Blinded by the Light

I’m not really an uber Bruce fan, but I’m going to exploit his fame to make a point here. I once sent a “Greetings from Asbury Park” CD to Sam Palmisano. Someone once told me that IBM execs aren’t allowed to accept gifts over $25 and there are some rules, I do obey. He thanked me for it, but I’m sure he thought it was a peculiar gift. I told him it was from the other famous person in NJ. But now we have Tony Soprano, so I don’t know what I’ll do.

Anyway, when Dion Hinchcliffe wrote about Gartner’s Hype Cycle report, I cautioned him: watchout for the backlash. Well, here comes the backlash. I saw some of these pieces dribbling out on the Net over the past few days: this piece by Mike Stevens, then this piece, from Gavin Clarke from the Register (UK), and even my beloved friend, Josh Greenbaum, had published this piece last month, and I’ve seen it referenced in a comment or two.

So, I guess we’ll use a little Bruce juice to bring the message on home. Today, I was lucky enough to get myself on a panel at the upcoming Office 2.0 conference in San Francisco to do some evangelizing for our glorious cause. I believe there is something BIG going on here– not because I’m an investor, not because I’m a CEO of a web 2.0 company, not because I’m a journalist of a SF-based publication, heck– I’m not even on the West Coast. I feel a little like Mr. Springsteen in those early days, playin’ his heart out in those NJ dives hoping someone would dance, or better– listen to the lyrics.

Of course, how this will all unfold over time is still unclear, but for the naysayers I can only say, when’s the last time you bought a CD? The digital revolution is here. Enjoy.

The Rebirth of the SI Market: Anyone in the Mood for a Fat Margin?

I had a great briefing this week with IBM’s Dan Gisolfi of its Emerging Technology Group. I was able to clear up a few things. For starters, it’s not THAT easy to create a “long tail” micro situational app. Gisolfi says, “Today, it’s extremely hard unless you’re a programmer… and unless you know Ajax, Java script, and programming languages, you’re not going to create a mash-up.” But that’s where this IBM group is headed. With their web 2.0 class of tools– mash-up makers– ultimately, the high IQ guys and gals in IBM’s key installed base accounts will be able to create their own dashboards ad hoc and provision data across departments and groups without troubling anyone from IT at all.

Gisolfi and I waxed philosophically about the cultural trends that are driving Enterprise 2.0 and we agreed about the socio-cultural underpinnings. Now here is a guy who can fit squarely in both camps– traditional IT, wearing the IBM logo, yet can hold a respectable conversation on the latest in open source, or any web 2.0 technology. We agreed the new Enterprise 2.0 wave is not about technology. The technology is evolutionary and Gisolfi recounted many examples of initiatives IBM has been involved in for years that are now hyped as web 2.0. What’s different now, however, are the attitudes that eclipse the technology. He said, “Web 2.0 is a convergence of enablers… coming together at the right time, at the same time.”

We then talked about a possible rebirth of the systems integration industry– something I found intriguing. Gisolfi said, “For the IT guys, we’re not taking away work, we’re creating a new type of work. Instead of doing integration of monolithic applications, today, you’re going to create granular software components.” He used Sarbanes-Oxley as the perfect example of the need for a customized, daily mashboard. He described using a business analyst or consultant to define the data indicators and then pass it to a software guru to render it and provision it as a mashboard.

It’s at this point, I started thinking about the sweet-margin business of the late 80s: systems integration. I checked in with Graham Kemp, who tracked the SI market in those days. Graham said, “In the late 80s, SI margins were good… in the high teens… and FM (facilities management [outsourcing]) margins were fair (low teens). As the 90s came in, both dropped.”

On EDS’ Next Big Thing blog a few days ago, I read with some interest a post resurrecting the “I” word:

For a long time, the Fellows have been talking about the movement away from the Chief Information Officer to the Chief Integration Officer. The integration of process and information flow between and across the enterprise to enable greater flexibility is where all organizations need to be headed.

And as I just wrote recently to the head of analyst relations at CSC, before all outsourcers were called outsourcers, they were systems integrators. It might be time to ditch the losing battle in the ITO market, and start putting up recruiting booths on MySpace. There may be high margin opportunity introducing the Global 2000 to Enterprise 2.0.

