Tech Market Froth

I've been observing hiring in tech for the last year, and I've started to believe that we are in a bit of a bubble. The salary increases, and hence the employee churn, is at levels not seen in recent history.


I saw two things this week, which confirmed that we are at a tech-top point:


1) Companies forget their core competency

Companies build products and provide services. That's why they exist and that's what their shareholders expect. In the late 1990's, many companies started investment funds to chase alpha. Those companies had no core competence in investing and accordingly, they lost their shirt. VC's, Private equity companies, and hedge funds should be investing. Companies that build products and services should not be. Which brings us to this mornings news courtesy of the Wall Street Journal: Citrix is starting an internal incubator! I think we all know how this will end.


2) CEO's become rock stars

This is Yammer's CEO, at his recent party, with Snoop Dogg. Enough said.

Self-Service is the Future of Enterprise Software

Despite human desire to be pampered and served, there is a huge affinity to self service throughout the economy. Some samples:

1) Would you prefer to print your own boarding pass or have an agent do it for you?
2) Do you like taking your computer in for technical support or do you prefer to fix at home?
3) Do you want to call a restaurant for reservations or book it on OpenTable yourself?

Given the right tools, humans prefer self service. Especially when its easy. Even more so if they get value out of doing it (ie OpenTable will learn what you like and make recommendations). If it starts to get hard, people might prefer some help. If it gets hard, people refuse self-service and at that point, forcing them into a self-service model will push them to seek alternatives.

The future of enterprise software is self-service. Clients do not prefer to talk to sales people, but they have to, as a means to an end. Clients don't like to hire consultants, but they have to when things get hard. Clients don't want to take training classes, but they have to if the products are not intuitive.

Despite the claims heard every day on Silicon Valley Radio (my term for the chatter), the future of enterprise software is not holistically SaaS/Cloud. SaaS and Cloud do not necessarily deliver self-service, but they can. Irrespective of delivery model (On-Premise, Saas, Cloud), I believe clients will migrate to software with the following attributes:

1) Available for download on a public website.
2) Intuitive use: no manuals, no training...unless desired.
3) No sales people, consultants, or meetings...unless desired.
4) Quick value, based on how the software is used.
5) The software understands what the user needs, so every usage is more valuable.

Interestingly, I talk to very few companies that are focused on this. I am aware of only one that I think has done this quite well...and accordingly, they have been very successful.

This is not easy, but it is the future of enterprise software.

The Business Opportunity of the Decade

Peter Drucker, the famed management guru, frequently talks about risk (more specifically managing risk) in a business. Per usual, he simplifies into 4 kinds of risk:

1) Risks that you must take
2) Risks that you can afford to take
3) Risks that you cannot afford to take
4) Risks that you cannot afford to not take

I believe the current transformation in Information Technology falls into category 4: its a risk that every organization cannot afford to not take. That fact creates the business opportunity of the decade, for someone or some group of people that decide to capitalize on it.

The Macro View

The current economy is turbulent. Unfortunately, this is a new normal vs. a phase, in my view. With continued QE's, LTRO's, and countless other government programs, there are attempts to keep things afloat. However, the result is increasing unemployment (euro zone now at largest level EVER), stagnating growth (Brazil barely growing??), and an inevitable reduction in global trade/commerce.

When you have this type of environment, the actions for every company are fairly straightforward: spend less, do more with less (employees, tools, etc) and prepare for life in the new normal.


The Transformation

At the same time of the macro picture I paint above, as discussed in this book, we are at the start of the big data era. Let me simplify big data for a moment: this is simply about leveraging technology to do (or not do)things that were never possible before. I think these 'things' fit into 3 categories:

1) New use cases, applications, solutions.
2) Shift 'how' you do existing things, to a more efficient approach/platform
3) Consolidate everything (tasks, employees, IT, offices, spend, vendors, etc)

Interestingly, 90% of the discussions that I have with clients on big data are focused in category 1 (new use cases, solutions, etc). In many cases, this is dream-storming (brainstorming, with a healthy amount of dreaming).

Category 2 and 3 are where I believe the real opportunity lies, given the new normal. However, doing anything in category 2 or 3 is very hard for an organization:

- You have to build a plan to define what, how, when
- You have to have the fortitude to slaughter a massive number of 'sacred cows'
- You have to overcome organizational inertia to take action

These 3 inhibitors to making progress on Categories 2 and 3 are what present the business opportunity of the decade. This can only be done by an external party/partner, due to the inhibitors...and that presents a rich consulting opportunity.

To build a business here, I think the right model is to earn fees as a % of dollars saved. This immediately eliminates the vast majority of large Systems Integrators and Consulting companies, as they cannot afford that model.

I've seen the potential savings with my own eyes. Clients can save 50-70% on many functions, by leveraging this 'next generation middleware'. Who will help them?

