Aug
23
Strip Billiards joins Ecosystem
Filed Under B2B, Big Data, Blog, Financial services, healthcare, Industry Analysis, internet, mobile content, Publishing, semantic web, STM, Thomson, Uncategorized, Workflow | Leave a Comment
In truth, I thought it a dull week of post-Olympic depression, but for the professional grinch it had some brighter moments. I watched England losing a Test Match that they might have won but for the lack of something extra-ordinary. I hear that something extra-ordinary took place in a Las Vegas hotel room, leading to a potential new Olympics sport. But between the sports pages and the gossip columns it felt like a really “silly season” sort of week. Except that it wasn’t. At all. Two things fell to Earth which exemplify where and how quickly we are going in the information services and solutions marketplace. Two routine announcements, but read them as confirmations that the changes we have been tracking here are market-wide, deeply embedded and worth real investment.
The first that caught my eye was the purchase of Adeptra by Fair Isaacs (FICO). Now, the credit rating sector has never been at the leading edge of workflow delivery, though in other parts of the same wood companies like Experian are foremost players in data analytics, and the whole risk management sector is in the vanguard when it comes to service solutioning. So an outfit like FICO (www.fico.com) knows all about solutions, and its FICO Score service is currently said to be the US industry standard for consumer credit risk assessment. Adeptra (http://adeptra.com), a UK software house, with almost 20 years of experience in its market, has emerged as a leading power in customer connectivity in this sector. Cloud based, SaaS configured, and running in voice, SMS, mobile and email to resolve credit-based issues in real-time. In other words, this is technology used by banks to improve customer engagement, and if those banks are (and they mostly are) using FICO scoring systems, then a bigger solution is possible, more dots join up, the banks get to gratefully outsource a bit more functionality, and everyone gets to go home happy, except for players like Equifax who now have to think about what the competitive response may be.
And the reason this intrigues me so much is the timing. FICO have known Adeptra since 2002. In 2007 they became strategic partners as FICO Falcon Fraud Manager was integrated with Adeptra’s package. And of course, as the world has gone mobile and these two players move globally into younger, and thus more mobile-dominated markets, the importance of partnership grew. But acquisition in a $115m cash deal? Only a few years ago that would have had managers talking up the cultural and geographic differences instead of emphasizing the importance of full workflow integrated answers for customers. This is a real step forward in competitive positioning, and could precipitate an arms race in acquisitions in the credit and risk management sector. And I wonder what the FICO Score is on a Royal Prince in a gambling joint?
And my second choice? The Thomson Reuters Life Sciences Partner Ecosystem. Did I miss its real significance when it launched in April? Probably – the title is a long one and so many things are now called Ecosystems that the word has slightly lost its bearings: hence the ironic title of this piece. But I did not lose track of the news that GenoSpace had this week joined this club, which now boasts six members (Accelrys, Entagen, IBDS, INOVA and Symbiosys being the others. GenoSpace (“Own your own genome” www.genospace.com) was a last year start-up which has a passion for the ability of individuals to store and control access to their own genomic data. Others in this group are also users of Thomson Reuters’ Life Sciences data. Particularly interesting to me is IDBS, the lab notebook player, but they all have something in common: they can use Thomson Reuters data to help them build a service and cross-referencing component within their own services and solutions, so that the T-R data becomes an “Intel Inside” element which helps each service sell a more complete solution to each chosen party. This then is a real club, co-operating around the Thomson Reuters Cortellis platform. Here is how they describe it:
“If you are an innovative services and technology-based company with a vested interest in the life sciences, a partnership with Thomson Reuters could enhance your client offerings with comprehensive and timely scientific data and competitive intelligence.
Thomson Reuters supports access to the company’s life sciences information at the point of customer need through application-specific solutions developed by third party partners, creating a mutually beneficial solution for users. These solutions can potentially include data ranging from ontologies, to biological target information and information to support pharmaceutical business development activities.
For more information on how to join the Thomson Reuters Partner Ecosystem for Life Sciences, please email us at: Partnering.Ecosystem@thomsonreuters.com
Note — Thomson Reuters Life Sciences Partners are not resellers and are not authorized to resell Thomson Reuters solutions.”
I included the note at the end deliberately. This is about co-operation and forming communities of interest. Just as FICO must now own its communications pathways to compete, this unit of Thomson Reuters must form collaborative relationships with small or specialized players to intensify the seamlessness of delivered solutions. Both critical trends. And they even go forward in a news free summer break – news free unless you are a Prince, that is.
