At any conference on investment, you will witness the venture capital community pouring out contempt for data warehousing. In a word, venture capitalists (VCs) will do anything they can to put data warehousing down. They don't invest in data warehousing companies. They can't find a good word to say about data warehousing. They revel in presentations that purport to explain why data warehouses are failures. What is it about data warehousing that has alienated the investment community? No other phenomenon has been as widely reviled by the investment community and adopted as widely by the actual users of computer technology as data warehousing. Why?
As with any large issue, there are many reasons for the alienation of data warehousing by the investment community, including:
Data warehousing is an architecture, not a technology. Many different technologies blended together in just the right way are required to make data warehousing successful. VCs love a single "fix-it, one-size-fits-all" technology. That simply is not data warehousing.
Data warehousing is strongly oriented toward infrastructure. Most VCs don't truly understand infrastructure. They want the quick and immediate hit the obvious home run. Ironically, the most profitable, most long-term successes IBM, MicroSoft and Oracle were never venture-backed and that's a good thing. One can just imagine a know-it-all VC, at the first ripple of trouble, throwing Bill Gates out in favor of "someone who really knows what he/she is doing." VCs just don't have the foresight or patience for technology that is oriented toward infrastructure.
Data warehousing was not invented in the Silicon Valley. VCs love their "invented here" technology. They love their Intels, their semiconductors, their clever Palm Pilots and so forth. I was once told by a VC seriously that there were no companies or technologies worth investing in outside of the Silicon Valley.
It is difficult for an investor to make money with data warehousing. What companies have benefited the most from data warehousing? A short list includes IBM, Oracle, SAS, Microsoft and EMC. The problem with these companies is that they were in place long before the advent of data warehousing. No start-ups here. No IPOs. These companies have been publicly traded longer than many VCs have been alive. There are, therefore, no easy profits from the traditional VC approach of start-up and IPO. No wonder VCs hate data warehousing. They can't get inside the companies that are reaping the big bucks.
Appreciating what data warehousing does for a company understanding the role of integration and the value of history is a complex task. It is not an elevator story that can be enunciated in a glib sentence or two. Instead, it requires a profound understanding of what makes companies tick. VCs don't like that. They like quick and easy hits. One-liners. Technologies that can be described in one breath, two at most. You can't do that with data warehousing.
Data warehousing has a long-term and indirect payback. Indeed, history has shown that the payback is enormous. However, it does not happen overnight, and it does not happen directly. VCs don't like that. They like the quick hit. They like the obvious payback. Let's face it. VCs are financial engineers, not information engineers. Most VCs went to Stanford for MBAs. They have never before seen an IMS DBDGEN and have no concept what is required to get information out of a legacy system. They have no feel for what is needed to merge two disparate files with partially matched key structures. They have no idea what a user is asking for when a user is mute during a JAD session. Instead, they are much more comfortable with burn rates, capitalization and series-C rounds of financing. Why would we expect VCs to understand data warehouses?
The benefits of data warehousing are not visible. The benefits of a data warehouse are kind of like those you experience after taking an aspirin. You feel much better when the headache goes away; but the emphasis is on the pain that has departed, not the pill that made the pain go away (i.e., the improved productivity or other gain). VCs like things that are immediate and obvious. They want their investments to be in plain sight.
VCs like "clean solutions." VCs don't like to travel back in time to wallow in undocumented, confusing old legacy code where, in even the best cases, educated guesses must be made. Integrating old legacy systems is complex, thankless dirty work, something the average VC doesn't want any part of.
Finally, VCs invest in what is "cool." They have led the way in such fads as CASE, artificial intelligence and dot-coms. The list is quite long, and the waste of money has been huge. Data warehousing has always been the outsider. The database theoreticians hated data warehousing. The companies that followed the database gurus of another day hated data warehousing because their gurus told them to. The VCs hated data warehousing because it was not easy to make fast bucks from start-ups. In short, the only people remaining for data warehousing were the consumers. And with them, data warehousing has made a home. The reality is that data warehousing solves some very fundamental problems that cannot be solved any other way. Among others, data warehousing solves the problems of:
- The need to separate operational processing and informational processing.
- The need to store data in a form and format optimal for access.
- The need for integrating informational data.
- The need for collecting and managing historical data.
The enmity felt by VCs for data warehousing has undoubtedly hurt the industry of technology. One only wonders what new technology could have been advanced if the VCs had seen fit to allocate just a fraction of the money they wasted on dot-coms and failures such as Webvan.
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