Database 2.0

For a long time (decades I believe) it seemed like the General purpose Database was the silver bullet. Object Oriented Databases tried to take the shine away from RDBMS , but only to strengthen the notion that RDBM’S do best at what they are supposed to do – Store , Query and Update Data.

The application development world adjusted to the notion that the Object Relational mismatch is a reality and instead of fighting it let us work with the RDBMS systems and make world a better place. Tools like Hibernate had great success because they accepted the strengths of RDBMS as compared to competing technologies at that time like EJB's . The Enterprise was also caught up in the ERP wave where everything in the Enterprise needed to have a predefined structure, vocabulary established etc.

2007 brought some interesting changes in the DB world. Web 2.0 brought the concepts of self organization , realization that all information does not reside in-house , that everything cannot be structured , that Information Management is not just EDW / BI - there is a whole world out there with unstructured information and Semantic Web . Consequently SQL and RDBMS is not the silver bullet.

2007 also brought some interesting DB’s to the forefront including SimpleDB , BigTable , HP Neoview , CouchDB each of these serving very different purposes finetuned for particular needs.

So the definition of Database 2.o in my opinion is that it is the realization that all information in the Enterprise cannot be out into RDBMS , cannot be structured and that there can and will be multiple datasources to information within and Enterprise.

So what is my point ?

I think the Database market is splitting into two layers
1. The general purpose database market - now turning out to be a commodity market
2. The specialized DB market

So finally I would like to close on the trigger that got me to think the above - The mysql acquisition by sun – Why does sun need a database product NOW ? it has severe wall street issues and convincing the market of buyout of a company that gives away free products is going to amazingly difficult.

Here is the answer I came up with .
With the technology and engineering capability needed to build a general purpose database generally available – Building a high performance RDBMS system that competes with the likes of Oracle and DB2 does not seem like a very big challenge. So if competing on price and brand are your differentiator's in the general purpose DB market then what better way to compete by giving the product free.

Now monetization on mysql and revenue potential is a separate discussion. My discussion above is keeping the number of deployments in mind.

more reasons for the Sun / mqsql acquisition

Google Energy and Vertical Integration

Google’s(NASDAQ:GOOG) announcement to enter the Energy space kinda surprised me but when you look under the hood there seems to be very good business justification for this.

Google is doing what Henry Ford did in the auto industry and Rockefeller did in the Oil industry – Vertical Integration.

Vertical Integration is defined as - The ownership by the same company of different functions in a supply chain relating to the provision of a particular good or service. Vertical Integration is generally done to lower the transaction costs in the supply chain and synchronize the supply and demand across the chain. Vertical Integration was pioneered by business leaders like Rockefeller and Henry Ford , where after reaching a certain size in their business they expanded into owning the supply chain so as to minimize the risk , control quality and lower transaction costs. Rockefeller after owning oil refinery branched out into oil distribution, oil retail and oil production.

Electricity costs for any SaaS vendor ( Google included) Electricity costs are significant and it is only going to get worse with Oil at $100 and the Global warming problems with coal. So it makes sense to manage the risk on the supply side and try to solve the problem. Google with its core competency of managing and monetizing innovation is also well placed to take up the challenge.Besides in my opinion Energy is going to be next frontier of innovation and to keep on sustaining at PE multiples of 50's long term GOOG needs to be looking at the next growth industries.

What got me thinking on reading about the Google Energy post is the approach Enteprise2.0 companies(like Amazon and Google) are taking towards Vertical integration. Thought leaders like Don Tapscott have argued that in the 2.0 world the transaction costs (the costs for collaboration) that justified vertical integration have evaporated to almost nothing now and vertical integration potentially does not make sense now as the integration costs internally in the Enterprise could be more than taking the route of ideagoras or Crowdsourcing

Google’s Energy entry and Amazon’s Webservices business in my opinion are Aspirational Core Competency based Vertical Integration transactions.

For Google:

Aspirational –Energy is the next thing
Core Competency - Managing and monetizing innovation
Vertical Integration – improve downstream supply chain.

For Amazon:

Aspirational - Become an HaaS Vendor
Core Competency - Software Engg and Systems Management
Vertical Integration - improve downstream supply chain.

Update : dec 29th: Here is another example for Googles vertical integration strategy. Also interesting to note that Google has been integrating downstream and not a lot upstream ( Android) , it did not not end up launching a GPhone as people had predicted.

Business IT Alignment and SOA governance

Congratulation Bryan Mjaanes on successfully implementing SOA program at Zurich Insurance .

There was one slide that I really liked that in my opinion captured the Business IT Alignment problem quite well.




The diagram explains quite beautifully how the information flow and feedback mechanism's work for SOA governance. The link from Enterprise Architecture / SOA to Business Process in my view represents the two constituents in the Enterprise that need to be aligned and in my experience this link is generally the weakest link in the picture. What I have seen in Failed SOA cases is that the shadow IT(part of Business) will end up using SOA tools and technologies (webservices etc) and solve their business problem and keep on shouting to the world that they implemented an SOA architecture. See diagram below , This generally happens when the SOA program does not have a senior management buy in and the Enterprise Architecture group is really a figure head and not very powerful.

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.

