Friday, March 21, 2008

The R-Word Chronicles, Vol. 6


One way that recessions stir anxiety is by making people worry whether they’ll be rendered redundant. One way this can happen is when our customers find that they can do what we do reasonably well all by themselves.

Even IT industry analysts worry about such things, and not just individually as human beings, but, collectively, structurally, as an industry. We wonder whether the Internet and all that it has wrought will empower customers to the point where they’ll be able to spot the competitive “disruptors” as well as we do. I addressed that issue today in my post to Forrester’s I&KM blog. One thing that Forrester doesn’t shy away from is examining issues such as this that hit close to home.

Speaking on behalf of all IT industry analysts everywhere, we like to think that our research skills, brainpower, and insights add value that we can take to the bank.

That we are, collectively, indispensable (some of us individually more than others, maybe).

That you, the user and vendor communities, are all the richer for engaging our services.

What you think?


Thursday, March 20, 2008

The R-Word Chronicles, Vol. 5


Free is appealing in all economic climates, but especially in a cloudy one. So it’s predictable that free-ish IT options--no/low cost, no/low risk, no/low commitment--will be given greater attention in times like these. Open source, of course, but also SaaS (aka “cloud computing”).

Check out my latest Forrester blog post on the growing SaaS phenomenon called “cloud databases” (aka Database 2.0). I take a special look at Microsoft’s new SQL Server Data Services offering. I also discuss Panorama’s new gratis, lightweight, BI/OLAP-engine add-on to Google’s hosted apps, and speculate on the possibility of Google leveraging its GoogleBase “cloud database” into a full-blown Data Warehousing service in the cloud. See Boris Evelson’s post, “Free BI!,” for further details on the Panorama/Google announcement.

Neither of these Database 2.0 initiatives--nor those from startups such as Trackvia, DabbleDB, and Zoho--are ready for enterprise primetime OLTP and OLAP applications. As I note in the Forrester post, Microsoft’s initiative is just a beta, and only provides a subset of the functionality of SQL Server, whereas GoogleBase is simply a depository for data that companies would like crawled/indexed by Google’s search engine.

The cloud database space is just beginning to form larger droplets that may some day irrigate the planet below. Enterprises in a budget crunch may choose to use these database services on a pay-as-you-go basis, though they’re far from a no-cost, no-risk proposition. It’s not clear whether any of the Database 2.0 startups will survive, nor whether Microsoft and Google are prepared to go further with their initiatives. Also, Oracle, IBM, and other database vendors have not indicated whether they plan to offer similar services.

The smart money says they will, but, once again, that’s not a sure bet. Users all over creation are feeling far too much risk right now. There are far too many bleeding economic indicators in everybody’s dashboards.


Thursday, March 13, 2008

The R-Word Chronicles, Vol. 4


A quick shout-out back to the always-worth-reading Mr. Tony Baer of OnStrategies, who has just blogged in response to my most recent Network World column, incorporated into Vol. 1 of this thread, on BI as a tool for weathering recessions.

OK, I’ve had a bit too much caffeine and I hyperlinked that last sentence to kingdom come. But there really is a point to this shout-back, above and beyond me finally beginning to respond directly to my peers across the blogosphere.

With all due respect, Tony, I didn’t argue that, per your interpretation, that “BI provides tools that are not likely to be sacrificed in a downturn.” Don’t think I’m hair-splitting on this. Please hang with me a sec while I clarify.

As you noted, I assumed, in writing that article, was that there are no sacred cows in a business downturn. But I also assumed that that every investment--including BI--is a likely candidate for chopping.

In that article, what I issued was a challenge to IT professionals to safeguard their companies’ investments in BI, data warehousing, etc in the face of fiscal austerity. Here’s the core thesis of the piece:
  • “For IT professionals, the greatest test may be in how well they safeguard their organizations' core analytics assets from budget cuts during down economic times. The core issue is: How can you optimize your end-to-end analytic environment -- such as, control costs of your business intelligence applications, predictive analytics applications, enterprise data warehouses and other key infrastructure -- without impairing service levels or limiting your company's ability to leverage analytics into new business opportunities?”
By the way, yes, I do cover BI for Forrester (as I noted in an earlier post: Boris Evelson is our lead analyst on BI; I’m lead on data warehousing, plus partner-in-crime with Boris in what amounts to a Forrester dynamic duo on all things BI, a space so broad and deep that one analyst alone can barely do it justice). But, be that as it may, I’m under no illusion that this technology’s value proposition is so cinch-tight that corporate investments in BI can’t get swept out to sea in a perfect business storm.

