The Facebook piñata is ready to burst

Jay Yarrow at Business Insider featured Facebook on Tuesday's CHART OF THE DAY. It's not even a week and the stock has already dropped 18% from its IPO price, "losing over $15 billion in market cap". The Facebook IPO hype went into overdrive, and without a product to sell, I wonder what were investors thinking?

These are smart people, so the only logical explanation is speculation; this seems to be the current modus operandi on Wall Street. CNN is reporting today that a group of investors are suing Facebook, Mark Zuckerberg and Morgan Stanley, accusing them of withholding information about Facebook's IPO.

We have yet to see how this story will unfold, but there is no question in my mind that the overhype and speculation were part of the game investors were playing. Henry Blodget at Business Insider offers a thorough analysis about what Facebook is actually worth; if you want to save the link for later, Blodget places a "fair price for Facebook ... between $16-$24".

Advertising is not making money for Facebook and their best option for generating revenue is "monetizing" subscribers. This sounds interesting until you consider the can of worms it opens up for privacy issues; this is what makes Facebook valuable but it can also make users turn away from Facebook.

This seems to me the most likely scenario, and I think this will happen sooner rather than later. A few people will become insanely rich, many others will lose tons of money, and subscribers will move on to the net big thing.

In my opinion, Facebook is poised to become Wall Street's latest and largest casualty, its bubble seems ready to explode faster than a piñata during posada season. We probably won't even have to wait for the first posada in mid-December for this.

Update on Wednesday, May 23, 2012 at 5:19PM by Raul

Aswath Damodaran, Professor of Finance at NYU, wrote a piece today for Forbes in which he states the following: "Yes, Facebook can be valued. Facebook is a company with tremendous potential, with two key drivers of value: an immense user base and unparalleled information about these users. The question is whether they can convert this potential into profits, and if so, how quickly."

Translation: how to monetize subscriber base, effectively, to generate revenues that will make investors happy.

Bottom line: Facebook IPO overhype, stock price overvalued, still "not a buy".

Read Damodaran's piece on Forbes: "Facebook's IPO: Thoughts On Momentum, Pricing And Valuation (It's Still No Buy)".

EMC Moves Enterprise, Cloud, Services Business To The Channel

Access Governance or Intelligent Identity Management?

I recently wrote about how innovation coming from companies identified as 'visionaries' or 'challengers' in the Gartner Magic Quadrant can redefine entire industry segments (see Top Trends in Enterprise Software in 2012). Aveksa, SailPoint, TIBCO Spotfire and Tableau are good examples of companies that have changed the conversation in the industry segment they compete in.

Aveksa was included in the 'leaders' quadrant on the latest report for Identity and Access Governance (December 2011), but in the years prior to this, the company worked dilligently to support their vision and change the way the industry looks at IAG, from managing access to a more comprehensive approach focused on supporting business operations.

Prior to releasing the Magic Quadrant report for IAG in December 2011, Gartner published a report looking at how this segment has shifted to a governance based approach (Identity and Access Governance: Definition and Market, Gartner, July 2011).

Forrester also noted the innovations coming from Aveksa ("The Forrester Wave: Role Management And Access Recertification, Q3 2011"), highlighting the fact that their platform was designed with access recertification in mind.

The response from the big industry players has been to reposition their solution in the IAG space as the new Intelligent Identity Management.

So is the future in Access Governance or Intelligent Identity Management? Both are completely different approaches, and it can get confusing when evaluating which vendor best fits the needs of the enterprise.

I don't believe that the concept of Intelligent Identity Management is a matter of semantics or marketing hype. However, there has been a profound shift in the industry and this will only extend the product life cycle for a couple more years; as market requirements continue to evolve, the gap will be more noticeable. 

Identity Management is reaching a mature stage and becoming a commodified solution, like User Provisioning. This does not mean it will become obsolete anytime soon, but eventually it will be insufficient to address the evolving requirements of the enterprise.

It's precisely because these solutions work well that we can now move to a different level in enterprise security.

NOTE: This is by no means an attempt to undermine the value of the reports from Gartner and Forrester. These reports provide a valuable framework for the enterprise to evaluate vendors; my point with these posts is to show how innovations introduced by up and coming companies can redefine an entire industry.

