I am going to be moderating a panel on the opportunities for publishing in cloud computing on November 19th - more to come on that - so needless to say my head is in the cloud (computing) to some degree already. But when Microsoft announces a major initiative to adapt its Windows operating system for cloud computing for Amazon's web services platform you know that the balance of power is shifting away from enterprise servers faster than you might think. This is great news for network services providers and potentially good news for Microsoft, whose desktop Windows operating system is becoming ever more ponderous and is being readied for a crash diet. The bottom line from a technology perspective is that we're returning to the days of complex technology being "out there" in the network and user-oriented technology being oriented away from general computing and towards serving up content from network services.

The move towards cloud computing may seem rather "back to the future" in some ways for those of us who lived through the days of mainframe computing and (really) dumb terminals, but when did it really make sense for companies to have thousands of dollars of over-complex content and software on people's desks in the first place? The network is the natural place for most content services to live, making it far easier for peers to communicate and collaborate with one another as publishers and to provide them with the ability to benefit from sophisticated services with a minimum of in-your-face technology hassles. This is no surprise to publishers that are succeeding with the move to online digitual publishing services, but it does pose an issue for content and technology companies that had been focused on enterprise sales.

In recent years much of the "value-add" component for sophisticated enterprise content services and the technologies that support them has revolved around tailored software and information services based on integration with enterprise I.T. platforms. The early enterprise entrants in cloud computing such as Salesforce.com's network-based services have strong participation from many enterprises, but the big push for margins has positioned many enterprise content providers towards strategic sales that involve I.T. teams in major companies. Cloud sales were an investment in the future, to be sure, but present revenues were focused behind the firewalls of enteprise publishing clients oftentimes.

Clearly the rapid acceleration of enteprise-oriented I.T. services towards network services available via highly scalable Web infrastructure is going to put more and more pressure on this line of marketing for high-end enterprise publishers. Web services, which enable publishers to integrate their content easily and rapidly with other content via standardized programming techniques, are flourishing in cloud computing environments, enabling user-defined "mix and match" content services intergrated into a wide variety of platforms and productivity tools. This is good news for publishers who want to get their content up and running as quickly and as easily as possible in enterprise-oriented applications - but bad news for publishers who wanted to sell people on the idea that doing so was really expensive and hard.

The go0d news for enterprise publishers is that cloud computing is likely to spawn a widening breed of tailored content applications that can be deployed more rapidly and efficiently. Long and risky product development cycles for advanced publishers are likely to give way to general frameworks for cloud-enabled content applications that will have easily tailored core functions that can be changed to meet individual client needs more rapidly. In the process of doing so, many major aggregators may begin to look at what their real core strengths need to be, leaving some likely to look further and further afield for just the right content sources to aggregate as needed for specific client applications. Instead of focusing on database curation, it's more likely that tomorrow's major enterprise publishers will be focused on Web services curation, being experts in assembling just the right content from any number of databases and Web sources that meet their clients' needs.

While in many instances existing staff skill sets will be transferable to the cloud computing environment, I expect that more than a few of the major publishers are ill prepared for the cultural leaps required to survive and to thrive as content services experts in cloud computing. We're all familiar with the reogranizations that have been the focus at major enterprise publishers such as LexisNexis that are aimed at blasting away very I.T.-centric product development cultures in favor of more client-centric cultures. What happens when the Web services-centric model of cloud computing impels these companies to accelerate the culture change for their core revenue lines that much more quickly? There are great opportunities for major publishers in the shift to network-oriented enterprise services, but I suspect that more than one five-year plan may be floating out their H.Q. office windows shortly as the depth of the impact of cloud computing services on the enterprise content industry becomes more clear to them.

Labels: amazon, cloud computing, enterprise, LexisNexis, Microsoft, publishers

Reed Elsevier is doubtless looking over its shoulder at the Thomson/Reuters merger as of late and wondering how they can improve shareholder value in troubled times for traditional publishing against this looming B2B database giant already divested of print publications. Well, when the going gets tough, the tough buy databases would seem to be the answer to the wondering.

USD 3.6 billion later Reed finds itself lining up to be the proud owner of ChoicePoint, one the world's leading collectors of data on individuals used by businesses, governments and non-profits for a wide array of marketing, credit scores and background checking functions. Barron's notes that this deal has been in the works for about two years, but clearly the accelerating of scale by other B2B database providers has Reed eager to get some good news on the radar for shareholders. AP notes that ChoicePoint will be merged with Reed's LexisNexis risk business unit, with expected redundancies on tap as a result for LexisNexis employees.

The flip side of this deal is Reed's decision to let go of Reed Business Information, its B2B trade publishing unit that contributes about 20 percent of Reed's overall revenues today. With ChoicePoint's annual revenues a tad higher than RBI's and with considerably better growth prospects from ChoicePoint in the near term this an acquisition that fits in very well on the balance sheet. RBI's strong events production unit will be retained, though, as noted by Bloomberg News. With rapidly softening print ad revenues, a slowing business cycle and a very slow transition to online publishing and advertising as a mainstay, B2B media properties are not going to be the margin-producing machines they once were - a conclusion that Thomson had come to several years ago.