You say you want a revolution? We-e-ll, ya kno-ow…we all want to change the world…

I knew these worlds would collide (the Interactive Agency market and Enterprise 2.0). Shiv Singh at the Enterprise Solutions practice at Avenue A | Razorfish published this primer yesterday explaining Web 2.0 for the Enterprise. It’s a cultural tectonic plate shift taking place.

His summary spells out my argument:

Web 2.0 (its technology and values) is here to stay. The web is not about publishing content and making it available to employees, partners, and customers. That was Web 1.0. This time it’s about letting those customers, partners, and employees take control of the online experience.

I love the fact he paired technology and values. I would lead with values. Values are what drive revolutions; the techology is an enabler.

REA-lly cool; check it out

On my pestering list on the hunt for “proof cases” has also been JackBe. By now, I’m sure Mike Wagner wishes he never commented on my blog. This little firm here on the East Coast, however, has some rock’n blue chip, international customers. I’ve been doggin’ Wagner for case studies, and he’s been patiently telling me they were about to launch a new web site with “new Enterprise 2.0 positioning.” If you want a good explanation for why IT and non-IT folks should be interested in Enterprise tools, read this white paper on Ajax from JackBe.

The new site launched yesterday. What I really liked was the initiative the company took to coin a new acronym, “REA.” It stands for Rich Enterprise Applications. Read for yourself what it’s all about.

I’m trying to wrap my head around this, but it appears JackBe has the secret sauce to unite SOA with Ajax. Read this excellent article written by Deepak Alur JackBe’s VP of Engineering published this week for a better explanation. All I know for sure is JackBe “already counts among its satisfied clients more than 30 industry leaders worldwide supporting more than 4 million end users. Customers include Forbes, Citigroup, McKesson, Tupperware, Sears and Banamex. The company’s deployments and deep expertise span the financial services, government, e-commerce and telecommunications sectors” according to its bio line, and that’s pretty impressive to me for a company exclusively focused on the Enterprise 2.0 sector.

Seismic Shifts in the Software Industry

I listened in today on NetSuite’s hosted Enterprise 2.0 and the Software Industry webinar featuring SandHill.com’s M.R. Rangaswami. I was amazed by some of the statistics in the presentation, but remember, I’m new to some of this stuff by five years. For instance, M.R. said Sandhill had done some research and is reporting that 90% of all software firms are now using offshoring for some element of their development. I also was surprised to hear that 80% of a CIO’s IT budget is already committed to maintenance before the year even begins… the point being a mere 20% is left for innovation. He also said Sandhill had counted over 500 Web 2.0 companies, but was quick to point out that, “None of these companies know how to make money.”

NetSuite, a SaaS app, and whose product looked very impressive, btw, said the webinar would be available on their site.

This issue about the IT budget is one where I’m not sure everyone is on the same Enterprise 2.0 page. A few days ago I was pestering poor, old Gary Fernandes (who is really neither) about this point. Gary used to trot out this slide back in the old days while I was covering EDS. It showed how, on average, the IT budget was a mere 10% of the operating budget of most corporations. As Gary was EDS’ Chairman of A.T. Kearney, and the BPO market was just beginning in those days, he was always interested in how EDS could get its hands on the other 90%. Enterprise 2.0 is Gary’s dream come true. The big opportunity here for tech companies is not with the IT budget gestapo, it’s selling directly to the lines of business that can produce real returns on small investments.

I tried to make this point to Vinnie Mirchandani today, who knows better. I know there will be a lot of push back on this issue. And, I’m a lover, not a fighter, but hey– it is a revolution whether you’re the revolutionary type or not.

Enterprise 2.0 and TCO?

I’ve decided to start tracking what I consider to be “Enterprise 2.0” companies. In pursuit of that, I was perusing JackBe‘s blogs and this post by Mike Wagner got my attention about Enterprise Mashups and TCO. The Enterprise 2.0 movement with its disintermediating affect is poised to seriously impact all discussions surrounding TCO, yes?