Top Trends in Enterprise Software in 2012

NOTE: This is not meant as a comprehensive analysis of the enterprise software industry, but rather my thoughts on major trends shaping the industry based on specific segments of my interest and expertise: Business Intelligence, Data Analytics, Knowledge Management, Collaboration and Security Management.

Some of these segments, like Security Management, are more mature, while others, like Collaboration, are still emerging and rapidly evolving. There are, however, common elements that in my opinion, reflect major trends; these are my top three to watch in 2012: 

• Ever-increasing data volumes are fast becoming a major factor driving market requirements. This is not only relevant for storage, backup and recovery applications, but increasingly for Security, Access Governance and Analytics. The challenge for 2012 is NOT related to handling data -technologies to manage and store large amounts of data have been around for a while now- but rather with extracting value from this data in real time. This will impact Business Intelligence and Analytics applications (what to do with the data) as well as Security and Governance (who should have access to this data).
• Enterprise software is shifting from IT to business user-centric applications. Access to data (Identity Management, Access Governance) and working with data (BI, Analytics, Reporting) is a burden to IT that is increasingly growing in complexity. Shifting the responsibility and accountability to business managers -the people that actually know who should have access to data and what to do with it- is more efficient, simplifies business processes and reduces risks. This is more than just  providing a better user interface, it is about designing business user-centric applications that respond to structural changes in the business operation.
• 'Challengers' and 'visionaries' will increasingly influence and redefine the industry. Innovation can come from new players or from established industry leaders, but the companies that are increasingly changing the way we do business tend to be newcomers identified in Gartner's Magic Quadrant as 'visionaries' and in some cases, as 'challengers'. Working their way into the major leagues is an accomplishment by itself, but the way some of these industry outliers are redefining the industry is even more relevant. Data Analytics, Security Management and Collaboration are all good examples of this; companies like Gomez/Compuware, Jive, Aveksa, SailPoint, Tableau and TIBCO Spotfire are changing the conversation in their respective segments and the big players are taking notice. How these companies are redefining the industry is a topic I will address in a separate post.
• Data Analytics and Visualization will take center stage. Analytics and Visualization are topics I am passionate about but this is not why I included them in my list of top trends for 2012 :-) Visual analytics can address the challenges that business managers face with increasingly complex and growing data volumes, the need for real time analysis and a shift from IT to business user centric applications. This is a topic I will also explore in a separate post.

There are other trends related to Security, Governance, Compliance and Collaboration that I will address separately. I have grouped the above together because in my opinion, they are shaping the enterprise software industry and reflect changes in the way IT supports the business operation and the way in which business managers operate with increased empowerment and accountability.

The companies that respond to these changes will be the ones redefining the industry and leading the way; with a clear vision and innovating with a purpose, rather than getting lost in the marketing fluff and swallowed by the hype cycle.

Update on Monday, April 9, 2012 at 5:19PM by Raul

I have received a few messages and tweets asking me why I didn't include enterprise mobility in my list of trends for 2012, especially since that's a topic I cover regularly. The reason is that I see enterprise mobility as an element of a major trend related to 'openness', together with social collaboration and social networking. More on this topic coming soon.

I also received messages regarding my thoughts on the magic quadrant 'visionaries' and 'challengers' and their impact in the competitive landscape. A good example is the market consolidation in the Security Information and Event Management (SIEM) segment; the Gartner Magic Quadrant Report lists HP/ArcSight, IBM/Q1 Labs, McAfee/NitroSecurity and Attachmate/Novell in the 'leaders' quadrant, all of these are the result of a merger/acquisition where the smaller player was already positioned as a 'leader'.

Another interesting example is the Gartner Magic Quadrant Report for Business Intelligence Platforms, with Tableau and TIBCO Spotfire in the 'challengers' quadrant, competing with the likes of IBM, SAP, Oracle and Microsoft, all in the 'leaders' quadrant. These 'challengers' are redefining the industry, and this will eventually create, in my opinion, a new taxonomy that will reflect a redefinition of this industry segment.

To BYOD or not to BYOD, that is NOT the question

There is a tendency to see consumerization and security as opposites, but a higher degree of flexibility in the workplace does not necessarily translate into increased security risks. The increased complexity of the IT environment can be managed more effectively when adequate governance policies and practices are in place and the organization focuses on managing and controlling consumerization, instead of fighting the presence of employee-owned devices in the workplace.

Please click the link to read my new guest blog post on Partnerpedia, published 01/19/2012.