While I’m on the topic of my Forrester coverage areas, check out our Information and Knowledge Management Blog. I post to the Forrester I&KM blog too, of course, along with all of my colleagues. FYI, in terms of upcoming BI research we’ll be publishing in coming months, Boris is taking the lead on our latest BI Wave, and I’m lead on our forthcoming BI market sizing study.

Back now to the topic of the r-word and its impact on I&KM. Check out Kyle McNabb’s recent post on the impact of recession on enterprise adoption of enterprise content management (ECM) solutions.

If you’re a Forrester customer, you should also look at Andrew Bartel and Merv Adrian’s recent teleconferences, “Vendor Market Strategists: How To Prepare For A Downturn” and “CIOs: How To Prepare For A Recession.” Also, Connie Moore did a teleconference entitled, “Information & Knowledge Management Professionals: How To Survive (And Even Thrive) In Times Of Economic Uncertainty.”

Another bread-and-butter plug: Role-focused competitive, market, and best-practices intelligence are always essential, in all economic climates. That’s where industry analysts fit into the IT world’s food chain. Deep feeds of intelligence from leading industry analysts--that should be sacrosanct, if nothing else is, in all enterprise and vendor budgets.

Got that? Role--that’s an R-word. Research--another one. Relevance--a third. This could go on forever but won’t.

Thanks for your indulgence.


The R-Word Chronicles, Vol. 3


For those who’ve made our living in IT, and who are now almost entirely ensconced in a post-millennial frame, one recent recession looms largest. That recession, the 2000-2002 unpleasantness (aka, the “Dotcom Bubble,” which I like to think of as the Millennium Recession), was, for some of us, transformative.

Just as I personally experienced the Great Recession of the 1970s from a regional perspective--that of a long-declining Midwestern manufacturing city--many slogged through the most recent US economic downturn in a puddle of pure metropolitan pain. Of course I’m talking about Silicon Valley. Though I’ve personally been residing in the National Capital Region for the better part of a quarter-century, I felt the pain of those years vicariously through the sufferings of my Bay Area professional friends, associates, and virtual acquaintances who suddenly saw their jobs, careers, companies, business models, finances, and lives crash--or, at the least, veer wildly off course.

Though most of my Bay Area connections recovered reasonably well as the decade wore on, the memory of dashed dreams still stings. No metro area felt the recessionary whomp as hard as the fine folks of that scenic, seismic peninsula. For the IT world generally--and for Silicon Valley as the epicenter of the Internet-driven economic revolution of the 1990s--that nasty bit of business was the rump-end of what economist Joseph Schumpeter called capitalism’s “creative destruction.” It was akin to the sort of creative destruction that global competition has been visiting on Detroit for the better part of my life.

Essentially, the year 2000 turned out to be a sort of temporal fulcrum, counterbalancing the wildly creative bubble years of the extremely late second millennium with a resounding recessionary crunch. Was this a Y2K bug of another sort altogether? Well, it didn’t truly crash the new Internet-centric world economic order, nor did it destroy any of the most fundamental innovations that surfaced in the 1990s. Rather, the Millennium Recession simply introduced further entropy into an already chaotic but very vital system. It atomized and scattered many ambitious ventures, business models, technologies, teams, brands, innovators, etc hither and yon. It spurred them to recombine into more self-sustaining business concerns. Hey there, Schumpeterians, if we’re looking for another euphemism, call this messy process “constructive deconstruction.”

I take little comfort in the prevailing perception that the Washington DC area is somehow “recession-proof.” It is not. For starters, it isn’t (federal) budget-proof. The federal budget isn’t politician-proof. Politicians aren’t election-proof. And elections aren’t recession-proof. Neither are tax revenues, or federal budget appropriations, or IT-centric projects that depend on those appropriations, or the IT professionals who people those projects and who happen to reside in and around this particular mid-Atlantic estuarial basin. It’s the economy, stupid (remember: a candidate got elected president in the midst of the early 90s recession on the strength of that slogan).

But the Washington area--in particular, northern Virginia’s high-tech sector--is doing OK. I should note that we of the DC-area high-tech community have become much more diversified in the past quarter-century, in terms of whence our bread is buttered. Case in point: I’ve been in IT since the mid-80s, all of it in the DC area, and have drawn income from federal work (i.e., contracts) in only a half-dozen or so of those years.

