In my last post I wrote about some hypotheses around why more credit & collections professionals don’t do more batch portfolio scoring.

Here are some thoughts that address each of the barriers in order.

As ever, let us know what you think.

A few years ago I wrote an article about the importance of utilizing and automating the wide variety of information that is available to credit professionals looking to efficiently and accurately make credit decisions. Now, looking back, it is easy to see how the same concept of using the right piece of information for the type of decision you are making really applies to all job functions. It is an intuitive concept that better information leads to better decisions, yet a surprising number companies still rely on a single source of insight either because of budgetary constraints or the complexity and time commitment of IT integration projects.

Building on the theme that information wants to be free, both in the in monetary sense and in terms of accessibility, the time for non-IT information consumers has never been better. Now this going to sound like I’m picking on IT a bit, but as a friend of mine wrote a few months back in his blog, “Power is shifting to the users and away from IT departments.” I completely agree. Don’t get me wrong, there will always be an IT department, but the rise of on-demand applications has ushered in a new era of productivity and time to solution expectations. Instead of multi-year (or decade) ERP implementation, customers are achieving paybacks in months (and expecting it).

This has equally extended into the world of content with the rise of free and open APIs from 100s of companies the flow of information keeps getting easier and cheaper. Mashup directories such as Programmable Web and API delivery aggregators such as StrikeIron are providing gateways to find and deliver the information needed for essentially any application you want to build. Similarly, business intelligence vendors such as Business Object’s Information OnDemand are giving access to the data for the analysis you need to conduct. These trends, combined with widgets and plug-and-play integration provided by platforms like salesforce.com’s AppExchange make it even easier to simply access content you need when you need it.

So whether you are a credit professional setting up a credit line on a small business you’ve never heard of before, or a sales rep looking for a nugget of insight that will give you an edge, now is the time to help yourself.

Or you can just stay on IT’s waiting list.

“Information wants to be free” - these were the very first words I wrote on my first whiteboard, two decades ago, following my first substantial promotion in my technology career, which came with a nice, if oddly shaped, office and as plush a set of furniture as I was able to after-hours requisition. I certainly wouldn’t have thought that so many years later the sentiment contained in those words would have set the stage for unprecedented freedom of information exchange via global networks, created a multitude of new industries, and brought about the end of others. I don’t recall a lot of the other things that ended up on and off that surface, but I doubt any were as fundamental or stood the test of time as well.

I’ve struggled with differing interpretations of this saying over the years. My initial perspective, formed in the early 1980’s around exploration of early personal computer technology, public electronic bulletin board systems, and other less-public resources, was one that if important information existed that everyone should have access to it, and I carried the words as the first entry in a personal information-age bill of rights. As time passed, and as the amount of information in the electronic domain ballooned, it became clear that there were important boundaries that need to be observed in order to protect personal privacy and the interests of the larger community. When the amount of information, and most importantly, easy access to it hit critical mass, it became clear that information needs validation, structure, and a pedigree so that each of us can assign appropriate weight to a given “fact” or version of the truth.

Today, I am a strong believer that information wants to be available and that it has worth, both in its raw form and even more in how it can be applied. However, given the negligible investment required to publish in our virtual playgrounds, it’s essential to pay close attention to how information has been gathered, processed, protected, stored, and maintained over time. A recent pointed example of credibility given where not deserved illustrates how meticulous you need to be when evaluating any data point. Careful sourcing, intelligent grooming, and constant refreshing/re-validation are critical in a world where today’s facts are tomorrow’s trivia and next week’s ancient history.

It’s been a long way from acoustic modems to fiberoptic data transmission. But that technology is just a facilitator of the fundamentally important ability to share information between interested parties, an activity that helps all of us have a better understanding of the world we live in. And isn’t that actually the point?

Last week I spent three days at the O’Reilly Web 2.0 EXPO in San Francisco in an effort to better understand how emerging technologies and business models will impact the world of business information. This post is my attempt to summarize some of the key learning from the show and pose some hypotheses for how both producers and consumers of business information content can thrive in the changing world around us.

“Web 2.0″ is a muchhyped and little understood term and if you’re not familiar with the jargon, I would suggest you read Tim O’Reilly’s classic post, which is a bit dated in blog years (which are probably the inverse of dog years) but is still very relevant today. Wikipedia and Dion Hinchcliffe also provide excellent overviews of the Web 2.0 phenomenon.

Numerous business information providers (BIPs) either emerged during the heydays of Web 1.0 (e.g. the late ‘90’s and early 2000’s) or learned to leverage the Web to deliver their content. Their approach was a classic migration of a successful offline model onto the web - collect commodity information in a structured, centralized database, add some unique analytics, create a web interface or portal where users could come to access the information and charge high prices for access at the door.

