Three Card Poker

Filed Under B2B, Blog, Education, Financial services, healthcare, Industry Analysis, internet, Publishing, Reed Elsevier, STM, Thomson, Uncategorized, Workflow | 3 Comments

In the last weeks and months I have written so much about data businesses, workflow strategies, data and software acquisitions and how major players are being reborn in the heat of all this that I should have expected the criticism. When it came, I was shocked. Me, losing sight of the big picture? After all those years of consultancy when clients told me that the big picture was all I had, and the operational reasons why the big picture was unlikely were beyond me? OK, now here is an unashamedly big picture piece.

In the big picture we can see the battalions of information services companies, having emerged from the publishing stage of their development, developing strategies around data – either as Big Data, mining and extraction players, or as workflow and process emulation players. These are all businesses driven by understanding how users work in a networked society, and they are all about the way in which content and software interact to create solutions for the bench researcher, the equities trading risk manager, the teacher and the learner, the patent attorney and his office, or the insurance risk assessor. And many others. And then, through longer workflows, solutioning at the job level begins to turn into solutioning at the industry level. Users, through shared APIs, create their own answers, and these become generalized and re-iterated by the information service vendors, and over time smaller competitors are excluded. This becomes a rich man’s game, and duopolies become the norm, as they already are in some verticals, and then duopolies give way to quasi-monopolies and invite regulatory attention (as they already are in some verticals). Competing with these giants is difficult and market entry based on re-originating workflow approaches built on the experience of countless users will be seen as difficult and pointless. So competition authorities will settle for price/margin controls and by restricting the number of verticals that one corporation can dominate.

While all this is going on the information service players of today are playing a three card game of risk. I hear this dialogue every day and it goes like this:

STAGE 1 “We now have good business in selling data into process – but the data is very commoditized and the value is in the software which holds it, searches it and provides the end-user access and workflow. We had that stuff written under contract because it was too risky to think of owning it or developing it in house – we have no experience of software or of managing it! And, looking at the contract we drew up with the supplier, we appear to own very little. So the time has come to invest in software, manage our own solutions and just hope that we can cope with the constant iteration of solutions. We will buy our supplier!”

STAGE 2 “This is more difficult than we thought. The innovation that we want is taking place outside of the range of the outfit we bought. If we are to continue to innovate in the face of rapidly developing user expectations (and that is the problem, not competition from our peers) we need to work with higher level suppliers in areas like semantic web, entity extraction etc. So lets do different deals: not sub-contracts and licensing this time, but Strategic Partnership, with exclusivities in certain areas and revenue and/or margin sharing. We will incentivize these people to greatness – but which one do we choose and what criteria do we use to select them?”

STAGE 3 “Well, the strategic relationships are working fine, but these software guys are eating our margins. And they say that all we have to do is update, while they have to re-invest, and 90% of the value in the package is software. And can they buy us? And their toolkit, honed on our clients to whom we did the selling, is now so valuable that IBM are trying to buy them …and maybe us as well. What do we do now, except grin all the way to the bank?”

There are three critical big picture issues that I take away from all of this:

* If the information services industry succeeds it will one day attract the attention of the major Enterprize software players. If this is so, we need to make our own luck and form relationships now. I see this taking place around Oracle in some sectors, and IBM in others.

* Most relationships between content houses and software houses begin with improvements to the data, content, internal workflow of the content player. But the content players end user/client is also vitally in need of systems for handling his content, and other third party content which he has already licensed, and in making it compatible with the workflow solution he is buying. There should be rich pickings here for both the content and the software players in terms of referrals and commissions. Somehow it isn’t happening, but if it did it would iron out some of the creases in those Strategic Alliances.

* Consultancy and customization are the keys to the solutioning marketplace. Trying to sell one-size fits all never quite does it in terms of repeat business. Yet most of the participants seem to dislike both of those elements, yet they are the best protection so far known to man for the defence of niche positions.

Next week, back to the coalface!