Software as a Service OR is it Community as a service

I was recently talking to a large online brokerage and they were making a business case around launching a website on the lines of SocialPics

the discussion was - should the website be exclusive to the customers of the brokerage house or should it be open to all. The general thought in the group was that a service like that should really be exclusive to the customers as it would be the "Value Add" on their current web site , a diffrentiator from their competitors , one of the reasons for propects to become their customers and hence a justification to charge more premium per trade.

The discussion was near completion when a 20's something executive (who has a blog on blogger.com) raised the question - "So how are you going to build your community with all these barriers to entry" . The whole point of having a community like Social Pics is to leverage the knowledge of wisdom of crowds. If you are making this crowd as an exclusive club what is the value of such a community.

The world of software has changed in the last 5 years. 5 years ago putting the software like that of SocialPics on the website would be viewed as a value add. Things like Financial charts was a differentiator. Today Everyone gives a good Financial charting capability free , what people are interested in is the community like this or this or this(for a specific Stock)

Let me make a bold statement and say that "Software in itself as no value in a Web2.0 world ". It is the community , the volume of usage , the masses that you bring along with a successful software that has the value.Once you have the volume (as a measure of usage OR as a measure of community involvement) you will probably have the best software - because you have the best usage data collection , best feedback mechanism (Concept of continuous and never ending Beta )and maximum user community to improve your software.

Does open source make ecomonic sense ?

this is a topic talked about at several places including here (Jonathan) and here (Red Monk) all of which are perfect arguments ?

A point I felt that was not clearly articulated in my earlier readings was that I look at open source as just a different Market Capture Strategy.

You have a choice today. Do you want to spend millions in Marketing and Sales of your product or do you want to spend those millions into the product and follow the route of Bottom up marketing. ( and refer : death of cold calling)

Refer to what an a CEO of Major insurance carrier says regarding barriers to entry. I shall explain in a different blog entry of how the barriers can be eliminated in Web2.0 world.

Keeping the discussion to making money in open source. Once you leverage open source to overcome the barriers to entry you have several ways to make money including :

Business Models
- Donations : Apache , Debian
- Advertising : Sourceforge , O’Reilly Media, Sys Con
- Membership : Eclipse , Java.net
- Conversion :
--- Maintainence / Support / Subscription : JBoss , Solaris
--- Brand ownership - IBM (Eclipse)
--- MEdia Kit - Suse Linux
---- Add Ons (Dual License) - Niku Clarity , mysql

- Software as a service - Google with GMaps and a bunch of other services . Frankly if you are in SaaS world there is an even better case for you to go open source as the customer is interested in the service and not the software.

- Professional Services - interface21 (Spring framework)

Also note the Demand supply equation in the open source world works like this

Supply side:
- Technology Vendors : Achieve critical mass and gain market share aggressively
- Technology Vendors : Share cost of development and testing
- Individuals : Solve a particular problem and make the solution available to the world
- Individuals : Get involved in an areas of interest to learn , contribute and help career.

Demand Side :
- Lower Total Cost of ownership
- Transparency and freedom to enhance , modify the products to suit specific needs
- Better quality as a result of large user community base and hence more testing and improvements
- Demand side decision influencers generally involved in open source world


Understanding the type of payer you are in the open source world and understanding the kind of leverage you are looking for from this type of model is key for Enterprises.

Here are some personality traits of open source players

Three kinds of players
»Innovators – Model : Build Great Products - Achieve Critical Mass very aggressively ---Make $$$ by any/all of the Business Models
- Hibernate , Spring , Linux : started by a developer to scratch an itch and then they got a life of their own
- Eclipse , Netbeans , Tomcat : started by Big product companies as a strategy to achieve Critical Mass ASAP and leverage economies of scale

»Contributors - Ride on the success of a good open source product. Strategy is to start contributing to successful products. Come on the main contributor list and then you sell your expertise in that area by virtue of having IP on the product. Example JBoss/Tomcat story , numerous one person outfits.

»Consultants - Neutral parties who look at open source as another IT Solution for the their client. Build the expertise by working on the technologies and tools

Googify your Application

I am fan of Google Apps(NASDAQ:GOOG) and I think it has real potential of replacing the Corporate Intranet.

I already love gmail better than outlook (I get more spam in my corporate email than in my inbox in gmail account -And note that I give my gmail id to all commercial entities and *DO NOT* give out my corporate email id to anyone ) and Google Calendar is fast taking up my usage by having the Webservices API , Multiple Calendars etc. For my thoughts on Google Documents refer my earlier post

Besides I love the ability to configure my home page and choose between a portlet that shows freeway traffic to my home , a googifed salesforce.com that shows the sales projections from salesforce.com and a custom homegrown interface to my project management tool showing the resource utilization for my account. The ability to combine my personal and official priorities on my home page is just great.

Google Apps to me is building up to be a true Web Platform for application development. It is very ironic to me that we in IT consulting keeping on talking to Enterprises about the strategies to implement SOA and forget to mention about how to leverage existing open SOA platforms like Google Apps.

This leads me to think that the next big thing for software applications is going to be- "Googify" the Applications. As the Google platform becomes more established you will see vendors that comply to google apis and the enable there application for the google portlets.

You already see IBM Websphere support the google gadgets in their platform and several vendors like salesforce.com are already Googifying there applications.