberg's web, TV and mobile properties.

Could a 'trade' of sorts occurred between these two firms? Who knows, but it does seem to foretell of a possible deal between Bloomberg and Google for Bloomberg news through Google. Earlier this year, Dow Jones entered into a limited exclusivity arrangement with Microsoft's Bing search engine. In this action, Dow Jones also 'decoupled' themselves from Google's search engines. A deal by Google for the same level of exclusivity with Bloomberg news makes a lot of sense for obvious reasons - especially if Google is redoing their finance page.

Dow Jones has been busy lately, not only tying into the Bing search engine but also securing a deal with Factset to deliver its DJ Investment Banking product through the Factset terminal. This deal makes sense too given after tying to push its own desktop properties, it appears Dow Jones is focusing on its core assets - news and information - and start using channels to generate revenue.

For Factset, they have had some success in the Investment Banking segment but nowhere near the same success they had in the Investment Management market. This deal with Dow Jones strengthens them against both Capital IQ and Thomson Reuters and could lead to strong growth. My sense is neither Factset nor Dow Jones are done and they will be active in the coming months. What's driving these actions I believe is the current siege on their fortified walled gardens from the trends in mobile computing and users wanting freer access to information.

Apple's iPhone and iPad successes are based on one simple fact - people want simple and easy way to access and use information that is important to them right now. The Apple app ecosystem (outside of the games) is a list of information providers that have used Apple's platform, interface and customer network to generate millions for themselves and Apple. Everything from wine ratings, to restaurant guides, to movie listings, to books and newspapers are all applications driven by information. Dow Jones and Bloomberg I believe clearly understand that putting their information behind high walls cuts them off from the far larger and potentially lucrative handset/mobile market. They seem to understand that the rules have changed. The see smaller information aggregators making headway into these markets at their expense. Through innovative partnerships, clear commercial strategy around free and premium, these two firms are adapting to the changes in user behaviours and are seizing the opportunities mobile computing offers them.

It remains to be seen if this will pan out in the longer term for these firm since there is a catch - a trojan horse if you will - in mobile computing. More on that my next post....