Rubber Chicken

I'd definitely have to agree with this article from Yahoo. The BI market is still very fragmented and offers a lot of room for niche players. I'm surprised that the top 10 BI companies only have 60% of the market but it makes sense. The problem I've seen is that the offerings by the major players are very expensive and complicated. To really grow the market, someone needs to come up with a SMB offering that is priced right and is easy to configure (as the article says - compete with spreadsheets).

Posted by Rob at 01:23 AM | Permalink

Posted by Rob at 10:57 AM | Permalink

Another BI consolidation is in the works with Hyperion buying Brio. From ARCwire:

The acquisition of the query-and-reporting applications developer is a stock and cash deal valued at $142 million. It is expected to close in the fourth quarter of 2003.

The buyout is the second major acquisition within a week in the highly fragmented business-intelligence software industry. Last Friday, Business Objects SA nounced it is buying software vendor Crystal Decisions for $820 million.

The Hyperion deal will add Brio's query-and-reporting capabilities to its own business-intelligence and financial-management software. Hyperion's product line includes the Essbase XTD on-line analytical processing software. Hyperion resells Crystal Decisions' reporting software.

There has been speculation that Hyperion would move to acquire another reporting software vendor given that Business Objects is a Hyperion competitor.

Posted by Rob at 10:12 AM | Permalink

Although I haven't read the original HBR article yet, this piece in Computerworld offers an interesting interview with Dan Lovallo about why project managers are overly optimistic about the prospects of their IT projects. The research behind this was done with Daniel Kahneman, who won the Nobel prize in  behavioral finance and it seems that the same basic reasons people are overly optimistic about their investment prowess makes them overly optimistic about project prospects as well. Basically, people overestimate their chances of success because everyone thinks they are above average and can't distance themselves enough from the problems at hand. What to do about it? Make sure you back off a little bit and get a reality check from an outside or disinterested source.

I saw Dr. Kahneman speak at UVa this spring and his perspective on decision making is very interesting and resonates with what I have observed (and done). I actually did change my investment habits based on his finding and now I'm even more convinced that the best thing to do is buy broad indexes. What is the analogy of buying broad indexes in project management?

Posted by Rob at 12:14 PM | Permalink

One strong argument in favor of the IT doesn't matter viewpoint is the growth of outsourcing. Common sense dictates that you don't outsource something that is a core competency; something that yields a competitive advantage. So, if IT outsourcing is a growing phenomena, then IT really doesn't matter. If IT is just a cost center, of course you want to reduce the costs as much as possible. Why pay $5 for a widget when you can have the same widget for $4?

However, this is a slippery slope. By wholesale outsoutsourcing, you are effectively demonstrating that IT doesn't matter to your organization - it is merely a cost center to be managed. IT is a matter of simply managing the risks and contracts with the outsourcers, not a way to gain competitve advantage. In that case, of course IT will not be a strategic asset just like janitorial excellence is not likely to be a competitve advantage (unless that is your business, of course ;-)

It seems to me that the strategic import of IT is a choice that can be made: are we going to spend a extra money for potential extra reward through IT innovation or are we not? Are we going to make sure that IT has a voice in the governance of the company or are we not? Like most things in life, the answer must be "it depends".

Posted by Rob at 10:14 AM | Permalink

According to Ovum, the software market is in decline with only a few bright spots. I think articles like this just show that no one knows what the heck is going on. The stock market (although down today) seems to think that tech is back. The pundits say no. Who to believe?

Posted by Rob at 05:41 AM | Permalink

So, what now, Mr. Ellison? The completed purchase of J.D. Edwards by PeopleSoft ups the complexity of the whole deal. Instead of just folding one product line and group of customers in, there are now two that need to be handled.

If I were Larry, I might back off right now and try again in a year or so. By that time, PeopleSoft will have incurred the problems of the merger and maybe even taken a stock price hit. Most mergers destroy value, so by waiting, you are just betting that PeopleSoft will do no better than most companies and get the whole thing at a reduced price.