I’m getting together with Dan Gisolfi from IBM’s Emerging Internet Technology group in the next 10 days. Gisolfi ‘s group, led by Rod Smith, is fully engaged in the business of mashup-making. They’re pulling together data from intranets and local data for clients using their IBM mashup maker technology. He gave me an example using Home Depot’s finance department and provisioning the finance department with widgets, dashboards and mashboards… By his own admission, he sees a lot of what’s going on as new and that his group is a little ahead of the curve– they’re still having conversations internally with IBM, let alone getting to all IBM’s installed base. I’m looking forward to this meeting. I’m going to ask him about the TCO question too.

Interesting web 2.0/enterprise 2.0 trivia tidbit: Did you know Sam Ruby– one of the innovators of ATOM– is part of IBM’s emerging technology group? Not many people think of IBM as a leader in the new new Internet, but maybe they should?

Check out Dan’s blog. And these articles by Heather DalleTezze, Cal Evans, and Martin LaMonica are excellent resources explaining IBM’s Mashup Maker technology announcement last month.

If you are an Enterprise 2.0 firm, please email me. (susan@itsinsider.com)

Correction

The jump in blogstats is merci a M. Bowles who added me to his awesome Enterprise 2.0 blog. It’s a really Good Thang I didn’t write that comment I was tempted to when he posted his “Ancient Order of Thespians” brokeback-mountain-only-men-can-understand-eachother sonnet on his blog this month. Of course, now I’ve properly introduced myself, but hey, Jerry, you deserved that on behalf of the female tech universe. We don’t just do soft porn calendars, you know…

Do you think he’ll delete me?

Thank you Jerry! I promise I’ll contribute.

ITSinsider 2.0

I see I got a jump today on my blogstats. Visitors must be coming in from my friend Frank’s new outsourcing portal that he launched today. For all my homies coming here from the outsourcing community, I hope you’re not disappointed I’m not writing about EDS, IBMGS, and CSC. (I did leave a comment on EDS’ Next Big Thing blog on web 2.0., however.

The facts are that outsourcing has changed so dramatically in these past five years. I think it was all over for me when I heard George W. Bush use the “O” word sometime in the 2004 election year. When I came back into the business (and you can see some of this in the early postings on this blog), the offshoring phenomenon, the fractured BPO market, the pressure on margins for suppliers, and the sudden plethora of experts that have flooded the market… all drove me back to looking at the Internet again with longing eyes. I’m being cautiously optimistic and giving that Godzilla a second chance.

The good news is– there will be a heck of a lot of systems integration to be done in Enterprise 2.0 with web 2.0 tools. SI is outsourcing’s second cousin. It’s a respectable margin business, so you IT Services firms take heart. The really good news is you can hire or rent kids out of college to do the work (read: better margins).

I’m still finding my way in this new sector, but stay tuned. I’m on it. Please feel free to drop me a note. You know I’d love to hear from you.

A word on Frank’s portal. I think portal is a web 1.0 word, but in this case, it’s working for me. I’ve said this before, but Frank Casale at the Outsourcing Institute has always been a step ahead. He had the foresight to reserve outsourcing.com in the mid-90s before anyone was on the web, definitely in the outsourcing sector. He has ambitious and interesting plans for this site, and I’m pleased to be participating in his new venture. For now, I’ll be moderating forum panels on Marketing and The Next Net. More interesting opportunities are in the offing so stay tuned.

More Navel-gazing

Fast Company published its second annual Fast Talk: What’s the Biggest Change Facing Business in the Next 10 Years? Among the pithy commentary was Esther Dyson who has been a friend to ITSA. Esther helped me during Web 1.0 as an advisor and has always been a kind resource and source of counsel lending the occasional introduction when I needed it. Her comments here in the Fast Company piece sum up for me why I think the Enterprise 2.0 movement is going to be bigger and happen faster than a lot of people are predicting.

Esther Dyson

Editor, Release 1.0 (for CNet Networks)
New York/Palo Alto

Dyson, 54, has hosted the influential PC Forum conference and edited the technology newsletter “Release 1.0” since 1983. She has also advised many start-ups. In all her roles, she has helped mold our modern technology landscape.
First appeared in Fast Company: October/November 1997

 

“There is an erosion of power going on. Specifically, the online world has eroded business’s power. People increasingly will personalize their Web experience and determine how they interact with their environment and the people around them. The Web creates transparency, which will make competition tougher and in turn, business better. When a company messes up, it will be very visible. People will blog about it, review it, and expose a company’s flaws and pitfalls. Businesses will have to respond to this increased transparency by hiring and retaining better people. And in any case, we’ll see a new wave of smaller companies focused on specific needs, in part because they can outsource or partner for the commodity part of their operations or offerings.

