Trident Capital Blog

Business Analytics Obstacles

Last week my partners and I hosted a meeting of our IT Advisory Board.  This board consists of senior IT executives from Global 2000 companies including CIOs and CTOs.  I will write about the topics discussed in this meeting in a few days, once I had the opportunity to clean up the several pages of notes I took.  Today I wanted to relate one of the conversations I had with a couple of the board’s members during one of the meeting’s breaks.  We started talking about the effective utilization of business analytics by companies.  Both executives commented that their companies are increasing the utilization of analytics to understand their consumer customers.  In fact, one of them stated that during the last 3 years their analytics group grew from 4 analysts to 20.  Moreover, they stated that senior business management in their companies is more sensitized to the importance of analyzing corporate data to gain any type of competitive advantage.  As I tried to ask them about the analytic tools and solutions their companies currently employ and how these have been changing over time to deal with the increasing volumes of data, they both stopped and said that their biggest obstacle for the broader utilization of business analytics was not technology but the proper and effective application of the information they extract from the analyses they perform.

Both of these companies have always been early adopters of analytic and associated data management technologies.  Both executives indicated that they feel particularly good about the caliber of their corporate data analyst groups.  However, today, by their admission, both of their companies lack the people who can provide a “two-way translation,” i.e., first to properly translate a business problem to a data analysis problem (that can subsequently be tackled by the quants), and second to formulate (or re-translate) the analysis results in a way that business executives will understand, appreciate, and be able to act on.  Companies that provide business intelligence (BI), analytics and even data warehousing solutions talk about how they target “business analysts.”  The business analyst has become a mythical position in corporations.  The business analyst is generic description for an individual who works for a business unit, as opposed to an IT organization, and uses such analytic solutions in the course of business.  However, our advisory board members said that the business analysts in their companies use such solutions to address well-understood problems and activities, not novel situations that may call for an data-driven analytic approach.  These business analysts may use a query and reporting solution like Qliktech’s or a multidimensional analysis solution such as Microstrategy’s but they are not able to provide the two-way “translation” I described above.  In their opinion, the right translator/analyst must have the appropriate level of business understanding and experience to understand complex business problems in their entirety, be articulate enough to describe it appropriately to data analysts, the right amount of data knowledge to be able to broadly identify the types of data that will need to be utilized by the quants to provide insights and information, the ability to take these insights and relate them to the original problem providing actionable solutions and finally the executive gravitas to present these solutions to the business executive(s) who will act on them.

There exist independent consultants who play this two-way analytics translator role very effectively but their extensive and continuous use by corporations is not feasible, mostly for financial reasons; they are too expensive and in too high demand.  In discussions I’ve had with some members of IBM’s 7000-strong analytics and optimization consulting unit I heard that those of their consultants who can provide such services are in the highest demand.  In fact IBM can’t find enough of them to hire and deploy with corporate clients around the world.

So while we celebrate the development of new analytic tools or solutions that can deal with even larger and more complex quantities of data that must be processed faster than ever before, we must not lose sight of the fact that we must address our inability to identify enough “translators” who can help us analyze the right problems and effectively use the insights we discover.

Related articles

• IBM doubles down on business analytics (infoworld.com)
• IBM's Watson: The Future of Business Analytics? (enterpriseirregulars.com)

CES 2011 Report

The CES this year had about 140K attendees, a significant increase over last year’s attendance.  More importantly, 30K of these attendees were international.  Last year was good for consumer electronic sales, particularly the Christmas season, so that buoyed the attendees spirits. This was another show demonstrating CE evolution rather than revolution.  As I wrote last week, this year I went to CES looking for the impact on consumer electronics in three areas: mobility (tablets and smartphones), app stores, and Internet. 

