Web 2.0 Meets BI 2.0: Learning #1

I recently had the opportunity to speak at The Data Warehouse Institute (TDWI, August, 2008) on the topic of what happens when an old school data warehousing and Business Intelligence guy falls into the world of web analytics. I'm going to use this and the following posts to cover my 6 "learnings" from this experience. Plus I think that these learnings form a key basis for what I'm calling Decision Support 2.0.

Learning #1: Business Model Evolution

The old world technology business model was built around a product-based business model. That is, the product is packaged like a normal product - much like buying a laptop or even toothpaste - and sold as a product (with an on-going annual support contract). This model worked well when the industry was starting as it was a business model for which it was easier for Purchasing Departments to buy software / technology.

The problem with this business model was that an increasing percentage of total vendor resources need to be allocated to support and maintenance. This greatly inhibits investments. Also, this business model is that the rate of innovation is totally "you" dependent, which is why the Open Source movement is disrupting this business model.

The new world business model is services-based (e.g., subscriptions, etc.) as demonstrated by companies like SalesForce.com and Red Hat. Cloud Computing has the potential to really accelerate this model, and the result will be new innovation in the way of new products and services, as well as lower switching costs will enable customers to more easily adopt these new offerings. Unfortunately, the burden of business success still falls upon the users.

What we are seeing on the web is potentially a new, more disruptive business model - performance-based business model. With this model, the vendor only makes money when the customers make money, a real win-win scenario. In this model, vendors take on full responsibility for business execution success, and are rewarded accordingly! Massive amounts of data and computer power enabling new web business model.

Final note on this topic: it's not technology that's disruptive, it's the new business models that new technologies enable that are disruptive. It’s not technology that’s disruptive, it’s the new business models enabled by technology.

My next posting will cover the "secret sauce" that fuels what I am calling Decision Support 2.0