Aug
5
In Search of Enduring Value
Filed Under B2B, Big Data, Blog, data protection, Financial services, healthcare, Industry Analysis, internet, online advertising, privacy, Reed Elsevier, Thomson, Uncategorized, Workflow | Leave a Comment
Yes, I remember Dun and Bradstreet. In the old UK headquarters in High Wycombe, the “white elephant” building that was intended to become the global data centre (in the days when you concentrated data instead of distributing it) had a waxwork figure in the foyer depicting a frock-coated Mr Dun (or was it Mr Bradstreet , or Lewis Tappan , the real founder?) collecting together the vital credit rating clues of the 1840s, as well as a discreet reminder that Abraham Lincoln had acted as as a data collector in Illinois in the 1850s. But the company I knew was a large and prosperous portfolio player, the very demonstrator for the theory that markets never go all bad at once, and that change in one can be nurtured from sustained growth in others. Under the portfolio, if I recall correctly, there nestled Nielsen in market research , IMS Health in medical market research, Donnelley in directories and market-leading marketing services, Cognizant in technology, Moodys in global rating services and Hoovers in company profiling. Never, you might say, was there a better example of a company with a portfolio of related interests who could interconnect these data collections to create fresh value in wider marketplaces – and take it all global as D&B itself was already going global. What a huge opportunity that now seems to create value through connecting hitherto unconnected data values and effect the type of transformation that Thomson Reuters are now attempting.
But the voices that D&B listened to were not the voices that said things like this. They were the siren voices of the market, who said that short term values could be increased by selling off all these allied companies, organizing the buyback of shares on a major scale and creating a greater value in the parent than would have been possible if it had remained in the group. So all of these companies went, and mostly to private equity buyers. But this was still not enough in terms of value creation, so the majority of the overseas subsidiaries were franchised to local operators , with valuable operations like China, Russia, Australia, and Germany having their data leased out to previously competing market players, who would then pay fees and royalties and contribute to the global data holding (now around 200 million companies and 53 m details of directors) in return for local re-use.
Markets and managements change, and over time D&B have bought back Hoovers ( revamped and without its research services ), and bought out their local franchise holders in places like China (where they now face a local data privacy infringement case) and Australia. No one adds the loss of value from these buybacks to the long term calculation, but presumably at some point the company became aware that by paring itself to the operational bone in search of value, it was actually losing opportunity. Now we gather (Wall Street Journal, 31 July 2012) that the company has been seeking a buyer for the past year, and has now appointed financial advisors to “explore opportunities” that may or may not lead to a sale.
D&B know all about creating value. In 1963 they created the DUNS number , forcing consistency and their own metadata on a market they meant to dominate globally. In just the same way IMS Health created its proprietory BRICS system for measuring medical activity in a community. Here were the forefathers of dominant metadata systems, whose value creation (think of the recent Thomson Reuters argument with the European Union over its RICS metadata nomenclature) is the bedrock of value add in data driven systems. Given its birthright, D&B might have been the dominant player today in value-added workflow services and systems offering solutions in areas like procurement and customer profiling. Question: has it been competitively outflanked by Experian (compare performances in Brazil, for example, where D&B have been since 1933) and lost touch with a value growth plan beyond buying back the franchises it once leased out?
It seems to me sometimes as if value in the sense that markets use the word is in fact a bell curve. It is clear how the asset sales drove D&B’s valuation up one side of this and how it has peaked through an inability to add fresh value in the narrow front on which it now operates, without the advantages of platform integration and Big Data-style development. It is possible that in places where these factors have come together (insurance risk in the US would be an example, where Lexis Risk use these elements to dominate in a related but consumer-orientated marketplace) it may be very difficult, without very extensive strategic partnerships and joint venturing, for D&B to prevent itself from losing ground.
So does this mean sale at a discount to a private equity player, or are there trade buyers who would offer a premium. Before Sanford Bernstein suggest again that Reed Elsevier should sell Lexis Law and buy this, let me just say that, in my view, the only real potential fit is with Thomson Reuters, and they probably have enough on their plates without trying to absorb a $1.7 bn revenue player, or Bloomberg. Competitors would all face anti-trust issues, but enterprize software and systems players might be interested – and D&B already has good links with Oracle.
A friend reading the last two pieces on this blog – a sort of odd trilogy on valuations – kindly asked how the UBM announcement that it “might” sell its “data services” fitted into all of this. Surely, as with D&B, we do not sell data at the moment: instead we try the alchemy of value add. So I have looked at this too, and am now even more confused than when I started. For example, by “data services” UBM appear to mean the databases from which they once sourced their print directory products. Apparently they have found that advertising online earns such diminished CPMs that it is very difficult to sustain the services. Similarly with Tech Insights, which they acquired and seems to suffer from the same problem. Is this surprizing? Not at all, since unless that data can be recombined with other internal or third party content there is no real hope of getting a subscription value from it. Advertising online is always going to be dodgy territory and at best a subsidiary income source.
And what does all this demonstrate ? Is the portfolio model broken for good and cannot ever be mended ? Or maybe D&B were right fifteen years ago , as Thomson Reuters are now : you can build portfolio if the players you buy are data-related and if you have platform and distributed search going for you . When D&B lost faith in their original model they did not have the technologies to do the job . So they followed the equity market view of value , and the chronic short term thinking that results from that has brought them to this . Now comes a more interesting question : what is credit rating and how do you reconstruct the service future of this marketplace ?
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