There will be a profound change in psychology as people realize how much power they hold. There has always been a general perception that we shouldn’t mess with authority– when authority is exactly who we should mess with. Empowered people are going to begin to realize this. When they walk into a Wal-Mart, they’re going to want to know how a product was made and under what conditions. They will assume they have the right to ask because they can do so on the Web. And over time, people will start to expect that same responsiveness from all institutions, not just from online businesses. What kind of tax breaks on real estate are my elected officials getting–and why? And why isn’t my hospital as responsive as a hotel?

What does all this say about individual responsibility? If people control their own lives, then they are responsible for those lives. They can’t simply complain about things being bad. In a world of choices, your responsibility does not end with complaining.”
–Interview by Jennifer Pollock

Esther’s comments here dovetail with a lengthy interview I had with Joe Kraus, CEO of JotSpot. Kraus said, “When you give people the ability to do something that previously only experts could do, I think very interesting things happen.” Kraus admitted JotSpot was trying to enable a new DIY (do-it-yourself) revolution. So far, JotSpot has accumulated 30,000 users as customers with over 2000 organizations using its self-service applications including British Telecom and Intel. And JotSpot’s applications are by Kraus’ own admission, simple.

The key points here are from Esther’s comments– the erosion of power, the profound change in psychology, the inclination to mess with authority– all of this spells BRING IT ON, my Enterprise 2.0 friend with your empowering productivity tool. And if we look at the early success Kraus is having with JotSpot’s simple applications, despite the fact he’s specifically targeting the SMB market, it’s an early predictor of user adoption.

And one more prognostication for which I don’t have the data, but a sixth sense. Like Esther’s comments, Enterprise 2.0 may be more about the socio-cultural transformation than the ease-of-use tools that are enabling the technology transformation. It’s a demographic colliding alliance of sorts. On the one hand you have frustrated middle management users who’ve been hamstrung by lagging IT departments, dictatorial edicts for clumsy (and expensive) collaboration, and limited desktop solutions. On the other hand, you have the “MySpace” generation pouring into the entry level positions of every major corporation of the G2000. Today’s generation of hotshots are impatient; they’re all about instant gratification. To impress their bosses and peers, how long do you think it will be before they’re investigating their own self-styled DIY apps or Lord knows, situational enterprise mashups?

The problem with blogging is– no editor. I’m not sure I’m making my points clearly here. I’ll look at this again later this weekend and try to rewrite it if it’s not making sense. Meanwhile, I know people are reading the blog. Please post some comments. I’m curious to hear what people think about the half-life of Enterprise 2.0. Incidentally, great journalist minds think alike (ha! that is said with all humility). Jerry Bowles, whom I describe in all my links to his blog as “The most awesome Enterprise 2.0 blog” posted a note about the need for more “proofs of concept” to validate Enterprise 2.0. He also had some interesting comments on the Wikipedia weirdness.

How much democracy is “too much?”

I was scrambling for a clean definition of Enterprise 2.0 yesterday and I was going to start with the one McAfee started on Wikipedia, but low and behold, the “thought police” (see excellent post by Dennis McDonald) had deleted the entry claiming it was “not notable.” I’m going to yield to the trail-blazers to resolve the definition-establishing process, but this brings up a more interesting conundrum. It appears, ironically, the Enterprise 2.0 camp have fallen victim to what those who are critical of it have been alleging– that there are gaping holes in an unstructured environment where there is no central command or authority to keep everyone on the same page. I’m simply pointing out the obvious, of course, (and I’d like to think I’m in this camp), but what will be interesting is to see how a genuine, grass roots, bottoms up effort moves forward to clearly establish itself as the technology continues to drive Enterprise behavior.

I’m going to keep thinking about this… It’s intellectually interesting…yes?