In the last weeks and months I have written so much about data businesses, workflow strategies, data and software acquisitions and how major players are being reborn in the heat of all this that I should have expected the criticism. When it came, I was shocked. Me, losing sight of the big picture? After all those years of consultancy when clients told me that the big picture was all I had, and the operational reasons why the big picture was unlikely were beyond me? OK, now here is an unashamedly big picture piece.

In the big picture we can see the battalions of information services companies, having emerged from the publishing stage of their development, developing strategies around data – either as Big Data, mining and extraction players, or as workflow and process emulation players. These are all businesses driven by understanding how users work in a networked society, and they are all about the way in which content and software interact to create solutions for the bench researcher, the equities trading risk manager, the teacher and the learner, the patent attorney and his office, or the insurance risk assessor. And many others. And then, through longer workflows, solutioning at the job level begins to turn into solutioning at the industry level. Users, through shared APIs, create their own answers, and these become generalized and re-iterated by the information service vendors, and over time smaller competitors are excluded. This becomes a rich man’s game, and duopolies become the norm, as they already are in some verticals, and then duopolies give way to quasi-monopolies and invite regulatory attention (as they already are in some verticals). Competing with these giants is difficult and market entry based on re-originating workflow approaches built on the experience of countless users will be seen as difficult and pointless. So competition authorities will settle for price/margin controls and by restricting the number of verticals that one corporation can dominate.

While all this is going on the information service players of today are playing a three card game of risk. I hear this dialogue every day and it goes like this:

STAGE 1  “We now have good business in selling data into process – but the data is very commoditized and the value is in the software which holds it, searches it and provides the end-user access and workflow. We had that stuff written under contract because it was too risky to think of owning it or developing it in house – we have no experience of software or of managing it! And, looking at the contract we drew up with the supplier, we appear to own very little. So the time has come to invest in software, manage our own solutions and just hope that we can cope with the constant iteration of solutions. We will buy our supplier!”

STAGE 2 “This is more difficult than we thought. The innovation that we want is taking place outside of the range of the outfit we bought. If we are to continue to innovate in the face of rapidly developing user expectations (and that is the problem, not competition from our peers) we need to work with higher level suppliers in areas like semantic web, entity extraction etc. So lets do different deals: not sub-contracts and licensing this time, but Strategic Partnership, with exclusivities in certain areas and revenue and/or margin sharing. We will incentivize these people to greatness – but which one do we choose and what criteria do we use to select them?”

STAGE 3  “Well, the strategic relationships are working fine, but these software guys are eating our margins. And they say that all we have to do is update, while they have to re-invest, and 90% of the value in the package is software. And can they buy us? And their toolkit, honed on our clients to whom we did the selling, is now so valuable that IBM are trying to buy them …and maybe us as well. What do we do now, except grin all the way to the bank?”

There are three critical big picture issues that I take away from all of this:

* If the information services industry succeeds it will one day attract the attention of the major Enterprize software players. If this is so, we need to make our own luck and form relationships now. I see this taking place around Oracle in some sectors, and IBM in others.

* Most relationships between content houses and software houses begin with improvements to the data, content, internal workflow of the content player. But the content players end user/client is also vitally in need of systems for handling his content, and other third party content which he has already licensed, and in making it compatible with the workflow solution he is buying. There should be rich pickings here for both the content and the software players in terms of referrals and commissions. Somehow it isn’t happening, but if it did it would iron out some of the creases in those Strategic Alliances.

* Consultancy and customization are the keys to the solutioning marketplace. Trying to sell one-size fits all never quite does it in terms of repeat business. Yet most of the participants seem to dislike both of those elements, yet they are the best protection so far known to man for the defence of niche positions.

Next week, back to the coalface!


Name (required)

Email (required)


Speak your mind


3 Comments so far

  1. Phil Cotter on October 4, 2011 21:47

    David good to see you still have your eye on the big picture. Your 3 critical issues are spot on.

    To date there has been no truly successful partnership between enterprise systems vendors and information providers. What are the reasons for this. In my experience there a few major hurdles. Firstly the information player is seen as a plug in into the ERP, CRM or whatever enterprise solution. Nice to have but not key to the sale of the software. Secondly and this speaks nicely to your third point, incorporating the niche workflow processes in which the information provider is an expert into the wider enterprise workflow solution which is often sold as ” out of the box” is too hard and too costly to do.

    To your second point, this situation is complex and in part often not helped by the clients own behaviours. In reality clients make two types of decisions, select a software solution into which their existing content must fit or select a new information supplier which must fit into an existing system. Whilst neither of these routes should be that difficult, they are compounded by the lack of universal standards such as taxonomy and classification of information in some markets, high costs of customisation and maintenance associated with creating bespoke processes in the software and the challenges of managing a multi-partite programme to time and cost. Daunted by this task clients will often opt to build the more complex niche workflow outside of their enterprise solutions trading the opportunity to potentially reuse the content and processes developed in the wider enterprise for the certainty of solving a specific problem.

    To your final point many information providers and software players will emphasise their focus on product but all know that the real money is in building customised solutions, not least because once built they are virtually impossible to displace.

    So how to move forward? In my opinion there is a gap that could be filled that sits between the information providers and the software players. In this space it is possible to envisage an organisation that sourced data from multiple suppliers, standardised and normalised the data, built the analytics to extract the insight and then built the web services that could be plugged into the software at any point that a particular sub process was required as part of an organisations enterprise workflow. Imagine further this could be done on a global scale and the potential is huge. Is this likely to happen? Well there are lots of vested interests to stop it from happening but can they stop the evolution of the network?

    bespoke processes

  2. Shane O'Neill on October 7, 2011 09:29

    Back to the big picture – that’s where we want you to be David (remember you said it was a nicer place to be?).
    But great strategic route map for information businesses.

  3. Three Card Poker: Big Data, Data Mining / Extraction, Workflow and Processes | on April 18, 2013 17:07

    […] discusses each of these points and offers his thoughts in how to deal with them.  To read the full story click on this link This entry was posted in BIIA News, Business Information, Business Information, Data Integration, […]