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Weekly Column

All That Glitters: How the Real Value of Business Intelligence is Allowing Us to Fail Quicker

Status: [CLOSED]
By Robert X. Cringely

Last week, I visited the United States Mint in West Point, New York. One of several mints around the country, this one makes coins, specifically most of America's commemorative coins that are struck from silver, gold, or platinum. My objective in visiting the mint was to say something about gold and its role in world finance for my next TV show, "Electric Money." So, after a background security check and five calibration runs through the metal detector, I found myself sitting on a pile of 5,000 gold bars worth approximately $640 million.

Most of us see gold only in the form of jewelry or coins. These were very heavy (about 28 lbs. each) bars stacked floor-to-ceiling in a small room. The gold was dusty, so we wiped it off to reveal the shine. The gold also felt slightly greasy. Maybe this was an artifact of manufacturing. But the bottom line here, folks, is that after about five minutes, the gold was just plain boring. Had it been my gold, maybe I would have felt differently, but I don't think so. Certainly, I have lost any empathy I ever felt for Scrooge McDuck.

The most interesting part of visiting the gold, though, was learning that the bars I was visiting had probably been sitting in that room since the mint was built in 1940. Each bar had its date of manufacture stamped on the end, and most of them were from 1926 and 1928, meaning they had sat at Ft. Knox for a dozen or so years before being shipped on to West Point. The mint held a total of 40 million troy ounces of gold worth just over $10 billion at current prices. But what's odd is that these bars weren't actually used to make coins: The mint buys its coin gold on the open market, and has it delivered as sheets and blanks ready for stamping. That $10 billion in gold is only there because the facility has room to store it. Is this productive use of capital? No wonder nations around the globe are selling their stocks of gold!

The mint represents the exact opposite of today's new economy. And I really believe this IS a new economy, with the essence of that newness being the substitution of speed and agility for piles of gold that sit for decades representing wealth. If there is a good analogy for this new economy/old economy concept, I think it can be found in baseball, where the weight of the average major league bat has been dropping steadily for decades. Sammy Sosa's bat has less than half the weight of Babe Ruth's bat. This represents a substitution of higher bat speed for mass. The new economy has a higher bat speed, that's all.

Which brings us to this week's interesting company, Brio Technology. We've finally made it to the "B's." Unlike the last two companies in this series, Brio is already public, which makes sense for an outfit that's 14 years old and has more than 600 employees. Brio's products are software packages that extract business data from other computer systems and display the results in any web browser. The company refers to this information as "business intelligence" and it simply means the ability to know what's happening inside an organization. It is easier to make decisions if those decisions can be based on real data, and if the effects of those decisions can be quickly seen and adjusted. That's what Brio is about.

Of course, this decision support technology has been around for a long time in one form or another. Back when Homer Sarasohn was chief engineer at IBM in the early 1960s, he showed such a system to Tom Watson Jr., the head of IBM. Watson rejected both the idea of a CEO having access to realtime information about the company ("He'll have people to do that for him," Watson said) and the concept of even having a computer screen in the boss's office ("Executives don't type," said Watson).

Actually, I am beginning to think that the greatest single impact of information technology on American business has been getting executives to type.

Sarasohn's concept of business intelligence was more than realized a couple decades later by Dave Liddle's company, which was called Metaphor. Metaphor mined data from IBM mainframes and presented it on special terminals at a cost of only $12,000 per seat. Metaphor users loved the system, but the high price combined with a nagging thought in the back of the minds of many MIS managers that the Metaphor system might reduce their power within the organization, led to its eventual failure.

The founders of Brio came from Metaphor and knew what was possible. But building an Internet-based system to provide the same functionality at a reasonable price has taken a long, long time. Still, we've seen Brio technology in lots of products from other companies — sometimes licensed and sometimes not. The Pivot Table function in Microsoft Excel, for example, was inspired by an early Brio application cleverly called "Pivot." Pivot Tables allow you to look at data from a number of different views. Microsoft liked the feature so much that it began negotiations to buy Brio at one point. Those negotiations broke off when Microsoft's Pete Higgins revealed that their underwhelming bid for the company was based solely on the calculated salvage value of Brio code; no bodies would be moving to Washington. When Brio rejected the Microsoft offer, Redmond came up with a similar feature all by itself. Microsoft's Pivot Table feature was so similar to Brio's Pivot, in fact, that the data set used to originally demonstrate it (the data concerned varietal wines — not exactly an obvious choice) was copied cell-for-cell from Brio's demonstration.

Today, Brio's data mining and decision support tools have an energetic following in large and small companies. I don't mean to exclude Brio competitors from this explanation, because I think it is the entire category that's important more than one specific player. It's tools like these that have enabled the rate of change we see today in many businesses. While this acceleration of business makes many people uncomfortable, it has also enabled much of the growth and prosperity we've enjoyed since the mid-1990's. Simply put, business intelligence allows businesses to fail more quickly, which is good. Quick failure is cheaper and easier than a long death. Quick failure makes companies more willing to take risks on new ideas, knowing that if those ideas fail, the failure will be detected early. Failing quicker is the essence of this new economy, creating nimble organizations that can do more with less and often require no debt at all to finance growth. No wonder that steady increases in the prime lending rate have little effect on anything except the stock market, and even then only for awhile.

I wonder if U.S. Federal Reserve Chairman Alan Greenspan understands this? Or maybe he has people to do that for him.

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