Big vendors get wise to Business Intelligence

Business Intelligence is now high up on the list of corporate IT priorities but a host of BI acquisitions by major IT vendors last year appears to be changing many aspects of the BI landscape in 2008 – so what will this mean for your business?..

As covered in our last issue, business intelligence (BI) is the process of increasing an organisation’s competitive advantage by making intelligent use of its available data in decision making.

Over the past few years BI has evolved from being a niche activity, understood and controlled by only a few specialists within the organisation, to a mainstream, more easily accessible tool.

Its potential to offer businesses a real competitive edge in the market has seen it rise up the purchasing list to be near the top of corporate IT requirements.

While in the past BI solutions have been the domain of specialist best-of-breed vendors, increased corporate interest has attracted the attention of the world’s big name IT suppliers who have snatched up BI providers in a bid to both expand their client lists and provide their existing customer base with integrated offers that include BI functionality.

The upshot of the corporate maneuvers of the past year has been a significant consolidation in the BI space.

Early in 2007 Oracle snapped up performance management software specialist Hyperion Solutions, then major ERP vendor SAP took a walk on the wildside (unlike Oracle, SAP had not followed the ‘growth by acquisition’ philosophy prior to this) and bought long established BI specialist Business Objects - while IBM acquired another big BI name, it’s long time partner Cognos.

So what do these mergers mean for organisations contemplating the purchase of a BI solution?

Although theories abound as to the reasons for the purchases, the most likely one is that the ERP suite vendors have struggled to deliver the kind of real-time, actionable BI required in today’s fast paced business environment.

Although their ERP systems were able to record terabytes of organisational data, all that information was next to useless if management couldn’t easily gain actionable insights into their business – the kind of insights that best-of-breed BI vendors have been delivering for years.

Though they might not say so in so many words, IBM appears to acknowledge this lack of real-time capacity in many BI solutions, and a desire to improve BI’s usability.

“Customers are demanding complete solutions, not piece parts, says Steve Mills, senior vice of IBM Software Group, “to enable realtime decision making. Integrating Cognos, (the 23rd IBM acquisition in support of its Information on Demand strategy), will enable new business insights to be delivered to a broader set of people across an organisation, beyond the traditional users of business intelligence.”

So as the dust settles on these acquisitions in 2008, the kick back for customers is likely to be that they’re offered sweeter deals from the big vendors, who can now offer more easily integrated solutions to organisations shopping for a BI component to bolt onto their existing Oracle or SAP ERP and data assets. Or even customers with a totally non-aligned ERP suite.

Oracle, in fact, has not minced words about wanting to compete as a best of breed BI provider. In a release last year the company said “Oracle is...shifting our focus from offering a solution that works for Oracle-only environments towards offering a best-of-breed business intelligence product family that will work with heterogeneous information sources in an enterprise, both Oracle and non-Oracle.”

Implementers also point to the big vendors being more flexible in terms being ‘niche’ industry or ‘sector’ capable.

“The point of these acquisitions, I believe, is that the market is very much heading towards vendors being able to offer end-to-end solutions,” says Richard King, BI and ERP practice principal for HP Consulting and Integration. King says vendors such as Oracle and SAP are gearing up to offer customers integrated solutions that are either “functionally aligned” – in other words provide a depth of intelligence within areas of the business such as HR or finance – or are “vertically aligned,” meaning they offer a deep solution specific to meeting the needs of organisations within defined industries, such as the telecommunications or manufacturing sectors. “Most medium to large organisations have their data in a variety of disparate systems. It’s unlikely to be in one ERP,” says King.

“So a lot of effort goes into creating a data warehouse and integrating that data into one store. It’s been quite difficult until now for any one vendor to offer a one-size-fits-all solution mainly because there have been so many source systems, so it’s been impossible to offer a solution that meets all the requirements. But I think as BI has matured it’s really consolidating to the point where it’s focused on solutions for verticals or horizontals.” He says this type of consolidation has the potential to provide organisations with strong productivity gains.

Best-of-breed or system agnostic?
Despite these potential productivity gains, however, independent BI vendors say their specialist best-of-breed solutions offer customers a powerful alternative to the end-to-end propositions being worked up by the majors. One such independent BI vendor is iQ4bis.

“The way we look at these acquisitions [by Oracle, SAP, etc.] is that they have actually helped independent companies like us,” says Sunesh Samarasinghe, iQ4bis’s Asia-Pacific general manager. “Because we are ERP-agnostic we have no favourites. In the past the resellers of those recently acquired BI solutions could have said that too but now they can’t because there are clearly-defined alliances.”

Samarasinghe also argues that iQ4bis’s sole focus on BI is reflected in the quality of the solution.

“There were times when vendors used to try and do everything for everybody, but as independent business intelligence providers we have said we don’t build ERP solutions. There are very good

ERP solutions out there. What we do, we do very well and that’s all we do. So to that extent these acquisitions have helped us tremendously as independents.”

Sebastien Marotte, Oracle’s Asia-Pacific vice president of enterprise performance management and BI, says the consolidation currently happening in the BI space has similarities to the trend across the ERP market over the past decade, which has seen a reduction in the number of major vendors.

“What’s happening right now,” he says, “because of the diversity of players that we had in the past, is that CIOs are a bit tired of having too many technologies across the board. So they really want to lower the cost of ownership and they want to base their BI investment on one single platform, to reduce the cost of implementation, the cost of training and to roll out the solutions faster, especially since companies are doing a lot of acquisitions. They want their BI investment to be pluggable into their existing systems, so the less technologies they have the better.”

Marotte says BI’s popularity relates to organisations’ growing demand for more visibility into their data. As markets become more competitive, accurate planning and forecasting is becoming both more important and more complex.

“We are seeing a lot more new applications around forecasting, planning and budgeting in addition to the traditional BI applications, which were more around monitoring or measuring activity.”

Marotte says the Hyperion acquisition was about Oracle wanting to provide the best integrated ERP/BI solution possible and the purchase is paying off with existing Oracle customers now extending their investment into BI.

However, the goal was also to target Hyperion at organisations who were not currently Oracle customers but were looking for a BI solution.

He says moving quickly to put a product roadmap setting out Oracle’s plans for integrating Hyperion into its business, in front of customers, had been a key factor in ensuring the success of the acquisition, because customers wanted a clear view and certainty around future product development.

HP’s King agrees that the integrated ERP/BI offerings from the larger vendors are likely to offer cost advantages to customers. “The large vendors can probably come up with a more competitive licensing model,” he says.

“There’s also pre-built integration so the speed to implement will go down and the implementation costs will go down. And you would imagine – if you’re implementing a reasonably vanilla solution – that your support costs would be lower as well. That’s what this market consolidation will probably help achieve in the long run.”

Another interesting element in the evolving BI mix is Microsoft’s increased push into this market. Recent Microsoft Dynamics launches have positioned the company as offering a stronger end-to-end BI solution meaning it has the potential to capture a larger share of the market over the next few years.

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