Informatica Perspectives

Nicholas Carr infamously penned “Why IT Doesn’t Matter” back in 2003, and many in the IT world howled their indignity at the idea. Many proved over and over that IT did matter in many businesses. IT did provide competitive advantage.

But part of what he stated does resonate now. Business applications used to be the epitome of how IT helped differentiate an enterprise. American Airlines invented the yield management system for allocating and pricing airline seats, revolutionizing the industry and generating an estimated $1.4 billion in additional revenues over three years. MCI won five points of market share from AT&T in the 1990s with its Friends and Family plan, enabled by its uniquely flexible billing application. Bank of America cemented customer relationships and leapfrogged competitors by providing state-of-the-art electronic bill pay capabilities.

But more and more, the custom or customized application is dying. Of course, there will always be custom applications, and some companies and industries such as Wall Street will remain highly dependent on them. But for many enterprises, the cost of maintenance and the inflexibility caused by decades of either building custom applications, or highly customizing packaged applications from vendors, has simply become too high to bear. Many organizations have laid down a new law: applications are to be purchased, and they are to be implemented vanilla— no customization. Several CIOs at a CIO conference I recently attended stated this as their go-forward strategy. If the applications are vanilla, they can no longer be the source of competitive differentiation.

So what in IT is now the source of competitive advantage? The data. The data transcends the application. The data outlives the applications. Data is more important than the applications. After all, the applications are the means to capture the data, but the data captures what is actually going on in the business.

IT organizations need to shift their priorities to recognize this reality and to focus on their data infrastructures. We’re already seeing signs that this is happening. Historically, the applications folks tended to be at the top of the totem pole in the IT organization. But more and more IT executives are putting their key managers on data integration and data management. Some are even anointing data czars or chief data officers. In fact, at the conference, the CIO of an insurance company asked me for leads in recruiting a data czar, a position he was about to create. (If anyone wants the job of data czar in the Philadelphia area, let me know.) The CIO needed someone to think about data and information strategically across the entire enterprise, while his existing IT leadership kept the shop running smoothly.

Applications are still a core foundation to any business. But like email and networking, they are becoming commoditized. The key to competitive differentiation is in your data and how you integrate and manage it.

Next posting: Why you should throw out your ROI analyses.

Over the past few weeks we’ve been talking to Informatica customers about cloud integration at the Informatica 9 World Tour events. In most of the cities, we’re hosting a Cloud Breakfast to dive in to what Gartner has listed as one of the top 10 strategic technologies for 2010. Not surprisingly, interest has been widespread. Attendees include people in IT and line of business (LOB) roles; people with PowerCenter skills and long-time Informatica Cloud customers; CRM administrators and IT architects; sales and marketing operations; ISVs and quite a few consultants.

One thing that they all have in common is that they’re thinking about the opportunities and challenges that the shift to cloud computing represents. As one attendee put it, “we can either get on the train or get run over by it!”

[Read more]

This week, I attended a CIO conference in Philadelphia, for the first time in a couple of years. It was really good to hear them talk about their experiences, goals and issues, and to talk with some of them one on one. It spurred a bunch of new thoughts, which I’ll be writing about in a series of upcoming blogs. This first posting is on CIOs playing offense.

In my last posting, I talked about the Dr. Jekyll/Mr. Hyde nature of data—data being both an asset and a liability. The CIOs talked about playing offense vs. defense. They really wanted to be engaged with business transformation and growth initiatives. But many were saddled with cumbersome, expensive IT environments that sucked up 90% of their IT spend and resources just to “keep the lights on”. In other words, they were spending almost all their time and energy playing defense. [Read more]

I am very fortunate to have a CIO role that extends beyond the traditional responsibilities of IT. Part of my role includes the strategy and implementation of the recently launched Informatica Marketplace.

The Informatica Marketplace has generated a lot of buzz with our customers and partners. Last week while I was presenting at the Pacific Crest Annual Cloud Computing Conference I heard the excitement about our new offering from many of the attendees. Mostly, people appreciated our continued thought leadership and commitment to providing an open platform to host solutions for data integration, data quality and data management. And yes, it is an open platform to host solutions that not only support Informatica, but other vendors too - even competitors. Our fundamental belief is that the hand of free enterprise will ultimately win, so we are willing to provide an open platform to do so.

Here are a few questions I've heard and answered over the last few weeks: [Read more]

Today Informatica announced that Bay & Bay Transportation has used Informatica Cloud Services to achieve a six month project payback on their total Salesforce.com investment and a 900 percent return on their critical data integration project.

Bay & Bay is using the turnkey, on-demand Informatica Cloud Services to provide robust, bi-directional synchronization between its logistics management databases and applications with Salesforce CRM. Using an intuitive web based integration wizard, the company automatically maps source and target fields, configures powerful data transformations, and sets automated synchronization schedules. And being a true multi-tenant cloud-based service, there is no hardware, software, or infrastructure for them to install, manage, or maintain.

[Read more]

This is the last of the Data as an Asset series and what better way to wrap up the theme than with a view to the future. As stated by Thomas Redman, author of Data Driven, “Your company's data is a key business asset, and you need to manage it aggressively and professionally.” The future vision then is around Agile Data-Driven Enterprises. [Read more]

Continuing with the Data as Asset series, in this posting I explore the negative side and what can happen when data becomes a liability. Physical assets such as buildings, equipment, or even money, can become a liability if not managed properly; buildings can become unsafe to work in, machinery can be dangerous to operate, and business investments can turn into money-sinks. Similarly, data and information systems can also be assets that provide economic value to the enterprise or they can be liabilities that destroy value or put the business at risk if not managed well. Here are three common scenarios. [Read more]

My last post on this theme A Market-based Approach To Valuing Data, introduced the idea of establishing an internal data economy as a way to value and manage data assets. Here now is a specific scenario for how this could work. I apologize in advance for the length of the posting, so please bear with me. The level of detail is necessary to demonstrate how an internal market can function in a practical manner. [Read more]

As per discussions in prior postings on Managing Data as Assets, yet another method for valuing assets is to use market prices (mark to market). This method works best in a market for a homogeneous product where no individual buyers or sellers can affect those prices by their own actions. Securities such as stocks and bonds fall into this category. If you own 1,000 shares of Informatica stock for example, you know exactly what they are worth at any time since there is a highly liquid market for them – it doesn’t matter what you paid to acquire the securities (except for tax purposes) and you don’t have to sell them to determine their value – you only need to look at what they are trading for at the moment. [Read more]

Continuing from my prior post Valuing Data Using Managerial Accounting Practices, you don’t actually need to put data assets on the public balance sheets to achieve the desired management focus You could use internal management accounting methods such as EVA (Economic Value Add). In EVA, operating costs that have long-run benefits (such as R&D, brand advertising, certain IT investments) are recorded as assets rather than operating expenses. EVA is generally calculated by line-of-business as EVA = NOPAT – (WACC * NOC)

• NOPAT = Net Operating Profit After Tax
• WACC = Working Average Cost of Capital
• NOC = Net Operating Capital [Read more]