Posted by Rob at 11:40 AM | Permalink

It's nice to see that people can place a positive spin on the slow death of a company. Reports from MacWorld seem to be saying that there is not much energy surrounding the company beyond the hard-core enthusiasts. This is in stark contrast to the condition of Apple in the early 1990s. I (and many others) learned C++ in the early 1990s on the Symantec compiler on a Mac and they had (and have) some great technology. They have certainly lost the mantle of the "Anything but Microsoft" crowd to Linux. You have to question whether there will be enough momentum to keep the platform going in the medium term (say 5-10 years). When will vendors give up on developing software for a niche platform? Old platforms never die, but they do become irrelvant to the vast majority of people. It's just a matter of time.

Of course, Apple might be revived as a media and consumer electronics company. They've always done a nice job with hardware innovation and consumer electronics would seem to be a sensible transition. Anyway, that seems to be where the energy in Apple is right now with the iPod and iTunes. Maybe Apple is the next Sony?

Posted by Rob at 11:22 AM | Permalink

I've recently been seeing a lot around about MySQL as a possible replacement for commercial databases. A comparison of features between MySQL and SQL Server (the database that I'm most familiar with) shows that they are pretty close in most of the things that I care about. The fact that it is used on the quite excellent U.S. Census Bureau website makes it even more appealing.

When I get some time to investigate, I'm going to try to learn more and maybe build a few things using it. One thing I'm not too fond of is the name - it is a little silly. Why not something a little bit more like Apache?

Posted by Rob at 01:53 AM | Permalink

 I'm not sure how effective this promotion will be, but these products do seem to go together somehow.

Posted by Rob at 11:01 AM | Permalink

Posted by Rob at 10:16 AM | Permalink

Microsoft's recent announcement that it will be discontinuing its stock option program for employees both surprised and delighted me. The basic idea of aligning employees interests with the interests of shareholders is a excellent one, but options plans have too many flaws.

First, options encourage short term share price thinking. If I'm an executive with options that expire in a few years, I want to get the price up as fast as I can even if it means pushing the boundaries of ethical business practice. This is clearly not in the best interests of long term shareholders who would rather have steady growth over time. Having a restricted block of stock, on the other hand, makes for a much closer alignment of interests.

Second, options are very difficult to value which makes them hard to expense. The cases of manipulation of stock options are many (for example, see Siebel's recent options debacle). A straight grant of stock is easy to expense and account for. The protests of Intel and Oracle that options are difficult to value so they shouldn't be counted as expense are complete garbage. To (mis-)quote Warren Buffet, "If options aren't compensation, what are they? If compensation isn't an expense, what is it?" Let's fix the problem of difficult valuation by eliminating the root of the complexity: options.

Third, restricted stock reduces risks to rank-and-file employees. If you replace options with stock, you get fewer shares, but the rewards curve is much flatter. If the price falls 20% on your stock, you still have 80% of you reward. If that same price fall takes the price below the option strike price, you get nothing. That discontinuity can be pretty devastating if you were counting on the money for your financial goals. In general, most people don't need to have the highly amplified risk/reward ratio offered by options and would be better off in the long run with stock.

So, as an investor and a technology worker, I'm really glad to see Microsoft move from options to restricted grants. Maybe other companies will follow, but I'm not holding my breath.

Posted by Rob at 09:50 AM | Permalink

So, given the facts that are available about the Sun deal with SCO, why aren't Linuxites claiming that Sun is somehow promoting FUD in a quest for global domination the way they claim Microsoft is? Could it be that properly licensing software is simply business as usual?

I guess it is a little harder to get people to rally against a company that looks like it might be on the verge of failing anyway. Sun certainly looks like they are in some trouble. Some interesting figures from a Computerworld survey do not paint a pretty picture. Do the math: Sun has the largest marketshare of Unix deployed (68%). Almost half surveyed (42%) say that Unix is becoming less important in their operations over the next five years in favor of Linux and Windows. So, even if the move away from Sun is less than proportional to the general move away from Unix, that does not bode well for market growth.

