Due Diligence: Seek and Ye Shall FindBy Eric Nee | Posted 10-01-2003
Need to find out which U.S. cities have the largest numbers of Korean-born residents for the launch of a new product? Google it. Want to locate someone you used to work with to offer her a job? Google her. Looking for the latest news about your lunch date's employer? Google the company.
It wasn't that long ago when finding the answers to these questions would have taken hoursif not daysof phone calls, library visits, perhaps even the help of a professional researcher. No longer. In less than a second, Google pulls up uncannily accurate results for just about any query you can think of.
We're all familiar with the impact Google has had in the consumer market, but what many do not realize is that it could have a similar impact on the business market as well. Of course, Google Technology Inc. isn't the first company to tackle this problem. All sorts of exotic software tools have been developed to help business customers categorize and find random information, but they have been expensive, difficult to install and hard to use. By making searching easy, accurate and inexpensive, Google is turning the corporate market on its ear.
"We are seeing [business] people changing their expectations," says Whit Andrews, a research director at Gartner Inc. "We've had lots of people come to us and say they want something like Google for their company."
Why is a once-obscure field like research fast becoming a big deal? Because the nature of business has changed. When railroads and steel companies reigned supreme, business functions like R&D, marketing and strategic planning were still in their infancy, and information gathering was primitive. Quickly finding the answer to a question like 'How many Poles live in Buffalo?' was not that important. Besides, there was a good chance no one knew the answer anyway.
Today's companies run on vast quantities of information, and much of it is not easily available. Sure, it's always been easy for accountants to get information about a company's own operations, like revenues and costs. Much of that information is captured and stored in databases at the time it occurs. This is the world of structured data.
But most information is not so readily accessible. This is the world of unstructured data. Some of the information you need might reside on company servers, but only in a Word document, a PowerPoint presentation or an obscure Web page, not on an easily queried database. "The amount of unstructured data stored on corporate IT systems is much larger than the amount of structured data," says Alexander Linden, a research director at Gartner.
And much of the most important information needed to run a business these days resides outside a company's databases and firewalls. Woe to the company that does not keep abreast of new government regulations and laws, the upstart competitor, the financial health of its partners, or new technology that might render its products obsolete.
Keeping tabs on this kind of information has become the responsibility of vast numbers of highly paid company employees, and it's keeping them very busyand very frustrated. A recent study by the consulting and research company Delphi Group found that business professionals spend at least one quarter of their day searching for information, and that two-thirds of these professionals say they have a difficult time doing the research. "This is a problem for anyone who is a knowledge worker," says Carl Frappaolo, cofounder of Delphi.
That's where Google comes in. A little more than a year ago, Google took its popular consumer Web tool into the business market by packaging the software on a server and selling it as the Google Search Appliance. The Appliance is designed to work inside a company's firewalls, respect varying levels of security clearance for sensitive information and handle a variety of data formats besides HTML. Google says it has sold "hundreds" of appliances to date, many to big-league customers such as The World Bank Group and National Semiconductor Corp. At an entry price of $28,000, the Appliance costs much less than most of the exotic corporate search software options, and it requires almost no support or training to use.
Critics point out that the Google Search Appliance is less sophisticated than the specialized search tools that have been developed for the corporate worldand that is certainly true. One of its biggest shortcomings is that it cannot search databases directly, but only when the data is delivered up as Web pages through a Web server. While that problem is likely to be fixed, expect to find other obscure technical features that probably will not be added. "We try to write things that are very general," says John Piscitello, product manager for Google's Search Appliance. And that's the right approach. Google understands something that the specialized software firms do not. The market for corporate search software is rapidly becoming a broad and general market that needs a broad and general solution (think Excel, PowerPoint and Word).
There will always be room for expensive, specialized niche products for the handful of people and companies that need them and are willing to pay a premium for them. U.S. intelligence agencies will spend almost anything to sort through oceans of information in the hopes of finding Osama bin Laden. And large pharmaceutical companies will surely pony up for special software to track the volumes and volumes of published research.
But for the vast majority of companies and employees, a general-purpose search tool that is inexpensive and easy to use, like Google, is good enough. Google is taking a path similar to one previously traveled by many other successful companies. Intuit Inc., for example, started with Quicken, an easy-to-use program to help people manage their personal finances. When Intuit found that many small-business owners were adopting Quicken for their businesses, the company designed QuickBooks, a simple-to-use accounting package. QuickBooks now dominates the small-business accounting market.
Time and again, IT providers have succeeded by following this simple approach: Build products that meet the needs of 80 percent of the market 80 percent of the time; sell a lot of them; invest the money in R&D and continually drive the technology up and the price down. This is exactly what is happening in the computer server market today, as low-cost servers built on cheap microprocessors and cheap memory for the mass market whittle away at high-priced specialized servers designed for corporate users.
Google is following the same strategy. It is using technology developed for the consumer world and bringing it to the corporate world. The profits it makes from its advertising business are being used to hire some of the world's leading experts in the field, and to buy other companies. In April, Google bought Applied Semantics Inc., a leader in what's called text categorization, which involves creating a "thesaurus" of words and phrases that makes it easier to find related information. Google takes all of this sophisticated technology, applies it to solving big problems that affect a large number of customers, and then masks it with an easy-to-use interface.
Google isn't the only company following the 80/80 rule. Salesforce.com Inc. has developed customer relationship management software that is easier to use, easier to support and less expensive to buy and install than traditional CRM software. It may not have as many little-used features as the CRM software from Siebel Systems Inc., but for many companies it is good enough. Don't be surprised to see this same approach take off with other enterprise applications. The concept of utility computing is yet another example of the 80/80 rule, and there will be others yet to come. That should be music to the ears of CIOsat least 80 percent of them.
Eric Nee, a longtime observer of Silicon Valley, has served in a variety of editorial positions at Forbes, Fortune and Upside magazines. His next column will appear in December. Please send comments and questions on this column to email@example.com.