Chapter Thirteen
The Emergence of a New Software Category
In the first week of December 2011 the Meltwater executive team held a strategy session in Barcelona. We sat in the basement of the W Hotel trying to create a five-year plan for the company. First we tried to create a thesis about where the world was going. We thought that, once we had a common understanding of how our industry was developing, it would be a lot easier to understand how Meltwater could fit into the bigger picture.
The basement was a dark, damp place with no natural light or fresh air, and after two days of intense discussions we stumbled gratefully out into the Spanish sunshine. Our conclusion after some intense debate was that in five years, by the end of 2016, a completely new software category would emerge. As I’ve described earlier in the book, this software would be to external data what business intelligence (BI) is to internal data. Through powerful data science and natural language processing it would analyse job postings, social media, news, patent filings, court documents, company websites and a whole range of other data types. By joining the dots across a wide range of external sources, it would create powerful intelligence about competition, clients and the overall industry with a level of sophistication that the world had not seen before. We called this emerging software category Outside Insight.
Enthusiastically, we started to dream about how this new software category would transform corporate decision-making. ERP and BI transformed decision-making into a rigorous, data-driven approach based on all the company’s operational data. Outside Insight would extend this to all the external factors that influence a company’s future development. With the right software the impact of external factors could be measured in real time, bringing Porter’s Five Forces to life on dashboards and in real-time alerts.
On the back of this strategy meeting Meltwater put the weight of the whole company behind a five-year plan to create this software. It started with a multi-year rewrite of our entire data platform. Then followed development of the data science required to connect the dots between a wide range of data types. Half a dozen specialist tech companies were acquired to complement Meltwater’s in-house expertise. The first version of the product was due to launch in the second quarter of 2017.
Outside Insight software tackles the technical difficulties of embracing the decision paradigm of the same name introduced in Part II of this book. It is conceptually easy to understand that external information can provide valuable forward-looking insights, but it is no small matter to process the vast amount of data available online and distil it down to practical, actionable insights.
The challenge with external data, in addition to its volume, is that it is much harder to analyse than internal data. Internal data is normally structured and typically consists of numbers. In contrast, external data is unstructured and typically comprises text. Analysing numbers is something computers are very good at, but analysing text is a much harder thing to do with a computer. It doesn’t help that online text is found in a myriad of styles and formats. Tweets, job postings, news articles and patent applications are all text documents, but they vary widely in style, grammar and even spelling. Add to that the complexity of aggregating insights in a consistent manner across all the world’s languages, and one can start to see how challenging such an analysis is.
As the importance of Outside Insight becomes recognized more widely, there will be a demand for highly specialized software that can take Outside Insight from vision to practical implementation. This is software with sophisticated capabilities in text analytics. This is software that can cut through the clutter of online noise, is able to aggregate insights across different languages and can join the dots across many external data types. In the same way as the need to manage and analyse internal data fuelled the growth of BI and ERP, so the need to manage and analyse external data will catapult the development of Outside Insight into the ubiquitous piece of next-generation software for decision-making.
History will repeat itself
Studying the development of Oracle, we can see valuable clues about how the Outside Insight software category will evolve. Oracle started out with a database that could collect and store internal data. As the need for more sophisticated functionality evolved, Oracle added workflow, business logic, visualization and analytics to address specific needs in the different company functions.
In order to cater to the growing demand, Oracle went through an aggressive acquisition spree. During the period 2004–16 Oracle carried out more than twenty strategic acquisitions, worth $45 billion.1
Oracle’s first acquisition was the infamous $10 billion hostile takeover of PeopleSoft, securing Oracle the world’s most used talent management software.2 The next target was the industry-leading CRM company, Siebel, which came with a price-tag of $5.8 billion. Siebel was created by Tom Siebel, a former Oracle employee and Larry Ellison prodigy. PeopleSoft and Siebel were key building blocks in Oracle’s future enterprise-wide software offering. Over the years Oracle added supply chain, billing, revenue management, customer support, business intelligence, commerce, point-of-sale (POS) systems and marketing. In July 2016 Oracle announced the acquisition of NetSuite, the world leader in cloud-based accounting software, for $9.3 billion.3
Oracle’s shopping spree tells an interesting tale of how ERP grew from a central data depository into a fully fledged enterprise offering.
History will repeat itself, and for external data we will see a similar development. The external data depository is a search engine because external data is inherently unstructured. On top of a central external data depository we will see a growing need for workflow, business logic, visualization and analytics – just as we experienced for internal data. As ERP software, Outside Insight will develop into an enterprise-wide offering with custom functionality developed per department.
Sales departments will be equipped with smart algorithms to scour the internet for breadcrumbs identifying new potential clients. This software will provide intelligence on what to pitch, to whom and when. If you don’t know the right influencer or decision-maker, the software will also figure out who’s best in your network to ask for an introduction.
HR departments will have robots crawling the internet looking for the best new candidates to recruit. These robots will be able to keep a tab on the twenty most suitable hires, for example, and discover breadcrumbs that can give clues about the right time to approach. Triggers such as promotions, expiry of vesting periods, leadership change, reduced investments, anniversaries or redundancies can all help find the right time to nudge external talents to climb on board.
Finance departments will rely on sophisticated software that mines a wealth of online data in order to benchmark performance with key competitors in real time. Analysis will track key competitive dimensions such as product investments, sales and marketing, and customer satisfaction. The analysis will be broken down in granular detail in order to understand development per market, product and demographic.
Traditional ERP and Outside Insight are two complementary software categories that will have to communicate and work closely together. While ERP is internally focused on operational efficiency, Outside Insight is designed to create external awareness. By constantly tracking the flow of external data, smart algorithms will discover patterns and flag emerging threats and opportunities. As ERP solutions have contributed greatly to helping departments stay on top of their operational execution, so Outside Insight will help each department stay on top of changing external factors.
External data is the next frontier. By systematically and rigorously analysing the billions of data points produced on the open internet every day, the guesswork of today can be replaced by fact-based analytics that can identify trends and anticipate future developments. Conquering the wild jungle of external data, companies will become better at understanding their competitive landscape and where their industry is heading.
ERP and BI transformed decision-making into a systematic discipline utilizing operational data. Outside Insight tracks the external factors impacting your business and will become the next-generation software for decision-making support for boards, executives and departmental functions.
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