Themes of Interest

• Tablets. This is definitely going to be the year of the tablet.  In all, 80 tablets were introduced at CES showing different visions for the device.  For example, Samsung and Dell introduced tablets with full keyboards aimed at people that want to create content rather than just consume it.  Most of these will start hitting the market by April.  Undoubtedly with so many tablets hitting the market, prices will drop.  I spoke to a few CE buyers who stated that consumers would want tablets with Kindle’s weight and battery life and iPad’s functionality and overall application experience. Google emerged as the early tablet operating system/platform winner as most of the introduced devices were running Android.  Google also demonstrated Android 3.0 that has been designed for tablets (better video performance on YouTube, 3D maps, video chat).  Motorola demonstrated Xoon, a tablet running it.  I liked Blackberry’s tablet (the Playbook) but it will be hard to catch up Android-based tablets in terms of applications running on it.  Microsoft announced the porting of Windows on ARM devices but I think that it will take a couple of years until we see such devices in the hands of consumers.  However, the availability of applications such as Office in ARM devices, combined with the appropriate cloud computing services, may represent Microsoft’s best hope in having an impact in tablets.  With Windows on ARM the consumer will stop caring about the PC’s architecture and focus on the seamless operation of applications across all devices he is using.
• Smartphones. Two types of devices caught my attention: 4G smartphones and a new category of phones called superphones.  Several 4G smartphones were introduced this year and the prediction was that in next year show every-high end phone will be 4G.  For example, Verizon alone introduced 10 4G-enabled devices.  While the devices looked great, the availability of 4G wireless networks and of bandwidth will become the key factors to their success and to the overall success of the mobile internet.  Carriers expect 100-fold increase in the use of bandwidth through the use of 4G.  In his presentation FCC’s Chairman Julius Genachowski talked about auctioning new spectrum for broadband.  It may take at least another 2 years before we know whether consumers will adopt 4G and will start upgrading their 3G smartphones.  This year also saw the introduction of a new category of smartphone which are starting to be called superphones.  These 4G devices, while the have the dimensions of smartphones, their capabilities make them more like tablets.  They run on Android and include 2GHz processor, 1 GB of RAM, multi-gigabyte storage, can be connected to a keyboard and a display and show video at 1080p resolution.  Motorola introduced the Atrix that in addition to being a superphone comes with its own webtop device. 

 

Two more thoughts on mobility.  First, it appears that we are settling into an operating system duopoly (Android, and iOS). Second, 3D is coming to smartphone screens (we’ll see several devices working next year) which I actually think that it is a better idea than 3D on TV screens.  The 3D effect is better because the user is relatively close to the phone’s screen and is staring directly into it.

• App stores. I didn’t think that we needed so many app stores but apparently many CE vendors (e.g., Samsung, LG, Intel, Dell) think we do, so they introduced one.  Samsung’s has 150 applications, LG’s has over 100 applications, and Intel’s has over 2500 applications.  Many appear to run the same applications, e.g., Pandora, and incorporate cloud-based services to store content.  Unfortunately none of the app stores are compatible so application developers have to maintain different versions of each application.  Ford also introduced an app store to provide applications for its Fusion Electric car that was introduced at CES and will be available next summer.  Ford’s goal is to provide applications that allow consumers to personalize their car experience, much like they personalizes their smartphone experience, better operate the electric car, by providing for example energy management applications, and allow for application updates over the cloud, thus allowing for improved technology refreshing. 
• Internet. This year TV sets were getting smarter as they are being built on Internet platforms (Google, Yahoo) allowing the consumer to access and interact with the web from the TV set. 

 

This 2-way interactivity will allow marketers to use direct response models through the TV.  It also means that consumers will be able to access content without the use of set top boxes. The cloud plays an important role in this area as it also enables content to be streamed to these connected devices.  This year’s CES provided a great showcase for the Internet of Things. Several manufacturers, e.g., GE, LG, Samsung, introduced internet-connected home appliances that take advantage of the smart grid and provide better home energy management.

Investment ramifications

1. More emphasis on mobility and the mobile internet.  The new tablets, smartphones and superphones will need new, specialized applications that take full advantage of the device functionality and intended audience, as well as of the rich network services provided by the carriers.  For example, in at interview at D@CES, Twitter’s CEO Dick Costolo said that while today 40% of all Twitter’s users are on mobile (up from 25% last year), 50% of the most active users are primarily tweeting from mobile devices.  For this reason, he is talking to mobile device manufacturers about embedding Twitter into their new platforms to make easier for the users to tweet.  The use of 4G phones will result in 100-fold increase in the use of bandwidth.  We need to develop applications that innovate in the use of bandwidth.
2. Platform dominance.  While Google with Android is trying to emulate Microsoft’s Windows strategy on the PC by attempting to become pervasive on mobile devices and IPTV, there will not be a single platform winner this time around.  Apple (with iOS for mobile devices and Apple TV) , and Microsoft (with xBox for IPTV, and eventually Windows on ARM for mobile devices) will continue to compete with Google.  Wireless carriers and cable operators are going to play a prominent role in this competition as well.  The competition presents interesting choices for application developers, since they will need to support multiple platforms (expensive) and each platform uses a different business model.
3. More emphasis on social media.  This CES showed the impact social media are having on the new generation of mobile (I heard the term “mobile sociality”) and home devices.  The Facebook application was on every announced app store along with several other social apps.  Dick Costolo spoke about remote controls with a Twitter button.
4. Cloud computing.  Device manufacturers sense that consumers’ comfort with cloud computing is increasing.  This is therefore the right time to be investing in a broad range of cloud-based solutions.