The deal offers Reed a number of great opportunities for revenue growth. With deeper personal profile data LexisNexis could develop more sophisticated analytics tools for the enterprise using data collected from other LexisNexis databases and also begin to widen the array of consumer-oriented information analytics that can help people to assess how the world views them as a risk. In a security-conscious world with lots riding on personal risks the value of these services certainly makes for a good investment. But there's a lot of unexplored territory around the potential for this kind of personal data to drive new types of electronic marketing. Generating marketing lists from a database is one thing: being able to match up online profile data to ChoicePoint profile data could give marketers a far more precise view of who they should be trying to reach online via ads and other marketing services.

This last point is key to the decision to drop the RBI division at this time and to hang on to the events properties. It used to be that magazines drove events: these days it's far more the case that events drive magazines, with the relationships formed in face-to-face events becoming far more important marketing vehicles than ads placed next to editorial content which is increasingly being replicated in a multitude of online content outlets. Overall it's probably better for Reed to focus on high-value human interchanges for B2B marketing and to focus its advertising efforts on helping marketers via personal metadata found in ChoicePoint and other databases to target the right people through any number of online and offline marketing channels.

Most all of this is good news for Reed Elsevier in the short run and even quite good for the long run for shareholders looking for steady returns. With the rise of online publishing one needs to accept that the huge influx of investment into new publishing technologies and business models makes it increasingly untenable to maintain the illusion that you can provide steady cash-cow returns in a sector that has reinvented itself around the long-term payoffs to be gained from risky startups. Apparently unwilling to risk margins on traditional editorial models in this environment and having missed most of the choice opportunities to move aggressively into online publishing Reed is probably best off punting its print-centric properties to those better suited for turning aging cash cows into hamburger.

If there's a potential sticking point in all of these moves it's that Reed Elsevier is moving one very control-oriented database culture into the arms of another control-oriented database culture. That bodes very well for the LexisNexis family of databases itself but not necessarily well for a division which in some ways was having trouble looking beyond traditional I.T. infrastructure and search applications into the markets' broader needs. Many changes have been undertaken already in LexisNexis to deliver more responsive product development but perhaps one of the more interesting aspects of this merger to watch is how ChoicePoint's dual focus on enterprise and consumer database services might influence LexisNexis product development. With more sensitivity to how individuals interact with databases in a public Web environment there may be some interesting product insights working their way into the LexisNexis fold as well.

Labels: ChoicePoint, credit scores, Deals Partnerships and Sales, LexisNexis, personal data, Reed Business Information, reed elsevier, risk

IT Week offers an article by Tim Buckley Owen of Information World Review that is a bit of a hatchet job on LexisNexis, Thomson and other business information providers. Owen quotes anonymous sources who paint a picture of subscription database services providers defending pricey offerings against users more adept at finding their own sources online. The criticisms are not so different from what we at Shore have heard in our private research but it is interesting to see some of these in print for the world at large to consider.

Some of the key quotes include:

“Although the sector boasts a lot about listening to customers, this is largely not so,” says one independent business information consultant. “Customer consultation is often just going through the motions because it’s expected or it looks good.”

"Even the shortfalls in the content would not be so unpalatable if we were informed about them in advance, understood the rationale or had clearer information on what the content includes," a librarian at a leading law firm adds.

LexisNexis adds that it does face competitive pressures: "Content that was previously impossible to access without a premium subscription is now often available for free on the web. New open solutions have been developed and consumer expectations have risen dramatically."

While this is hardly stuff that should shock the typical business information company executive it's indicative of the frankness that many of their customers are expressing to them - and of their own recognition that the business information industry is changing rapidly. Where a few years ago some usability enhancements on a search interface and a few new subscription sources could be touted as major enhancements by subscription database providers today these same improvements ring rather hollow in the ears of enterprise customers learning how to leverage Web technologies to get smarter faster than ever before. It's not even a matter of the bloom being off the rose: the rose of business information services is in danger of being uprooted altogether by enterprises in search of competitive advantages.

This is not all bad news for business information providers. In many instances companies like LexisNexis and Thomson are already all over this trend and moving aggressively into software services that can help to enable productivity and revenue generation for their clients. But the greater truth revealed by this rantish article and our own research is that the efficiencies of relational databases are being overcome quickly by the dominance of I.T. cultures in business information companies built around inflexible relational database technologies and the equally inflexible product design and support that results from these technologies. The result is cultures ill adapted to shed antiquated product concepts and to work more flexibly in Web-centric environment to deliver the products that users really want to use in ways that they want to use them.

You can do all the user interviews, surveys and focus groups that you want but if you're applying those insights to an outdated platform your ability to leverage those insights is not going to pay back the dividends that they should. Business information providers will continue to leverage existing relational databases profitably for some time to come, but at some point in the not too distant future they're likely to face the same crises faced by information giants such as Reuters as they realized that their allegiance to profitable but outdated platforms meant costly catch-ups in both product design and corporate culture in order to survive. It's time for business information companies to embrace user-driven content aggregation and generation technologies and to start enabling productivity benefits that may have little to do with how existing platforms are configured. There are many interesting trends in business information that hold out promise that this is going to happen, but timing will be everything.

Labels: Business Information, LexisNexis, Thomson

Two major conferences focusing on business information services point towards two very different approaches to creating revenues and profits from today's enterprise and media markets. Yet both database publishers and media companies are circling around many of the same opportunities to develop value for business information markets. The battle for the future of business information has just begun in earnest, with no clear winners in sight but with many "old guard" attitudes from both camps in dire need of ejection from the scene.

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Labels: Business Information, enterprise, Factiva, LexisNexis, media, News Analysis