Collective Business Intelligence and Enterprise 2.0

Web 2.0 as defined by Tim O Reilly is "the design of systems that harness network effects to get better the more people use them" . In his blog piece he describes very eloquently how Google's Page Rank mechanism is good case of harnessing user generated content.

Now take this to the Enterprise context. Up till now most of the discussion of Enterprise 2.0 I have seen revolves around two things
1. Harnessing Collective Intelligence of workforce to collaborate and share via tools like Wiki's , blogs . Product sets include Lotus Connections , Suite Two
2. Conversion of traditional office tools to Office 2.0 style platforms. Google Docs , HP Adaptive Enterprise Solution are excellent examples that basically focus on the ability to conduct normal business in a collaborative environment without being co-located.

A third part perspective of Enterprise 2.0 that should probably be included in the mix is the Business Intelligence gathered as a result of the network effect taking place with the continuous accumulation of Employee and Customer generated data and having an even broader data set as a result of SaaS applications serving more than one Customer.

So consider Salesforce.com - with several organizations using salesforce.com , they pretty much know the business benchmarks of processes in an industry (example :If they have 15 customers in the consulting space who use salesforce from sale to staffing cycle , salesforce will have the data to understand what it takes to improve the cycle by comparing various customers).

Frankly , If I was an SaaS player , I would pay to get users to use my software so that I can get their data and further master the business processes based on Data Analysis. As Tim pointed out , that in Web2.0 world Data is King and for Enterprises in 2.0 world , knowing what data is your core asset (and hence not shareable) and what data is something that you can share is going to be key.

So now you know - why did SAP buy Business Objects ? To enable Collective Business Intelligence on their Business By Design platform stupid.

Why did SAP buy Business Objects?

Recently I ran into a client who had made a significant investment in Business Intelligence infrastructure and a decision support system. This Insurance Carrier had 8000 reports in their portfolio. Yes once again the number is 8000 ?? Needless to say that one of reason I was engaged was to rationalize the reports(besides fixing other problems they had like Data quality)


I work in the Information Management space and have come to realize that 80% of our work is in getting the infrastructure for decision support right (i.e focussing on ETL , Data Quality , one version of truth etc). A successful project's end point is generally the ability for the Business users to get the information they are looking for accurately.This measure of success traditionally has focussed most of the BI players and consultants to be technology centric and tools heavy on the plumbing aspect for data.


So where does SAP(NASDAQ:SAP) and Business Object's (NASDAQ:BOBJ) fit in? With the aquisition SAP now gets the capability to be more than a core business transaction processor. i.e with the intersection of its industry knowledge and the BI knowledge from Business Objects , it can now enter into the relatively new market of Business Health Monitering and Business Benchmarking (not sure if this is a standard term-just coined it). Its future software will probably be able to analyze the business outcomes against indstry norms and suggest remediation (example - Your billing cycle is 10days while in your industry it is 4 days , you can fix it by doing X Y and Z). OR it might be able to proactively moniter the health of your business taking the Enterprise view in context (Example - For the insurance carrier reserve level for the Auto LOB has gone below the norm of X , but the Claims ratio in Commercial LOB is looking good so overall reserve level should not change for the enterprise).

SAP gets a chance to deepen the relationships it has with its customers by adding the business outcomes offering and broaden by penetrating into the Business Objects Legacy contacts.

I expect the Business Objects aquisition to have the effect of 1+1 = 4. The deal is not accretive and on strictly financial terms dilutes EPS and growth rate and hence the resentment from Wall Street on the deal. But then Wall Street was never expected to be a thought leader in how the markets are going to evolve.

I also think that Business Objects and SAP are a good cultural fit. Business Objects and SAP are both leading edge Web2.0 players in their areas (Refer here and here) and hence understand the overall direction of the consumer.