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The fact that your client is basically a browser means that you don’t have a bunch of fat clients to manage and synchronize and update and all that kind of stuff.

That basically allows you to bring a strategic capability to users at a highly disruptive cost. “Disruptive,” here being the classic definition of Clayton Christiansen in “Innovator’s Dilemma,” and seeing what’s next. He describes it as a “good enough solution at a significantly lower—if not almost free—cost.”

MB: Yes. What we’re doing is intended to eventually disrupt the typical development process of systems integrators building large-scale data warehousing systems and doing custom-designed data schemas and so forth.

Value-chain optimization

MM: In the spirit of value-chain optimization, the idea of giving tools—not just tools, but capabilities—to the people who understand the data and who can effect an operational or a tactical decision in real time as they run their business… can you provide a couple of forward-looking comments? Or what I call “future proofs,” in terms of how you see this rolling out or evolving over the next 2 or 3 years?

MB: Well, I can certainly tell you that the sophistication of these applications will be growing. I’d say over the last 10 years—certainly 6 or 7 years ago—there was a lot of talk about data mining systems, for example. But every data mining system I saw was a tool for an analyst to use.

I think this kind of advanced analytic technology is going to show up for the end users, and it’s going to be a feature of a product. It’s not going to be data mining. It’s going to show up in a way that’s meaningful to a business decision maker—as more data for them to look at and take action upon. It’s not going to be packaged as some sort of fancy data analysis tool.

I think that is certainly what our focus would be on—leveraging that kind of technology. Customers do want the capabilities that kind of technology can bring, but they don’t want it packaged for use just by data analysts.

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SaaS 2.0

MB: I want to come back to a point about SaaS deployment that is germane to where we were just going—which is security. Because once you go to these SaaS 2.0 kinds of applications, you are talking about your enterprise data being sent over to another provider that’s going to give you information services of some kind. You have to place a fair amount of trust in that party.

I’ll tell you an interesting thing. We—as a SaaS vendor, of course—want to be able to use our infrastructure in the most efficient and scalable way we can, in providing services to those customers. That allows us to add new customers at quite a low cost, and provide a higher quality of service to them.

A lot of customers have adopted the mentality of, “Well, okay. I’ll let you have my data, but you’d better give me my own private server.” It’s because they have this sense that it will be more secure somehow. In fact, I’ve been trying to convince people that, in fact, it is less secure.

I tell people at this point: “Why would you want have a private server if you’re interested in security?” You’re going to put it on a special separately handled box just for you instead of putting it on the proven secure infrastructure that we’re taking care of carefully for all our customers to make sure it’s secure every day.

MM: Mike, the other thing, too—if you’re dealing with regulated industry—whether it’s FDA or DOT or whatever… Dealing with regulated industries, as a SaaS provider, you have to meet such a high threshold in terms of transparency and IT governance –oftentimes, higher than the user organization has in its own IT operations.

MB: Yes. That’s right. This cuts both ways. If you’re a large enterprise, you might be very concerned about a SaaS company being able to live up to those kinds of security standards. If you’re a small enterprise or small business—an SMB business—a SaaS vendor, as an aggregator of responsibilities for data processing for multiple customers, is very likely to have a high-quality infrastructure. Higher than what an SMB company can afford to do.

There’s a SaaS vendor for the credit card fraud detection space, for example. It of course has built a system to meet the highest industry standards of credit card processing for data security and so forth. It said one of the great things is that other companies feel its solution is more secure than they themselves are.

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50,000 function points for what?

MM: I’d like to address one issue, there, Mike. As a CTO of a SaaS company, I’m sure you’ll have some things to say about this.

When I look at an enterprise application—whether it’s a supply-chain management system or ERP system—generally most of these enterprise applications have anywhere from 20,000 to 50,000 function points in them. Would you concur?

MB: Yes. Very large and complex systems.

MM: Very robust. Okay. Then when we look at the deployment of those systems, the core user of those systems barely uses 200 of the function points.

MB: Correct.

MM: Then if you look at what 95% of the value is that most users generate from that system, it boils down to maybe 20 to 50 function points.

MB: I would agree.

MM: If you’ve got 50,000 function points and 50 are delivering 95% of the value, what do you call the other 49,950 function points?

MB: Well, some of them are legacy — right? They’re there because of the way you got to what you’re selling today.

MM: What do you call it in economic terms?

MB: Low leverage. That’s what I’d call it.

MM: I would call it, “massive overhead.” Massive costs.

MB: Yes. But I wouldn’t even blame it on the function points, interestingly enough. To me, if you have a functional aspect of your system and it’s debugged and documented and so forth, then the cost of continuing to deliver that function in a new version of your product is not that high.