Related articles

• CES 2011: The Best New Android Devices (readwriteweb.com)
• Android invasion arrives at CES (cnn.com)
• Editorial: Five Things Android Tablets Will Need In Order To Succeed (androidpolice.com)
• Xoom stands out in a CES sea of Android tablet dreck (linuxfordevices.com)

Areas of Investment Interest for 2011

Happy New Year to all!  Like every year I am writing about the technology areas I will be following and focusing on during 2011.  These areas build upon those my partners and I followed during 2010.  During the holidays I wrote about online advertising, mobile and social web as areas Trident will continue to target.

1. Tablets and smartphones.  In a couple of days I’ll be heading to CES where I expect that several vendors will be introducing new tablets and smartphones targeting different customer segments.  My interest around these devices centers on the platforms they support, e.g., HTML5, novel features they will incorporate, e.g., NFC, the new types of applications these features will enable, e.g., mobile wallets, and the types of data they will be generating.  Tablets and smartphones are sensor platforms. 
2. Cloud computing, SaaS, and virtualization.  Cloud computing was one of the biggest technology trends for 2010 and corporations continued to virtualize their data centers (see my comments from the Goldman conference). Cloud management and management of virtualized environments are two important areas we are targeting.  Cloud management in particular is becoming a hot space.  We just lost a deal in this area after significant competition with two other venture firms.  I am also following closely the evolution of PaaS platforms and the SaaS applications they will be enabling, particularly now that enterprises have started aggressively adopting SaaS applications and developing their own cloud-based applications.  We will continue looking for context-aware, social (see below) and vertical SaaS applications.  In 2010 we invested in Acclaris (healthcare IT) but passed on several others.
3. App stores and application models.  I am watching how the app store is developing as a general purpose applicaiton distribution mechanism.  App stores are moving beyond smartphones (see what Apple is doing with the Mac App Store) into other consumer electronics devices, e.g., TVs, cars, (another area I’ll be watching at CES) and finally the enterprise.  An area of interest is application discovery within app stores.  As the number of applications offered by an app store increases, identifying those with the functionality that is appropriate for a particular task or specific business process will become very important.  Finally, between the proliferation of app stores and the more extensive use of PaaS for application development we see a new model emerging for enterprise application delivery and licensing.  Enterprise application functionality will be developed in much smaller chunks and will be priced accordingly, very much like it is happening today in smartphones. 
4. Social computing for the enterprise. We are focusing on three areas within social computing for the enterprise: customer service where I think there is opportunity for significant innovation in business settings, marketing, where word of mouth and friend referral programs are proving very effective for B2C and B2B businesses, and Facebook ecommerce, because so many companies are now setting up their stores within Facebook.  We are rethinking the workflows and business processes as we try to better understand how social computing can be used effectively in the enterprise.
5. Big data and analytics. We will be moving from just collecting and managing/organizing big data (web site data, social data, mobile data, data from the Internet of Things) to thinking how to effectively analyze it.  In-memory analytics, Hadoop, Google’s Percolator are technologies we follow.  Privacy and security will be important data-related issues that started coming to fore during 2010 and will remain so during 2011.  While I don’t expect to see technology-driven solutions to these issues, I anticipate that during 2011 we will need to engage in healthy dialogs about what data privacy in today’s environment really means.

Related articles

• Research Report: Constellation's Research Outlook For 2011 (enterpriseirregulars.com)
• 2011 tech preview: A tour through tablets, mobile, hardware, software and cloud (zdnet.com)