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In this Issue:
Inside B2B
Tilion is among the first entries in the B2B analytics derby, but can it finish what it started?
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The way things usually go, transactional systems under construction today will soon be complemented by business intelligence (BI) services. According to Hurwitz Group analyst Philip Russom, the Internet-enabled supply chain is likely to be particularly fertile ground.
This eventuality motivated Christopher Stone, formerly a Novell EVP and the founder and CEO of the Object Management Group, to launch Tilion Inc., an application service provider (ASP) for business-to-business (B2B) commerce-based analytics. The company plans to announce service availability in Q1 2001.
Tilion intends to address some unique problems. For example, unlike "traditional" transaction data, the information that fuels B2B analytics is not captured within one organization. Rather, it's distributed among potentially hundreds of partners, all with different internal data models and processes. As Stone explains, "You know what people have gone through trying to build data warehouses. Imagine trying to do that across hubs and trading partners — which is why it has to be done as a service. And it's got to be done with an enveloping technology, such as extensible markup language [XML]."
Tilion will capture XML-wrapped data from various sources (such as a participating corporation, a public Internet exchange platform, or a private EDI hub), transport it via the Internet to the Tilion Intelligence Center, aggregate the data appropriately, perform analysis, and generate reports. Analytics can include fill rate performance, advance ship notices, and variances between items ordered vs. items shipped. Reports are rendered in HTML from the XML source.
XML, the ASP model, the emergence of B2B trading exchanges, and the knowledge that these exchanges would eventually seek analytic tools were the magic combination that inspired the Tilion concept. But at first, it looked as if Stone may have been too prescient for his own good. According to Russom, when the company formed in January 2000, Tilion's revenue model was based on transaction volume and focused on public exchange hubs as its prime customers or partners. However, transaction volume is still very low on public exchanges. According to Russom, "Public trade exchanges for B2B are going to ramp up; in two to three years, there will be impressive volumes of sales going on there. But today, it's just too early. That's a dilemma for Tilion."
Tilion executives, knowing that indefinite rounds of VC financing are no longer a certainty, rethought their strategy and decided to target private EDI networks as well as open B2B exchanges. One of Tilion's first customers, which Stone would not identify by name but described as "the most valuable company in the world" (in terms of market capitalization), is an EDI-based hub.
The company does not perform EDI-to-XML transformations for customers. Rather, it works with partners such as Netfish Technologies Inc., XML Solutions Corp., and Mercator Software Inc. to put data into the right package. Russom says that writing the parsing instructions to transform a set of EDI document types to a given XML format takes about a day.
Tilion's "In the Net" analytics promise to radically cut down the time it takes to gather intelligence on the supply chain. Processes that have been taking 90 days could instead be done in minutes, delivering reports to all supply chain partners, at the same time, with a single version of the "truth."
The company faces formidable challenges, however. First of all, it's unclear whether Tilion offers a differentiating service; it uses off-the-shelf technology, such as Business Objects' WebIntelligence and Oracle8i. Tilion will clearly have to fight to achieve dominance when B2B analytic services become more popular.
Furthermore, the company may also have to address the "broken migration path," according to Russom. Although larger customers are attracted to the ASP model, if the application involved becomes mission critical for them, many of them will end up buying the application and installing it behind the firewall. With Tilion, that migration path -- from service user to application user -- is cut short by the fact that Tilion is by its nature a service. Whether larger customers will be willing to stick with an ASP for the duration is unclear.
-Jeanette Burriesci
Garbage In, Garbage Out
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The controversy surrounding the 2000 presidential election and the Florida recount is not just a once-in-a-lifetime civics lesson. It also provides an excellent opportunity to explore the profound business effects associated with questionable information quality.
At least six data quality issues are evident from the Florida election:
Poor data presentation. The use of the "butterfly" ballot in Palm Beach County is an example where the presentation of information did not correlate to users' expectations, leading to many errors. The fact that the top two punch-holes in the ballot did not correspond to the top two listed candidates apparently led a large number of people to vote for Buchanan instead of Gore.
Validation of data before it was "used." The use of punch cards and the butterfly ballot led to questions regarding the accuracy of vote counting. Improperly punched ballot cards precipitated questionable tallies resulting from automated tabulation; thus, the validity of a vote is primarily based on whether the tabulation machine could read the card.
Allegedly, approximately 19,000 ballots were disqualified because of "over-votes": more than one vote for president had been made. With no built-in mechanism to validate the data before it enters the system, there was no way to flag erroneously punched cards before they were submitted.
Invalid analytic models. During election night, the use of invalid analytic models led to invalid conclusions about the winner. News reporting organizations' predictions are based on the results of exit polls and election results provided by a jointly owned data collecting consortium called the Voter News Service (VNS). Typically, the VNS feeds both vote counts and winner predictions to the news media, which is why all the different broadcasters seem to predict the winners all around the same time.
In the case of last year's election in Florida, the networks twice predicted the winner of Florida incorrectly. The first time was due to the fact that predicting elections is predicated on statistical models based on past voting behavior that {1) were designed to account for vote swings an order of magnitude greater than the actual (almost final) tallies, and (2) did not take changes in demographics into account.
Conflicting data sources. Different sources of data may conflict, leading to incorrect assumptions. By 2:00 a.m., the VNS (and consequently, the reporting organizations) had switched their allocation of Florida electoral votes from Gore to Bush. However, a second retracted prediction occurred when there was a dispute about the actual vote tallies. Although the VNS report indicated that Bush led in Florida by 29,000 votes, information posted on the Florida Board of Elections Web site indicated that Bush's lead was closer to 500 votes, with the gap narrowing quickly. In addition, a computer glitch in Volusia County led to an overestimation of Bush's total by 25,000 votes.