MM: But you know that when you come up with a new module or a new extension of it, oftentimes that’s the source of the bug. A previously well-behaved documented debugged piece of code all of a sudden becomes the errant citizen in the new release.

MB: Well, I would say that that’s true because of the…

MM: Bad architecture?

No. Not necessarily even because of bad architecture. One of the reasons I work in a SaaS company is because I could no longer see a need for multi-platform packaged software any more.

MM: Exactly.

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Origins of DAM

PvT: Okay. Talk a little bit about digital asset management and whether or not that’s a feasible way for global organizations to manage their corporate brand identities, photos, and videos—their brand assets?

MM: Sure. Well, just for a little bit of a history on that. My firm invented the term “media asset management” in 1994 in our work with Aldus and MediaStation.

Later in 1996 or so, we expanded the term when we wrote the white paper for Apple Computer as part of their Masters of Media Program—a brilliant industry-wide marketing framework that included Adobe, Agfa, Kodak, Quark, and Xerox conceived and executed by Jeff Martin, then the Director of Marketing for their Advertising, Design, New Media, and Publishing division.

Apple commissioned an executive white paper to make the business case for their line of Apple servers. IBM picked up from there and commissioned another white paper and international roadshow—also to make the case for the IBM Content Manager.

In 1998, my partners and I wrote the first full market report on DAM and continued with the reports until 2002.

In 2001, we began our long-standing partnership with Henry Stewart Events and their DAM Symposium.

In 2003, as the Editor in Chief, I started the Journal of Digital Asset Management—with which I continue today.

Strategic Capability

I say this all as preamble, do I consider digital asset management strategic capability? The short answer is, emphatically, yes. You can’t manage a global brand and a pan-regional marketing operations without some form of DAM. In fact, we have published a series of executive white papers on the subject.

Now DAM has a lot of misinterpretations, or misunderstandings in terms of what it constitutes.

DAM, first and foremost, constitutes business strategy for accelerating operational processes within media, entertainment, and publishing, and marketing content processes within global brands. So it’s reducing cycle time, reducing cost, and having a process that’s far more agile or flexible in adapting to change.

I contrast digital asset management with content management. I used to say somewhat tongue in cheek that content management is really ‘crap management’.

Content management deals with more or less self-descriptive files—documents or Web pages for which you do not need a lot metadata to describe its contents, meanings, semantics associations with other content and, more specifically, who owns the content or images—from where did the editorial or copywritten material come, when does it expire, all that.

Digital asset management, in contrast, deal with non-descriptive files, hence the emphasis on metadata and the systematic reuse and transformation of preexisting digital media files. This entails the creation and management of metadata associated with findability, reuse standards, and permissions or digital rights management.

Now a reusable digital file may represent an image, photograph, or publishing template. Digital assets may include text or product claims used in marketing communications, or video clips, MP3 podcasts, and type fonts, or Flash animation. Or elements that contribute to immersive virtual world experiences 3D and 2D models or primitives.

A digital asset might also include software code assets—scripts and programming—and things like IT service management policies and business rules or software libraries and software objects. Or learning objects or reusable pieces curricula that flow into books, instructional DVDs, or online courseware.

So, digital asset management is really about reuse and creating metadata that give you competitive advantage: Cost reduction, time to market, higher quality, greater process agility, and the ability to maintain transparency or governance across an entire marketing supply chain.

As a business strategy, digital asset management starts with a DAM repository—where you put all those bits—and begins to really payoff with an operational group—a DAM service group—that maintains the integrity of metadata, digital asset files, and user productivity.

This brings us to the current state of the art in DAM:  Managing a supply chain for continuous improvement and reduction of cost, cycle time, defects, and opacity of key business processes.

So, I do not consider digital asset management an option, nor a luxury. Just like you have an email system, you must have a DAM. It’s just not an option.

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Webification of BI

MM: Then in history of business intelligence, the Web came along—and some things began to change. Could you quickly reprise us in terms of what changed how as a function of the Web, in the space of business intelligence?

MB: The Web changes everything. The Web changes some things directly and some things indirectly. One of the interesting forces in the database world and the data processing world is that the Web introduced a whole new realm of data to be handled.

The whole world of e-commerce introduced a need to understand e-commerce marketing, and to understand click-streams and how people were using the Internet and so forth. That created a number of new opportunities for people to try to process and understand the wealth of data, and to understand the customer behavior.

The companies that successfully handled Internet advertising have become the masters of this—Google and so forth. That’s the way that the Internet raised the stakes on this kind of marketing.

There’s also the absolutely direct benefit that the Web introduced—a new way to get information to people—in a way that is really much more appealing.

