Free and Uncertain

We have arrived in the age of convenience: what will it mean for the BI market?

"Predictions are impossible today. We are coming to understand what people understood in the Middle Ages: We live in a world of uncertainty. That is the human world." And the more freedom, the more uncertainty, said Fernando Flores, an influential visionary of modern computing, in his March 1997 address to the 50th Anniversary Conference of the Association of Computing Machinery (ACM). Rattling around my office for inspiration, I found a text of Flores' talk, "The Impact of Information Technology on Business." It seems even more relevant today than it was four years ago, when New Economy visions were just hitting full throttle.

"We fight for more freedom, but we are increasing uncertainty ... and more innovation, by definition, means more unpredictability," Flores continues. "So we are moving in a world of more uncertainty, and we need to develop emotions to deal with that. Because uncertainty and fear are not necessarily interconnected. My opinion is that part of the loss of the religious spirit in the world has to do with believing in control. We accept our limits, but we can also be more modest, more humble, and have a space for mystery."

As we head into the true beginning of the 21st Century, "uncertainty" is the word many would use to describe what the future holds. Disappointing earnings and a dot-com deflation have skewered the bubble of wealth supporting the stock markets, which fell to earth (and below) by year's end. Venture capitalists, institutional investors, and moneyed angels are scratching their heads. Is wireless Internet the next big thing? What about those B2B exchanges? Will we see any more 40-foot waves, or will the markets instead deliver a succession of smaller crests and troughs? Where is the dynamism and where is the stasis?

"This industry has a tendency to confuse communication and information, as if they were the same thing," Flores discusses in his 1997 ACM talk. "I have seen that again and again, and they are two different phenomena. Information has to do with what is present and can be asserted. Communication has to do with our successful living together. Communication has to do with the intentional coordination of actions. And I believe that what the Web has produced, and this industry is producing, is shifting the space of communication. There are communities that could not be formed before. There are transactions that could not have been completed before; there are promises that cannot have happened before."

Four years is a long time in an industry that likes to move at warp speed. However, Flores' simple distinction in 1997 still helps us recognize and comprehend the source of uncertainty so that we can focus our intelligence on riding out the waves, rather than falling off into the deep blue sea. The distinction helps us understand the turmoil in business intelligence (BI) - the sector of IT responsible for extracting and distilling value from information. As we move further into the "shifting space of communication," as Flores calls it, driven by the Internet, mobile computing, and "P2P" computing - person-to-person, not merely peer-to-peer - the BI industry could break up and reform itself.

Age of Convenience

Flores describes three phases in the relationship between business and technology. He starts in 1850 and the Industrial Age; paper-based technology supported the clerical requirements of that age. The second phase began in about 1950: the Age of Needs. "A 'need' was a certain kind of relation that business had with people," Flores states. "In the Age of Needs, people were defined by their desires, and what people needed were transactions. Information was, at the beginning, clerical work to manage transactions. But the deal was happening in the conversation. The transactions happened afterwards. Transactions were important for control, and for the IRS. They were not important for people. That produced massive complexity. And that is why when computers arrived, they arrived as data processing machines."

Data processing guided the direction of BI in the Age of Needs. But as Flores noted, implicit in data processing's BI offshoots, namely decision support and data warehousing, is the notion that more data equals more knowledge equals more power. He questions that assumption: "Today we are living in the age of inflation of data. We need less data. We are talking about filters. We are talking about agents. And we are beginning to distinguish between knowledge and power. They are interconnected, but power has to do with action."

Flores predicted that by 2000, the world would transform the Age of Needs into the Age of Convenience, when "people want products that come with service; that come with training, with maintenance, and come on time." What people would need from companies is a "promise for a condition of satisfaction." To achieve "convenient coordination" between services and their clients, "we don't need software by itself. We need software as a component of systems that support coordination of commitments."

BI Schizophrenia

Have we arrived in the Age of Convenience, as Flores predicted? Judging by the heat around customer relationship management (CRM), I'd say we're getting there. Flores predicted new kinds of stress and challenges facing this "Age of Convenience at the level of the customer and the age of coordination of commitments at the level of production." CRM, one-to-one marketing, and B2B supply and demand chains are IT solutions aimed at resolving these stresses and challenges. BI is splintering, with some vendors aiming at generating higher-value "convenience at the level of the customer," while others pursue the opportunity to bring greater intelligence, efficiency, and profitability to the "coordination of commitments at the level of production."

The established leaders in the BI industry - companies such as Brio, Business Objects, Cognos, Information Builders, Hyperion Solutions, and MicroStrategy - still aim to provide full BI solutions for access, analysis, and reporting. But as new competitors arrive, the established players have been facing tough strategic decisions. In the CRM space, they have watched E.piphany, Broadbase, and others cross the "operational" line and package analytics with marketing automation and e-business functions. Meanwhile, they've been absorbing the buzz around "realtime BI" for instant, perhaps even embedded and automated B2B supply chain, demand planning, and clickstream information access, analysis, and reporting. Should they chase the buzz?

The dominant user platforms for real-time BI are likely to be wireless devices-that is, computing platforms born to revolutionize communication activity, rather than information delivery. Sure, right now everyone uses these for stock quotes, other broadcast information, and in a limited fashion email: but the "killer app" will arise out of contexts such as supply chains, where systems can alert users and accept programmed responses from them to keep processes moving. To use Flores' distinction, realtime BI will focus on alert-and-respond "communication" activity, supported by a traditional BI information layer accessible via intranets or other middleware.

Permission Granted?

Michael Saylor, founder and CEO of MicroStrategy, knows well the roller coaster ride of the BI market. His company spent much of 2000 restating earnings, settling class action lawsuits, paring back its workforce - and releasing a new version of its flagship system. In a recent conversation, he noted that in the new age, "Your greatest asset is your attention. Next is equity, next is debt, and next is purchasing power. With the power of data, you can monetize these very efficiently."

"Permission will be the necessary condition" to harness the power of data, according to Saylor. People will be asked to "opt in" not just to meet privacy and security commitments, but as part of an agreement to surrender precious minutes of their attention span as well as the keys to other assets. "Any business that creates an annuity stream by monetizing assets of other people without their permission is at risk." Saylor includes banks as among the "quasi permission-based institutions" that could be threatened by consumers using intelligent agents to seek out better terms with providers that respect the fuller concept of permission to work with their data, financial, and attention assets.

In the Age of Convenience, permission will be not only an asset firewall but also the domain of critical data that future BI tools will analyze for clues to behavior and desires. Free from the shackles of necessity - and free to use whatever communications platform fits the function - both customers and business partners will need intelligence of a different kind to sort out complexity and uncertainty.