Consequently, I’m semi-abstracted, economically, from my current metro area on a day-to-day business. As an IT industry analyst, my personal geographic siting is semi-irrelevant. My schedule is torn between the demands of people in many time zones. I’m delivering value to customers in many countries. I’m continuously feeling the mixed pain-pleasure equation of every cresting or crashing solution area in every IT market that I cover, wherever those solution providers hail from.

And though my employer at any point in time is a business with a specific HQ somewhere on the globe, each of these firms could just as easily be sited elsewhere and carry on much the same. Many analysts in many firms work remotely and virtually, rarely needing to come to HQ for any operational reason. Over the course of my analyst career, I’ve worked remotely for firms HQ’d in the Salt Lake City area (hands down--the best view from HQ windows in my career--lovely craggy snowy mountains), the DC area (not far from my home/office, as the commute-weary crow might fly--HQ view of a shopping center parking lot), and, now, the Boston area (right next to an awesome world-class science/technology/engineering university--HQ view of semi-nondescript dense-packed office buildings nearby). The local impact of a recession on those particular metro areas concerns me about as much as the jobless rates in, say, Detroit or Jakarta.

Interestingly, I saw an article this morning about Silicon Valley’s primary high-tech bellwether Google, reporting that they’re attempting to diversify by pursuing more federal business. Cool, Google, though beware that the federal budget’s due for a significant dip under the next president, for three main reasons.

For one thing, whichever of these three individuals becomes our next commander-in-chief, they’ll almost certainly pull back our ground forces from Iraq and Afghanistan, and cut the defense budget accordingly.

Second, the current economic expansion is already around 6 years old...the same as the Reagan-presided (and defense-fueled) boom of the 80s and the Clinton-presided (and tech-fueled) one in the 90s--which means that federal revenues, hence spending, are going to take a hit.

Third, I get the sense that the US will find itself increasingly hard-pressed to compete against the one-two-three-four Asian punch of Japan, China, India, and Indonesia. Looked at as “metro areas” in an Asian economic “megalopolis,” these countries increasingly have their ducks in a row: vigorous R&D, IT, services, and manufacturing sectors with ample resources, stable governments, rapidly improving infrastructure, educated disciplined workforces, and a half-the-world-population “internal” market(s).

Something structural is going on that could permanently impact the competitiveness of this “metro area” we called the United States of America, and of high-tech solution providers that operate primarily in the lower 48. Any cyclical 2008-20** blip of a US recession could mask that greater concern. What I saw growing up in declining Detroit tells me that some metro areas don’t recover from structural weaknesses for a long, long time. If ever.

As I said, some recessions are transformative--but not to the benefit of everyone upon which the structural transformation is working its magic.

Personal bottom line: I’m no more wedded to the US than I was to Detroit. It’s an accident of fate, really, where you get planted. Fortunately, homo sapiens has handy skills and opposable rules of thumb.

Plug for my hometown: Detroit has casinos now. Hither there and gamble, if you’re so inclined.


Tuesday, March 11, 2008

The R-Word Chronicles, Vol. 2


For those of a certain generation, recession was formative. So its coming now isn’t so much a cause for alarm as a reminder to stay calm. We have the inner resources to persist through tough times.

I’m originally from Detroit, a city that sometime in the 1970s entered what has turned out to be more or less a permanent recession. I like to think of that decade as the “Great Recession” (albeit with legal booze). For me, the 1970s was the decade of high school and college, with all the usual anxieties that attend those phases of life. It was also a decade book-ended by the deaths of my mother and father. For our country, it was the decade of stagflation, an abandoned war of attrition, a political scandal that toppled a president, an energy crunch precipitated by geopolitical nastiness, a nuclear meltdown, a mass-suicide doomsday cult, and an embassy hostage crisis that toppled yet another president.

Toward the end of the 1970s, between my junior and senior years in college, I had an internship at an urban coalition in Detroit. The group, New Detroit Inc., was formed after the riots of the late 60s to rebuild the city’s torn economic, political, and social fabric through engagement with neighborhood organizations and with business and government. That summer, I was a policy analyst--my first analyst job (I was an economics major, by the way). In addition to representing the coalition at community meetings throughout the city, I had a research project. My job was to estimate the likely financial impact on Detroit, in foregone federal entitlement dollars, from an undercount in the upcoming 1980 census. If I recall correctly, I took 6-7 weeks to produce a defensible estimate: $50 million lost to Detroit if the city’s residents were undercounted at the expected rate of (I forgot what that rate was).