I wouldn't count Sun out completely, but since they have never been able to make money from Java (and are losing control over the direction of Java to IBM in any event), proprietary hardware market is all but dead and the Unix OS market is in decline they will need to come up with something else fast.

Posted by Rob at 10:14 AM | Permalink

The Economist has an interesting article on corporate survival. Although the article isn't focused on IT, there is paragraph that sort of covers my last point from what I was trying to say a few days ago. Referring to a Harvard Business Review study,

[The reports] main finding is that superior performance does not depend on use of this or that trendy management technique. "It doesn't really matter if you implement ERP (enterprise resource planning) software or a CRM (customer relationship management) system; it matters very much, though, that whatever technology you choose to implement you execute it flawlessly."

You should check out the whole article if you have an interest in these types of things. As usual, The Economist does a very nice job with their coverage. It's the only magazine that I make it a habit to read every week.

Posted by Rob at 02:11 AM | Permalink

I'm consistently amazed at some of the people out there who claim to be experts, especially in the IT field. I was at a professional association meeting the other evening and a woman was speaking about IT strategic planning and claimed to be a expert in the field. To be fair, this was a very short presentation and she may have more insight than I was able to gather in 30 minutes. The basic steps that she outlined seemed reasonable and in accord with what I do know about the area, but some of the opinions aired seemed horribly askew and antithetical to being able to give solid strategy advice. For example, she had an bias against younger people because they can't be trusted and don't have a solid work ethic. The bell-curve of morality and work ethic seems to be fairly consistent across generations, from what I can see. There may be differences in how these things are mainfest in different generations, but they seem fairly constant. In any event, judging people with such predjudice cannot be helpful.

My real point isn't to take issue with her opinions, just to be somewhat concerned at the general quality of advice on IT strategy. Without at least understanding where IT fits in with corporate strategy, you will fail to gain competitive benefit from it. Poor advice begets poor systems and I'm not sure it is possible to give good advice in different situations without an open mindset. I have a hunch that subpar strategic understanding is at the root of much of the general dissatisfaction with IT projects.

Posted by Rob at 02:21 AM | Permalink

Although this is not exactly new news, the sheer quantity of data that is produced and consumed in the world is truly staggering. Peter Lyman and Hal Varian have created a project that attempts to quantify the amount of information that is produced, stored and consumed on various media. A quote from that site:

[T]he world's total yearly production of print, film, optical, and magnetic content would require roughly 1.5 billion gigabytes of storage. This is the equivalent of 250 megabytes per person for each man, woman, and child on earth.

That is astounding and speaks about the amount of information overload we suffer. What makes it even more compelling is that the amount of digital magnetic storage shipped each year doubles and that the US accounts for an outsized proportion of the data created and consumed. And here I am contributing to the problem.

Posted by Rob at 10:38 AM | Permalink

With pathetic results commonplace in corporate IT projects, it is no wonder that companies are looking offshore as a way to do better. In my opinion, it won't help improve results much but it will reduce the costs of the failures. It seems that the ability to use IT effectively follows a sort of power law, with a relatively small group able to do things well (say Wal-Mart), a second group of solid competence (maybe CapitalOne?) and the unwashed masses who just kind of stumble along. The difference seems to be leadership and the status of IT in the organization. No doubt the folks at the top of the heap could effectively outsorce to anywhere in the world. But, will it really help those at the bottom? The real measure of success should be the cost/benefit of the projects, so you have to look at both sides of the equation and you can't improve the benefit without improving the leadership.

Posted by Rob at 10:44 AM | Permalink

This Kantian perspective on the intellectual property issue is interesting. My take on the argument is that the creation of great or popular works is almost a stroke of luck and that property rights should not be strictly enforced on an intial arrangement of rights that has a large element luck.

I guess to a certain extent, I would agree: music will be made by people whether or not they are richly rewarded for it. The sheer number of starving musical artists out there is evidence supporting that. So, maybe the rights imbued by copyright should be watered down somewhat? I'm not sure, but it is an interesting argument.

Posted by Rob at 02:16 AM | Permalink