The Business Intelligence Blind Spot: Everyone Needs These Systems
May 30, 2022
I recall that a booth called “Business Blind Spots” identified a number of behaviors which contribute to business missteps. Staff, preconceived notions, market receptivity, etc. were among the points I recall.
I want to toss one more blind spot into the raging fire of burned cash, torched reputations, and incinerated opportunities. I call this bling spot, “Everybody needs these systems.” Plug in your own “systems”; for example, software that manages several cloud accounts which are guaranteed to blow through budget assumptions with no easy way to control the rising expenses.
I read “Palantir Stock: Getting Desperate.” I think the write up has been riding the well-worn fire trail to a burning coal mine.
Palantir Technologies is when the charities, the razzle dazzle, and the jargon are stripped away, is a search and retrieval company. The idea is that a person looking for information about a bad actor, for instance, can plug in the name and see results.
Now this seems like a function which is readily available from many vendors. The twist for Palantir is that it positioned its search as one that would meet the needs of intelligence officers. The US government entity embracing Palantir’s software influenced the add-ons; for example, the ability to ingest certain types of content that only government agencies could acquire.
In order to make sales, the marketing engine of Palantir came up with the same type of “latest and greatest” verbiage that characterizes intelware (that’s software built around the specific needs of intelligence analysts). One example is importing proprietary file types. Another is keeping track of where a dataset came from, who fiddled with it, and what an authorized user did with the data when in search mode.
Over time, companies which serve government agencies have to choose one of three paths:
- Path 1 is to just do commercial work. Forget the intelligence market. A company which has moved in this direction is one you may not know anything about. It is LifeRaft. Look them up. Now the company does market and ad intelligence for commercial companies, ad agencies, and probably some non profit outfits.
- Path 2 is to just focus on government sales. An example of this type of outfit is BAE Systems which has software able to do Palantir type functions. I am not sure BAE Systems returns phone calls from a bank or real estate agency wanting some Detica goodness.
- Path 3 is to do both. The best example of this is Voyager Labs which does the LifeRaft type work and the intelligence and law enforcement work of outfits like Palantir.
Which is the right path?
From my point of view, a company selling intelware should stick to government clients, maintain a low profile, and keep systems and methods secret. LifeRaft told me, “Don’t even mention our firm at the 2022 National Cyber Crime Conference.” Why? Doing work for certain government agencies gives some commercial firms and their go-go decision makers the heebie jeebies. The fear comes from folks who are interacting with investigators, intelligence operatives, and analysts could say something that will create big time thunderstorms for the commercial company. Some businesses are not exactly paragons of behavior. This means that the purchase cycle is drawn out, excuses are made, concerns about confidentiality raised, and weirdness about the amount of training, customizing, and optimizing the intelware system requires. The result? Some pretty crazy attempts to sell the product and the resulting disconnect from promises of reality from the commercial sector and the inevitable gap. This type of “gap” created some interesting situations in the decade or so.
What about government sales? Unless a company is selling hardware, software, spare parts, training, and services governments a fickle. Sure, an intelware outfit like Palantir will get initial contracts. But the government agencies have roving eyes and will keep licensing, looking for the perfect solution to intel needs. What happens is that the software only vendor runs out of customers. Once a number of big agencies sign up, the US General Services Administration or the Defense Services Administration will start angling for a deal. Cut the fees or lose the contracts. This is bad news because expensive software takes time to sell to government customers who want a demo or a year of free or discounted use in order to figure out if the system actually works. The problem is that There are not that many government agencies in the free world to support the intelware companies hungry for allocated budget dollars. Stated another way, the intelware company has to get some contracts, make the software work, and forget about the hockey stick financial projections. The intelware vendors chase US allies, but there are vendors in those countries, and it may make more sense to license Trendalyze or Verint, not the Silicon Valley type outfit. Bad financial news? Yep.
Path three is to sell to anyone who wants the system. This is very, very difficult because the intelware system has to be fiddled with in order to meet the specific requirements of an organization. Chasing bad actors is one thing; figuring out what type of beverage a college student wants is another thing. Hanging over the commercial sales call is the concern about the government work, the government customers, and the government processes, which — once started — are tough to turn off.
This means that companies crafted for intelware users find that government sales slow down, commercial sales cycles take a long time and often end up at a dead end, and non government organizations don’t want or can’t pay big bucks for what is search software.
The market itself is changing. If you want to analyze tweets, hire a marketing agency and get rid of them once they have completed a project. Clean, tidy, easy. If a client has some Google grade programmers, download Maltego, license the $100 Hunchly, and spend some time looking at tools on GitHub. (Thank you, Microsoft, but do you know what’s on that service? I thought so.)
The cited article makes this point:
…the company must expand internationally. What better way to get new sales than to start fires and be the person to sell the smoke detectors? That is what Palantir’s software does, assess and analyze data for threats. It is a loose analogy but fitting. But why is Palantir in such desperate need of expansion to new governments and industries? It is because the only thing keeping the stock going is the revenue growth rate which has been so strong. The company has incurred losses every year of operation. It expects operating expenses to increase.
And what about international sales? Three points:
- There are vendors offering comparable or better systems so buying non-US may make economic and political sense
- The cost of closing deals internationally is — the last time I checked — two to three times the cost of selling from Chicago to US based customers
- The number of purchasers is not as large as one thinks? The US is the living embodiment of Parkinson’s Law and the Peter Principle. Other countries are not much better and they have less disposable cash.
Net net: The word desperate may be appropriate for Palantir Technologies. I don’t have a good set of options for the company: Too much hype, too much development cost, too much customizing and tuning and training, and too much nuke talk. Not helpful.
Stephen E Arnold, May 30, 2022
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