You’re able to get rid of many of the hassles and costs associated with software installation, if you can just give people a website to visit to get the information they’re looking for. People really like this model. It has all of the graphical capabilities that they’ve become accustomed to with their Office and installed desktop software.

That is an immediate thing that people latch on to: “Can’t I just have this on a web page, please?” Of course there is no reason that they can’t. There are a lot of companies like Oco making that happen now.

The Web also changes the way that the service, the calculations, and the data preparation can all be handled. Now, and throughout the history of data warehousing—going back to the mid-’90s, there was an awful lot of outsourced data warehousing. Lots of companies outsourced their data warehousing to big companies like Acxiom that specialized in data warehouse hosting, particularly for target marketing and related applications.

The Internet basically makes this idea a lot more attractive to companies—and in particular, attractive to companies with smaller budgets. It’s not just the big companies that can consider leveraging database and business intelligence technology, but in fact, everybody now can.

People are reluctant in some cases, because they fear, “Oh, gee, my precious data is going outside of my firewall.” But once people are satisfied that their data’s going to be handled securely, there are tremendous advantages.

One data-warehousing consultant I know said it pretty well, “All companies outsource the way their money is handled. That’s certainly precious to them. Why not data?”

MM: I think it’s because there’s a career track associated with it.

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Beyond the lipstick of messaging

PvT: And from your point-of-view, how will marketing’s contribution to the organization evolve?

MM: Marketing is really about what I’ll now call engagement with customers and stakeholders that affect the purchase, consideration, trial, and ultimately loyalty and advocacy of customers.

Marketing remains core, fundamental to the value and purpose of a company. However, marketing must evolve beyond messaging—you know the old saw, lipstick on pigs.

Unfortunately, most senior marketing executives lack fundamental skill sets to innovate new services, especially digitally provisioned services.

Most senior marketing executives lack – are utterly bereft of what I call IT service management chops. And yet, the marketing executives that will have the big wins over this next 5 or 10 years will essentially be senior IT execs and CIOs that understand the concept of customer-making, the primacy of brands as a way of engaging customers in the value proposition, and more specifically, the provisioning of online interactive services as a core innovation to the customer-making process.

That’s why most chief marketing officers of major companies today will simply be out of the game in 3 to 5 years. They will have to retire out or do other sorts of boutique consulting because fundamentally they are suited up for hockey when everyone else is doing ballet.

Not good news, huh?

PvT: No, not at all. Not at all, and I’m sure most marketers would not want to hear that, so.

MM: Well, as I mentioned it before, William Gibson, has this great aphorism: The future arrives unevenly distributed, i.e., some people get it, some people don’t, those that don’t end up feeling a lot of pain and hurt as a function of being laggard on innovation-adoption curve and, more specifically, the future that arrived yesterday. We need to play a little catch.

Customer-making mindset, plus systems

PvT: Okay. So what do you consider as the core elements of a tightly integrated marketing model? And that’s sort of a loaded question…

MM: It sure is. Well, not to belabor the points that I’ve already made. First, you need to have a customer-making mindset; you must integrate the systems and compensation of pre-sales and post-sales to customer-making process benchmarks.

Second, you need to have the analytic discipline and rigor to be able to identify your ideal customers and predict lifetime or long-term value. You must understand your customer.

Third, you need to develop the operational capability of listening: mood of the market, voice of the customer, and patterns of engagement.

Fourth, you to put into place agile methodologies for the development of content and services used promotional reach and engagement.

Now some companies people start with the social media and social networks; they start with a voice with which some customer might connect and begin a dialog.

Social media enables a firm to initiate emotional connection with its customers, and get hints about what’s really going on, and then using those intuitions and soft perceptions drive a broad-spectrum analytic practice and develop true rigor about who is your customer.

So, you know, it can mean a Yin and Yang kind of thing where they feed on each other. It should result in a positive feedback loop: listening begats better content and services that in turn produces “earned media” in the form of praise and recommendations in the Web 2.0 mediaspace, that you inform above the line mass market creative strategies, and so on.

So to unpack your loaded question, the fundament challenge confronting the marketing executive today entails building operational capabilities within the context of an operational marketing platform—a business process-management platform for marketing-related activities.

Unlike marketing automation tools for “doing the marketing process”, the operational marketing platform must also support the rapid, agile development and provisioning new interactive services—essential software applications, service mash-ups, and widgets.

With good listening tools and process, combined with collaboration and scheduling systems, the operational marketing platform becomes an innovation-services platform

That idea nicely summarizes how innovation and marketing have converged in terms of a core competency, vis-a-vie this platform.