Sep

22

Dog Days in the Data Mine

Filed Under B2B, Blog, Financial services, healthcare, Industry Analysis, internet, Publishing, Reed Elsevier, Search, semantic web, STM, Thomson, Uncategorized, Workflow | Leave a Comment

It reminds one superficially of mineral extraction. Who owns the seam of diamonds – the miner or the landowner? When rights are not clear or landownership in dispute? But this business of text or data mining is not really like that at all, and I was reminded this week by blogging contributions from two old friends that who owns the results of data extraction, from thousands or millions of unstructured files, where the data retrieved from individual datasets may be tiny (well within most fair usage provisions) but the contribution to the whole value may be huge, remains at issue. Play this in the context of Big Data and real questions emerge.

Lets go back to the beginning. Here are a couple of top of head examples of life on the planet that give a clue to what is worrying me:

* According to research quoted by the UK’s National Centre for Text Mining “fewer than 7.84% of scientific claims made in a full text article are reported in the abstract for that article”. This, they point out, makes cross-searching of articles using data mining and extraction techniques very important to science research. Fortunately the JISC organization which licences all journal article content from publishers on behalf of UK universities permits researchers to data mine these files, and no doubt this was agreed with the publishers within the license(?). But the question in my mind is this: who owns the product created by the data mining, and is this a new value which can be resold to someone else?

* Lexis Risk Management use many hundreds of public and private US data resources in their Big Data environment to profile people and companies. Both private and public data is researched, and, of course, it will often be the case that unique connections will be thrown up which encourage or discourage users from doing business with the data subject. Clearly Lexis own the result of the custom sweep of the data, and clearly it needs to be updated and amended over time as a result of fresh data becoming available, or more data being licensed into the mine. But do Lexis, or any other data extractor, own the result of the extraction process? They are able to sell a value derived from it, and that value emerges directly from the search activity and the weighting of the answers that they have accomplished. But do they own or need to own the content (which may be different in ten minutes time when another search is done on the same subject)? And can the insurance company who buys that result as part of their risk management model resell the data content itself to a third party?

I have put up two examples because I do not wish to polarize the argument into publishers v government. The issue arises in the UK, as the media lawyer’s lawyer, Laurie Kaye has pointed out, because the Hargreaves Review of copyright law recommends the retention of rights with the data miner – so you can make new products by recombining other people’s data. The UK government has adopted this recommendation with its usual emphatic “maybe”. Elsewhere in the world of August which I deserted to take a holiday, the UK government has come out with a storming approval of Open Data, and, as Shane O’Neill has repeatedly pointed out in his blogs, this contrasts sharply with the content retention policies pursued by UK civil servants, even now creating a Public Data Corporation in order to frustrate the political drive of its masters (how easily a licensing authority becomes a restricting body!).

There are two really troubling aspects of this to me. In the first instance we are not going to get the data revolution, the Berners Lee dream of linked data, the creation of hybrid workflow content modelling, or the Big Data promise of new product and service development unless there is a primary assumption in our society that all Open Web content, and all government or taxpayer funded content is available for data cross searching, unless there are national security considerations. And that it is a standard expectation for data leasing that discovery from multiple files creates new services for the person putting the intellectual effort into that discovery, and hopefully new wealth and employment in our society. If we simply continue to debate copyright as if it connotes the transfer of real world rights into the digital network then we shall constrain the major hope of intellectual property development this century.

And the second thing? Well, I am realist enough to know, after 20 years of lobbying this point, that it is unreasonable to expect the UK government to change its attitude to an information society in my lifetime. So maybe we can undermine these guardians of “my information is my power” by saying that we do not want their content – just the right to search it. After all if it is good enough for the universities and the progress of science, it should be good enough for Ordnance Survey and the Land Registry!

References

Making Open Data Real (www.data.gov.uk/opendataconsultation)

The Public Data Corporation (http://discuss.bis.gov.uk/pdc/)

Response to the Hargreaves Report (http://www.bis.gov.uk/assets/biscore/innovation/docs/g/11-1199-government-response-to-hargreaves-review)

National Centre for Text Mining (http://www.bis.gov.uk/assets/biscore/innovation/docs/g/11-1199-government-response-to-hargreaves-review)

Laurence Kaye (http://laurencekaye.typepad.com/)

Shane O’Neill (http://www.shaneoneill.co.uk/)

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