There are several Web 2.0 concepts and technologies that are challenging this traditional approach:

1. Wikis - nowadays it seems there is a Wiki for everything and business information is no exception. TradeVibes has begun a Wiki for startup companies and while they may not have become a household name like Wikipedia, the concept has merit. The power of the model is that content is created by the community for free and if/once the community reaches critical mass, it can self-police and correct any errors or willful deception. However, managers who have been given the responsibility to make mission-critical decisions about target markets, sales leads, credit risk or vendor selection have long derided the veracity of information that is “self reported” to major BIPs. I think that for any wiki to gain traction as a source of business-class information, it will have to be complemented by rigorous quality checks, both machine and human. But the power of the model is unmistakable.
2. Social Networks - LinkedIn is the leading social network for business, although check out this list of almost 50 more. Online social networks for business replicate the offline notion of networking for jobs, sales contacts and the like. They do a better job than most of us too, because their memory for names and associations is perfect and they can help us visualize the indirect relationships between our direct relationships and lead to new connections. I like building my network and all, but I could do without the extra 3-4 emails a week from strangers wanting to “Join my professional network on LinkedIn”. And just like we’re not quite sure about the consummate networker collecting business cards at a cocktail party, aren’t we a little suspicious of the guy with 500+ LinkedIn connections? That said, you can’t deny the power of a network, like LinkedIn’s that has grown to over 20 million members in a just a few short years. BIPs that don’t think of ways to leverage social networks either between businesses or the employees of businesses are in for a rude awakening.
3. The Long Tail: Part I - The long tail impacts BIPs along two vectors: production and distribution. For a long time, the toughest economics in business information were in the collection and management of information on the long tail of businesses, the 25 million or so medium, small and SoHo companies out there. It’s much easier and more profitable to build a database on the 15,000 or so public companies that have to report their information to the world and who everyone seems to do business with. Now however, enabling technologies such as the aforementioned wikis and social networks make the creation of that content virtually free. With storage, bandwidth and processing power all at nearly zero marginal cost, the creation, storage and management of this content is cheaper than ever. BIPs that figure out how to leverage these technologies to help them create and edit information about small companies will enjoy a huge advantage going forward.
4. The Long Tail: Part II -The long tail may have an even bigger impact on information distribution. In the old world, BIPs built a centralized portal on top of their centralized database and charged people for access. The challenge is getting eyeballs (for ad supported sites) and/or paying customers to come to your portal and pay for access to the information. With the explosion of blogs, YouTube, Google and other content sources, users now face a bewildering set of choices for their business information. Rather than (only) trying to build a centralized portal, BIPs need to experiment with information content where the users are - on a blog, on an analyst’s web set, wherever. In the words of one of the Web 2.0 EXPO presenters yesterday, “You’re not building a web site. You’re building a service. That service should be built to be consumed everywhere and anywhere.” If you still don’t believe it, here’s a statistic for you - it was announced in one of the sessions that salesforce.com does over 1.1 billion API calls a month, which is over half of their total transactions.
5. Mashups - One of the most interesting sessions at the EXPO was John Musser from ProgrammableWeb talking about the rise of enterprise mashups. His message was that mashups have the potential to flip the traditional notion of top down, IT- or vendor-led application development on its head by empowering business users to rapidly put information, workflow and analytics from disparate sources together to solve a specific problem. JackBe, Kapow and Serena are a few of the interesting companies he discussed. In order to thrive in this environment, BIPs need to have nimble technology, transparent pricing, and an open approach to their data so that it can be consumed by an ad hoc enterprise mashup.

Let us know what you think.

I don’t think anyone can argue that the world needs better insights into the traits and behavior of businesses. What does this company do? Will they buy our products and services? How much could they buy? What do our best customers look like? How can we get them to buy more? Should we extend them credit? Will they pay us promptly?

These are some of the crucial questions that companies struggle with every day. To analyze large companies, especially public ones, it’s relatively easy to acquire current and accurate answers to these questions. There’s one big problem, though. The vast majority of companies we interact with are small and private. Finding information and making decisions about them is far more difficult.

Google and other “free Internet” data sources have unleashed incredible breakthroughs in the availability of information. They have broken many old school philosophies and reminded us once again that convenience and accessibility are what the information age is all about. Tons of information is now available to the masses for free at the click of a Search button.

Taking the time to sift through the free Internet is often tolerable for consumers but businesses normally need a higher level of structure and distillation of information to fully support high-volume, time-sensitive business processes. Manually searching and analyzing a pile of data doesn’t scale well.

To address this issue of quality and structure, companies have typically turned to traditional business information providers. The problem is that these providers continue to treat information like a scarce resource and demand high prices for access to it. They aren’t keeping up with the explosion of data availability or the flexible new technologies for accessing that data. People looking for information are increasingly accustomed to getting what they want for free or nearly free. They want more of the right information for less, not the other way around. The days of “I have the data and you must pay me a lot to see it” are going fast.

Information wants to be free. The good stuff - the dirt, skinny, scoop, lowdown and what’s what - always finds a way to make the rounds. Sometimes it’s readily available but most times the valuable insights are found within obscured information such as trends, events and interactions. And new data sources are emerging at a rapid pace. There is more data available electronically every day. Computers are getting faster every day. Storage is cheaper every day. With all this innovation in the air, you should be able to get the skinny on businesses fast, cheap and right when you need it.

Cortera’s mission is to bring the power of new data and technologies to find answers to the questions businesses face in new and better ways and at compelling prices. That means more information, better organized information, analytics to pull the value from the ever-growing gobs of data and great applications to improve your business processes.

That’s what Cortera is all about. We look forward to changing the world with you.