O'Reilly talks turning IT inside out and data lock-in at SAP TechEd
SAP's TechEd '07 got off to glitzy start in Las Vegas as the pied piper of Web 2.0 Tim O'Reilly told the crowd of about 6,000 NetWeaver, Java, ABAP, ERP developers about the design patterns and business models for the next generation of software (hint, it's not on premises client/server applications).
Just as the PC industry engendered a revolution, O'Reilly said that Web 2.o will transform the tech industry. At this point, it's rather obvious. The root of that revolution, O'Reilly said, is applications that collect data and harness collective intelligence. "Owning the data is a huge source of lock-in," he said. Nokia's $8 billion acquisition of NAVTEQ this week can be viewed as a lock-in of a highly monetizable map database.
In effect, the "network-effect-data-lock in" brings accelerating returns to the winners, O'Reilly siad. And the data collection and lock-in brings profits. Hence, Google, Amazon, eBay, Yahoo etc. turn user data into profit.
Of course, only a small percentage of users will add value to an application explicitly. O'Reilly suggested setting inclusive defaults in applications for collecting and aggregating user data as a side effect.
"Think about how to design so participation is natural, so a service that gets better as you use it is natural," O'Reilly said. For example, Google mines search data and serves ads in an unobtrusive way.
He also said that new technologies are first exploited by hackers, the alpha geeks, and the results of those explorations eventually have impact on business, he stated. In other words, big companies like SAP need to look outside or to the rebels inside for innovation.
He added to his Web 2.0 definition, call it "bionic" software, citing tag clouds as an example. "[Web 2.0] is a new kind of people-powered, bionic software." Web 2.0 is also evolving into a platform play. O'Reilly outlined two models--one in which one or a few companies has enormous control and another of small pieces loosely joined, similar to the open source model. "When you have a large scale site, it costs a lot of money." The future could belong to those who have the infrastructure to host services and applications, such as Amazon EC2, salesforce.com and Google. He singled out Amazon's Jeff Bezos as one of the smartest platform players because he is building infrastructure for everyone.
"Be aware that the consolidation of power could lead to bad things. Web 2.o is built out of network of cooperating data services," O'Reilly said. A few dominant platforms is not the ideal outcome of Web 2.0. "Make sure you create a remix culture. Think about data from the outside and services that tie into whole structure of the Internet, such as mashups," O'Reilly said.
How does this notion of data lock in, collective intelligence apply, architectures of participation, rapid development, infrastructure platforms and mashups apply to SAP? Good question.
SAP is finally on the path to Web 2.0 goodness with the introduction of Business ByDesign, an on demand ERP system based on enterprise Web services and designed for the mid-market (full coverage). Perhaps over time SAP will become an infrastructure play, hardware and software on a massive scale. Widgets offer a way to syndicate back office data, and SAP is developed a Enterprise Widget platform and supports mashups. The company also has an enterprise collective intelligence, social network effort, Harmony.
SAP has a form of lock-in with is software, but not the kind of lock-in that O'Reilly has conceptualized. Once you are in the SAP camp, it's difficult to switch horses.
Coming up tomorrow: Keynotes by Peter Zencke, the SAP Executive Board member who leads the Business ByDesign effort, and CTO Vishal Sikka.
Craig Cmehil, a fellow Enterprise Irregular and SAPper, has set up a live feed of TechEd via a uStream.tv broadcast. The recording of the sessions can be found on Craig’s blog at the SAP community.