Nov
15
The British Do Irony
Filed Under B2B, Blog, data protection, Financial services, Industry Analysis, internet, news media, online advertising, Publishing, Reed Elsevier, social media, Thomson, Uncategorized, Workflow | 3 Comments
We are always told that a prime difference between the British and their American cousins is that the British “do” irony. So I find it really ironic that, after years of being told in this industry that the credit raters had an unchallengeable hold on their markets because of their unique aggregation skills (not, you will note, their analysis), a six month old start-up which aggregates and gives users free access is giving them holy terrors in the UK. The company is www.duedil.com (give it a transatlantic pronunciation to get the “doodle” moniker they obviously aimed for) and I cannot do better than quote its citation from the excellent news service of the Asia Pacific trade body, Business Information Industry Association (www.biia.com):
“Duedil is a new business information company that offers free financial information sourced from UK’s Companies House (Public Sector Information). It is so confident in the quality of its data, that it offers a £5 payment if one finds any discrepancies in its financials, no questions asked. The company was launched in April 2011 by Damian Kimmelman, owner of “We Are VI Ltd” and co-founder of Mackin Gaming. Duedil claims in its website to have the largest database of free company financials in the world! That is a tall order for an upstart that is only several months in operation. Duedil aggregates data from all over the web and bring this to users along-side information which it pays for. It says the information will correspond directly with the information found at Companies House delivering company financial statements, going back 10 years, with company histories, name changes, litigations, director lists, family graphs & more. According to Duedil, it is funded by Passion Capital, who is predominantly funded by the UK government. Other investors are some of the people behind Skype, LastFM, Yahoo!, AOL & QXL/Tradus, and was chosen as a Microsoft Bizspark company.”
This service is well worth a look. For one thing, the data presentation is good enough to seriously challenge the sector players, and for another the information collection is also hugely competitive. But the irony comes in the thought that a freemium model could be used to take a Trojan Horse right into the middle of the commercial credit rating encampment. Industry professionals rightly point out that Duedil would have to support a great deal of advertising to support such a service long term. But what if that is not the point at all. Instead, a cogent strategy here would concentrate on getting very high free usage levels, and all the time stretch those staid competitors by adding more and more Open Web derived content into the mix, so that the comparison was not with publicly available “official” content, but with the Duedil selection above and beyond that. Then, when you have the attention of the audience, you can begin to charge subscriptions for higher level activities: in-greater-depth analysis, time-elapsed reporting on watch lists, custom service applications for automated purchasing systems, social media-style buying clubs based on shared content with user groups etc. And when you get that second level market locked in, then you will be able to sell plenty of service advertising on the still-free core site.
The creators of DueDil have grasped a key point that the established market has long since conveniently forgotten. The market is all about the collection of commoditized data from the web, and there really is no defensible barrier to entry in that business. Insofar as credit scoring and the development of formulae for rating credit worthiness are concerned, the established industry is on safer ground, but as we used to say on the farm in my youth, if you try to sell potatoes with the dirt on them, you get rich for a while until people realize that clean potatoes cost no more, and are better value. Attempts to sell on openly available content as if it was an “answer” fits this case, and this is the bluff that DueDil calls. Soon, as in every other sector in every information market that I know, the players here those who seek survival will be heading up the value chain. Analytics, the application of Big Data principles and practice, the widespread integration of workflow modelling with third party strategic alliances – all of these are part of the future of a sector which we still call Credit and Business Information, but which we will increasingly come to see as whole web monitoring for business and personal performance.
And as that happens, so will consolidation become more interesting. Choicepoint and Lexis may have been an early sign. Both in the enterprize software solutions field and in the major B2B holdings there must be potential interest in those of the big sector players who add real value. But lets emphasize “value” again – DueDil have demonstrated that the value from pure data collection is negligible, and consolidators, especially if they are deeply into advanced taxonomic search and linked data, may find that smaller regional players in the existing industry have little to add. In the next play, much of their data will look as insignificant as the large and once much vaunted databases of the directory publishers do now.
In short, DueDil is a mouse that roared, and while the elephant of Big Credit is still in the room, he is trying to stand on the curtain rail!
(Declare an interest – I am currently chairman of BIIA – a powerhouse of industry discussion in Asia Pacific!)
Oct
2
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!
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