But for me, the real take-away from that summer was a firmer sense that Detroit was in for a very long structural decline. It wasn’t so much that the city’s population would be undercounted. It was more a matter of the city being far too overpopulated for its ever shakier economic base. Southeastern Michigan’s automobile-centric manufacturing employment base had peaked in 1955, three years before I was born, and had not been replaced by any other industries that could absorb the great number of unskilled and semi-skilled citizens who seemed to be waiting, biding their time, until some new great wave of industrial salvation restored them to some semblance of unearned, under-educated middle-classedness. Then and now, people just tend to stay put in Detroit, in ever more decrepit jobs, houses, and neighborhoods. There was and is precious little new business formation. The labor unions long ago became a reactionary force, an obstacle preventing Detroit’s antiquated industrial base from morphing with the times.

When any recession approaches, I ask myself to what extent it’s a cycle that will soon reverse itself, and to what extent it masks a deeper-seated structural change in the economy. Fortunately, the US economy bounced back nicely from the stubborn recession of the late 70s and early 80s: I’ve spent most of my adult life and career in a growth economy, in a different metro area (Washington DC) from where I grew up, and in a different industry (IT) from what I imagined in college. I thought I’d end up an economist with some Rust Belt manufacturing firm, enlisted in some ongoing defensive effort to fend off “Japan Inc.” or whatever other, more dynamic, more adaptable economic challenger threatened my employer’s livelihood. I expected to live my work life on the defensive, like the auto industry troglodytes (and their offspring) all around me in my salad days. (For the record, my father was a salesperson with mainframe computing pioneer Sperry Univac, though he personally sold electromechanical filing systems, office furniture, microfiche machines, and other non-computing products).

All I know, from all my experience, is that no one and nothing is truly “recession-proof.” A big part of the 1970s was observing my father’s 20-year career with Sperry come to an end, not due directly to any recessionary layoffs or what have you, but due mostly to Sperry continuing to lose ground to IBM and others in the mainframe computer biz. For my father, who was a great salesman (if his numbers tell the story, and they should), the 1970s was a structural breakpoint for his bread-and-butter. They couldn’t sustain their 1950s-1960s heyday. Come the 1980s, they merged with Burroughs, which begot Unisys, which saw a hasty retreat from computing hardware and software altogether, becoming the professional services firm they are today. Without a doubt, a similar structural shift will carry some of the 1990s’ former software juggernauts into the next era, while others will disappear as going concerns (or brands, which amounts to the same thing--lose your former identity, lose your footprint in cultural memory).

Nothing’s recession-proof, but, if we keep calm, we’ll find the inner resources--much of it purely spiritual--to persist as going concerns through cyclical and structural shake-outs. A recession is as much a collective spiritual funk as an officially certified downturn in leading economic indicators. Just as, earlier in this post, I strung together a litany of semi-coincidental nasty events that are forever stained into my recollection of the recessionary 70s, we can each summon up a peeve list of crap-happening-now, and link it to whatever recession may or may not take hold shortly.

But what’s the damn point. Just stay calm. If you’ve spent your entire career in the IT world, you’ve been building up immunity to cyclic and structural shakeouts, which happen with such fervent regularity, in “Internet time,” that they don’t spook us. Unlike the auto workers and their kids who always pinned their futures on the certainty that there would be a cushy unionized job awaiting them “on the line at Wixom,” we hold no such illusions.

We’ve spent our lives morphing, and holding on, awaiting the next shift, and the one after that too, prepared for whatever may come. Keeping spirits intact.


Friday, March 07, 2008

The R-Word Chronicles, Vol. 1


My BI/analytics-related take on this new collective preoccupation, which crystallized in my mind while on a roadtrip the week before last, visiting a couple of vendors in this space:

Recession fears put focus on business intelligence

Above the Cloud By James Kobielus , Network World , 03/04/2008

Modern economies are hypochondriacs of the highest order. They check their own pulses at obsessive intervals, searching for symptoms of weakness, ever ready to fend off decline through stimulants that may or may not help the situation.