Steel and Bridges: Evolving our Big Data Platform

Andrew Carnegie, born in Scotland, came to the US in 1848. He started work in a factory and eventually built one of the single most successful businesses in US history, Carnegie Steel (later became known as US Steel, based on a few mergers). Carnegie is a tremendous book, if you want a deep look into how he transformed from factory worker, to steel magnate, to philanthropist. Hint: it was a lot of hard work and smarts. However, one thing stuck with me from this book: his insights on strategy.

As he was building the steel company, he had a bad experience where he was mistreated by a railroad owner. At that point, he decided that he needed to either (a) own all components of the steel value-chain (from ore to tracks to railroads to bridges) or (b) build a set of partnerships for the long term, with folks that he could rely upon (and vice versa). This is why Carnegie Steel started investing in (owning sometimes, partnerships in other cases) most components from ore to bridges (railroads, sleeping cars, oil derricks, depots, etc). It may seem obvious now, as we have seen many companies emulate these strategies (think of media companies, auto companies, etc). However, this notion of owning or partnering throughout the value chain was his strategic insight, at a time when no one else saw that opportunity.

We made two significant announcements this morning, much along the lines of Carnegie's spirit for building a business for the long term. Like Carnegie, we believe that building the Big Data Platform for the enterprise requires us to be ambidexterous: in some cases build, in others buy, and in even others partner.

Vivisimo

First, we announced our intention to acquire Vivisimo. With strong roots at Carnegie Mellon, Vivisimo has been in business for over a decade. While they have had tremendous success as a company, you could also argue that Raul, Jerome, and Chris were ahead of their time, as we are now at the dawn of the Big Data Era. Vivisimo brings an immensely talented team, along with very sophisticated federated discovery and data navigation technology, to IBM. They have built these capabilities on top of their core strength in indexing disparate data sources, across an enterprise. Think about it: With our Big Data Platform and the Vivisimo capabilities, clients can access all of their data through a common lense, whether it is stored in hadoop, a warehouse, ERP, CRM, etc, etc...In short, this is an extremely powerful analytical capability.

To date, Big Data in IBM has been one of our most incredible organic development projects in recent memory. Our core platform is 100% IBM technology, built in IBM labs (Silicon Valley and Research), delivering tremendous client value. That being said, we are thrilled to welcome Vivisimo to the family, as the combination of our organic innovation, along with their people and technology, will keep us well ahead of others in providing a Big Data Platform to clients everywhere.


Hadoop Distributions

I've stated in these pages, since May of last year, that IBM is not in the Hadoop distribution business. Many people have questioned how I can assert that, based on what they perceive. Hopefully today's announcement will change that perception once and for all. We announced today that we will be enabling our Big Data Platform on other Hadoop distributions. The first partner that we are announcing in this area is Cloudera. Our objective is to be distribution agnostic. Said another way, we believe in client choice. If a client wants IBM to package Apache Hadoop as part of our Platform, we are willing and ready. If the client prefers the Cloudera distribution underneath our Platform, we will now be ready. If a client prefers another distribution underneath our Platform...well, we have nothing to announce on that point at this time. But suffice it to say, we believe in serving client choice, when it comes to the open source components of our Big Data Platform. I've been working with the Cloudera team for nearly 1.5 years at this point and have utmost respect for what Mike, Jeff, Kirk, and others are doing there. We look forward to a great partnership, serving our joint clients.

Closing

We will remain very active in Big Data. We have great client references (see some here and here, see the full reference book and others here), we now have over 100 partners in our ecosystem, we've been named a Leader in Big Data, and we are hiring engineers that want to be a part of the largest (and best) development team in Big Data.

If you are interested in partnering with us, please reach out. We will be over 200 strong in the ecosystem by the end of the year. If you have interesting technology that complements our Platform, please reach out. We are hosting a Big Data Partner conference call on April 26 at Noon est, to announce some new offerings for our Big Data Channel. Please join us if you are a current partner or are just thinking about it. Register here.

We are still in the early days of the Big Data Era, but we'll need more steel, bridges, sleeping cars, and depots to serve our enterprise clients.

Is Big Data an e-Business?

IBM's initiative around e-Business was arguably one of the better marketing campaigns in IT history.It emerged in the late 90's and really set the agenda for companies overnight: either you were an e-business or you were not.



This campaign set off an arms race, to determine which companies would lead in the internet era, in every major industry.

Obviously, you don't hear anyone talking about e-businesses anymore. It's the de-facto, the standard, life-as-usual, etc. In fact, it has become the default: everyone is an e-business. It's so obvious that we need not discuss it.

With all the hype around Big Data, I often hear people question if this is simply a fad or a passing trend. I put Big Data on the opposite end of the spectrum from hype. I believe that Big Data will become so fundamental to how organizations are run, that eventually the term will fade in relevance. Big Data will become fundamental to the fabric of an organization. This will happen once the public begins to embrace it as the next generation of middleware. And once that happens, we'll only hear the term Big Data, in the same breath as e-Business.

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Moving from hype/excitement to mainstream, starts with education. Here is some Big Data open source 101 content:

Hadoop
MapReduce
HDFS
Pig
Hive
Zookeeper
Hbase