Someone wrote me yesterday to ask about Sterling Commerce, how its business worked and how it could be worth close to a billion and a half dollars to IBM.
It's funny how things come full circle. Years ago, before I slid over to BI, analytics and information management, I was a veteran of the dotcom meltdown, and the more un-melted down B2B and supply chain space. I still love that stuff and knew it would sooner or later meet up with what I've been learning and thinking about since.
It's hard to believe that 10 years ago Sterling was built around a private B2B network of phone lines, 9600-baud dial-up modems and mailboxes for business transactions that were so expensive that only the largest corporations had them at first. (Imagine spending 50 cents or more to electronically send a transaction document.) Just like the value-added networks of EDS, IBM, Peregrine Systems and General Electric's GXS, Sterling's VAN was built mostly around a common protocol, electronic data interchange (EDI), that standardized the forms and terms for exchanging bills of goods, shipping information and invoices.
Sterling, EDS, Peregrine, IBM and GXS were sort of the Sprint, Nortel, T-Mobile and Verizon of their day, but built for business transactions. They interconnected, fought each other, fought to squeeze out Internet startup competitors and cut prices over and over as communication was commoditized.
But the VANs were much more collaborative than you might expect. What they did and continue to do with EDI and other protocols was to move a lot of discretely defined data between businesses in a very time-sensitive way. A lot of people don't know that 10 or 15 years ago you couldn't build a washing machine or an automobile without EDI because, besides managing the paperwork, EDI actually managed the shipping and receiving of sequenced parts from whole tiers of supplier networks. Without the exact right numbered heater fan for a given Honda Civic, whole assembly lines would have to stop, so manufacturers perfected this stuff years ago and orchestrated it for hundreds or thousands of suppliers. It was simple but hugely useful work around a common open standard of the same type we clamor for today.
Along the way, business service providers like Sterling mastered all sorts of data, payment and sales transactions for banks, for retail, for communications and for health care. And while a lot of this business has moved to middleware and integration services, just like in manufacturing, it's still about assembling the exact right data at the right time to build something -- or to make a decision.
That's where the subject comes full circle and reconnects with business intelligence and analytics. It's the idea of assembling data at the moment, on the fly, with just the right parts to create something of lasting value. It might as well be a car or a washing machine or a customer relationship.
I've been spending time on this subject because I think it's worth following. It's about an emerging marketplace in which discrete bits of data bought and sold openly on the Web become a brand new economy of goods and services. Most all of the data we bother to collect has some intrinsic use, but the value of a bit of data depends more on how and when we use it.
On one hand, there is so much of it out there that it's easy to call data a commodity. We buy it in huge volumes coarsely and cheaply in a newspaper or a report. We build and trade it freely in email and social networks. We consume it in vast quantities while only digesting small parts of it. We discard most of the data we come across with no concern because there's no real need for comprehension.
On the other hand, data is nothing like a commodity because we have the ability to define and parse it so narrowly that we can even identify the value of certain discrete bits to integrate and analyze to improve our business performance. That's how the SaaS vendors and the new value-added networks, like Salesforce.com or NetSuite prosper, with an incremental value-add we can see and are willing to pay for.
That's precisely what the old value-added networks like Sterling and its new owner IBM did 10 years ago with a common open standard called EDI. And now they're setting about to do all over again with the modern benefits of BI, analytics and a whole new service standard of value. Down the road you're likely to want it and pay for it.