In the past few months, we've all been encouraged to scout the economic horizon for signs of the dreaded "R" word -- a malady so dire, apparently, that its very name may not be uttered in polite company. Throughout the IT world, we've been scrambling to put together contingency plans for dealing with a down economy, if and when it materializes. Everyone -- IT vendors and users alike -- has been hedging their bets and watching their pocketbooks, just in case.

Recently, the IT industry has started to latch onto a curious notion: that business intelligence and performance management applications can help users weather whatever rainy day may or may not come. In other words, analytics applications are increasingly being positioned as tools for determining what to cut, trim and scale back from operations while, hopefully, minimizing adverse impacts on the business.

There is some validity to this viewpoint, though one can't help thinking it has come into vogue -- at least in part -- through a self-serving push by vendors of analytic applications. What's undeniable is that many enterprises are better prepared than ever to deal with economic uncertainty, having invested heavily in business intelligence and analytics over the past few years.

They are well-armed with reporting, scorecarding, dashboarding, forecasting, what-if modeling, interactive visualization, and other analytical tools for sifting through operational data and identifying promising areas for business optimization under tightening economic constraints.

Indeed, the business intelligence industry's recent emphasis on financial analytics suites has given chief financial officers (CFO) an increasingly sophisticated tool for determining, with surgical precision, where to apply the budget scalpel. By the same token, many human resources directors have powerful human capital analytics for identifying which positions can safely be eliminated, and which hiring decisions may be postponed indefinitely, when the economy goes sour.

Likewise, supplier relationship management analytics tools let companies understand their options for dropping marginal vendors in favor of those that can offer preferential pricing. Still other analytics tools promise similar optimization benefits across the full range of business functions.

Clearly, analytics is a key asset in the ongoing business optimization struggle, both in good times and in bad. There are many business analytics initiatives that can help organizations consolidate, spend modestly and tweak existing processes within fiscal constraints. In fact, one of the key tests of any analytics-driven corporate business model is its ability to deliver superior results in eras of austerity.

For IT professionals, the greatest test may be in how well they safeguard their organizations' core analytics assets from budget cuts during down economic times. The core issue is: How can you optimize your end-to-end analytic environment -- such as, control costs of your business intelligence applications, predictive analytics applications, enterprise data warehouses and other key infrastructure -- without impairing service levels or limiting your company's ability to leverage analytics into new business opportunities?

The following are the most fundamental pointers for protecting your enterprise's analytic core in a down economy:

• Outsource as much of your business intelligence, data warehousing, performance management, and other analytic applications as you can to software-as-a-service providers who can provide it to you on a pay-as-you-go basis. This eliminates the need for you to manage it all yourself from dedicated, in-house data centers with dedicated, full-time staff of your own.
• Single-source as many of the functional components of your analytic infrastructures as makes sense from vendors of comprehensive, all-in-one suites of business intelligence, data warehousing, data marts, extract transform load, data cleansing and other critical components. That way, you can obtain a bundled, integrated solution at a lower cost than if you procured these components separately from several vendors.
• Consolidate as much of your enterprise data warehouse (EDW) environment as you can--with associated reduction in server hardware, software licenses, and full-time operations and support staff -- into fewer, more scalable, more energy-efficient, more cost-effective data centers.
• Migrate as much of your less-in-demand operational data to more cost-effective "cold" storage (offline, near-line) as you can, while only keeping the most in-demand data in more expensive "hot" (online) storage in your EDW.
• Offload more of your high-volume online analytical processing (OLAP) workloads to the new generation of data warehouse appliances, which can accelerate query processing at a fraction of the cost of traditional data warehouses while also freeing up EDW processing/storage capacity for other workloads.
• Virtualize as much of your business intelligence, OLAP and other workloads to grid, massively parallel processing, and other scalable, distributed processing architectures, so that you can run more of this processing on inexpensive commodity servers, share workloads across available CPU and storage resources. And move these loads from mainframes and other "big metal" platforms that are more optimized to online transaction processing.

None of these belt-tightening recommendations should be radically new or unfamiliar to IT professionals. These guidelines should not be regarded as mere IT contingency plans for coping with budget austerity. They are best practices that analytics-driven organizations should implement, in both boom and bust periods, to strengthen their business core.


"Strengthen their .... core"--that's certainly a yoga allusion, for those who are keeping score. Let's keep the metaphor going. If you strengthen your business analytics core, you develop a six-pack of abs/apps, and you can tighten your fiscal belt comfortably etc. Hokey smokes, Bullwinkle!