Built-in margin of error. In Florida law, a priori expectation exists that errors will occur in how votes are counted. According to Title IX, Chapter 102 of Florida law, "If the returns for any office reflect that a candidate was defeated or eliminated by one-half of a percent or less of the votes cast for such office ... the board responsible for certifying the results of the vote ... shall order a recount of the votes." Inherent in this statute is an assumption of a margin of error of one-half of one percent of the votes. Thus, unless there is a true, validated count of all votes, the "real" winner is unknowable.
Lack of timely certification. In the Florida election, timeliness constraints for the reporting and certification of votes had a significant effect on the final results, mostly because the requested hand recounts in Palm Beach and Broward counties were not completed by the certification deadline (one week after the election).
In the knowledge management world, information policy serves as our body of "law." This policy delineates the guidelines and rules for the definition and use of data, as well as the consequences when these rules are violated. Thus, one lesson that the IT community can learn from this election is that well-defined information offers a way to manage risks associated with low data quality.
If we can learn from the errors that have taken place during the election and thereby improve the election process, then the nation as a whole will win.
David Loshin (loshin@knowledge-integrity.com) is president and CTO of Knowledge Integrity Inc., a consulting firm specializing in knowledge management and data mining.
A New Direction
ORACLE'S BRAIN DRAIN GOES TO THE BENEFIT OF VERITAS
What are Gary Bloom's New Year resolutions for Veritas Software Corp.? In November, he became the storage management software company's new president and CEO. He replaced Mark Leslie, who will remain chairman.
Bloom ended his 14-year stint at Oracle as executive vice president and was rumored to be next in line for the CEO job after the departure of Ray Lane, former Oracle president. But when it became clear that Larry Ellison, Oracle's volatile CEO and founder, had no intention of relinquishing his position, Bloom decided it was time to leave. He had been in talks with Veritas for several months before deciding to leave his former employer.
At Oracle, Bloom's multiple roles included head of marketing, alliance organizations, and mergers and acquisitions; he also led the team developing the next version of Oracle Internet-based software applications. Clearly, his previous experience at Oracle is a good fit for his new position at Veritas.
Leslie would like to see Bloom grow the company from $1 billion to $10 billion. Certainly Bloom is poised to take the company in any number of directions. He could lead Veritas toward more alliances, expand existing relationships -- the company currently has partnerships with heavyweights such as Microsoft, Oracle, Sun Microsystems, and IBM -- or he could take Veritas down the acquisition road to further expand Veritas' product line.
But don't expect any sudden moves in Bloom's first quarter; he is settling into his new role and taking time to learn as much as he can about the company before making any dramatic changes.
How Will Veritas Perform in 2001?
Mark Nicolette, analyst with the Gartner Group said that Veritas is well-positioned to build on its technology base in the backup and storage markets. "It's an opportunity to expand a number of current licenses and sell new functions into existing accounts because of the trend to standardize storage structure. They need to execute and continue developing their technology so that they can capitalize on this trend."
According to an AMR Research report on January 3, 2001, the storage industry grew more than 25 percent in 1999 and reached $13 billion in 2000. The research firm also stated that "about 75 percent of all new hardware dollars will be spent on storage, taking the storage area network (SAN) market to $35B by 2004."
Nicolette states that Veritas' strengths are in volume management and file systems. To acquire new backup customers, "Veritas will have to displace competitors and go after the installed base of vendors such as Hewlett-Packard, Computer Associates, and Legato," stated Nicolette. "It's a maturing market so there is only a limited amount of new business available"
As Veritas introduces SAN management, it will also be in competition with Tivoli Systems Inc. and hardware vendors such as EMC Corp. and Compaq Computer Corp. Look for Veritas to increase its competitive efforts, but not its acquisitions in 2001.
-- Chuleenan Svetvilas
Who Do You E-Trust?
Privacy competes with bankruptcy code
Expect more respect for Web site privacy statements. Beyond highlighting public distrust of Internet transactions, privacy statements often pledge that personal consumer information, including transaction details, will remain private and never shared with third parties.
But the Internet is neither doctor nor lawyer, and the law regarding enforcement of such promises is far from settled in the unsettled New Economy.
"The Internet is going through uncharted waters. Many companies have little experience going out of business, let alone being in business," observes Dave Steer, spokesman for privacy advocate TRUSTe, which has awarded "TRUSTe Privacy Seals" to some 2,000 Web sites that meet its criteria for privacy preservation.
TRUSTe sounded early warnings in June 2000 that flailing Toysmart planned to sell its 250,000-name database to raise cash, despite privacy-statement promises to the contrary. TRUSTe joined 42 state attorneys general and the FTC to stop Toysmart. The issue was resolved earlier this month when majority-shareholder Disney paid Toysmart $50,000 to destroy the database.
"We would have been satisfied if Toysmart had gotten each customer's approval," Steer says. "[But]the company said that in bankruptcy, all bets were off. We disagreed."
A basic tenet of bankruptcy law is to maximize recoveries to creditors. For dot-coms with few assets, customer lists might yield considerable cash. Thus, as a matter of law, privacy competes with the Bankruptcy Code.
Business valuation expert Michael O'Brien, vice president, Houlihan Lokey Howard & Zukin, says he believes that "stand-alone customer databases are worthless if privacy statements are attached." For thriving companies, the data has calculated value as future cash flow. For failures, he adds, "anyone buying the database would also have to buy the company."
That's precisely how CraftShop resolved its going-out-of-business dilemma. The Internet company sold its name and its privacy-protected database, eliminating the transfer to a "third party." This solution has yet to be tested in court.
The Toysmart case established a compelling precedent, says TRUSTe's Steer. "It showed that companies will be challenged if they step over the line, and it produced a tremendous chilling effect on the value of customer databases."