In-Depth
In Tough Economy, Vendors Stress Value
BI vendors have remarkably self-serving views on how and where your company should direct its IT dollars in these tough economic times.
Despite the global economic crisis, there's still plenty optimism in the business intelligence (BI) market. BI vendors claim that the BI, performance management (PM), and data warehousing (DW) segments are insulated from, if not completely impervious to, economic tumult.
Their reasoning certainly seems sound. Yes, they concede, businesses do tend to retrench when the economic troubles hits the fan. Although they stress that no technology segment is downturn-proof, BI enjoys a more immediate association with ROI (or ROI-generating insight) than do other technologies, making it likely to be an area where businesses increase their spending in an economic downturn.
Of course, no one knows just how much companies will boost their BI spending levels. Business intelligence is a big category, encompassing everything from reporting and analysis tools to DW (ETL, data integration, data quality, and specific initiatives such as customer data integration or product data integration) to PM (which includes budgeting, planning, and forecasting, plus scorecarding and other metrics) to other still-emerging disciplines. In a downturn or contraction, the economic forces that shape the "BI spending" category often means money spent in one area (e.g., analytic front-end tooling) is money siphoned away from another segment (e.g., master data management).
Not surprisingly, many BI players are predicting troublesome times -- either for their competitors or for vendors outside their own core markets. Consider the analytic tools space, where several players have talked up their own prospects -- businesses tend to invest disproportionately in insight-generating analytic technologies during periods of economic uncertainty, they claim -- and downplayed vendors in other segments.
"Every company on earth struggles with one essential challenge. They have data and information in different systems -- ERP, CRM, sometimes it's even in an Excel worksheet on the desktop. What they're struggling with is a way for end users to be able to visualize and consume that data to be able to answer business questions. Traditionally, the path between that data and that insight has been months, if not years. The prevailing wisdom has been to spend millions of dollars deploying traditional business intelligence systems, and we've come in and said, 'No, we can do that in a couple of days or a week,'" says Anthony Deighton, senior vice-president of marketing with BI pure-play QlikTech.
"As the economy is in trouble, a lot of our customers are looking at the IT projects that they have out there and are saying, 'Which one of these is going to deliver value quickly? Which one of these is going to be deployed quickly? [Which of these is] something that people can use?' Long, multi-month -- what I like to call 'intergalactic' -- IT projects are falling on hard times."
For Deighton, this calculus contravenes the option of additional big-ticket BI or infrastructure (DI, DW) spending. QlikTech promises both turnkey insight and infrastructure. QlikTech competitor Cognos, an IBM Corp. company, champions a different kind of calculus -- one that emphasizes the importance of both infrastructure plumbing and analytic front-end tools that can get the most out of a best-laid DW infrastructure. IBM and Cognos talk of other wrinkles, chiefly concerning the value -- important during an economic boom; a necessity during a contraction -- of industry-specific solutions (front-end tools or plumbing) and services.
Not surprisingly, this vision dovetails with IBM's strengths in the BI space: Big Blue markets best-in-class BI and PM tooling (courtesy of its Cognos assets), best-in-class DI plumbing (via its WebSphere DataStage and QualityStage assets, its DataMirror replication technologies, and its data federation tooling), and its IBM Global Services (IGS) and (on the industry-specific front) IBM Business Services (IBS) arms.
"During this time of turmoil in the … industry, you need to leverage an [infrastructure] investment that was probably several million dollars to now actually help you reduce costs further, increase your revenues to keep the customers that are still out there shopping … and of course to continue to attract other customers or maybe even take customers away from some of your competitors who aren't doing as well," says Jim Zalle, a retail business intelligence consultant with IBM Corp.'s Global Business Services unit.
Zalle has to walk a fine line, of course, as IBM is a big player in the DI infrastructure business. Consequently, he's careful to stress the importance of enabling infrastructure plumbing, which -- when paired with top-notch analytic front-end tools (and the industry-specific services expertise to tie it all together) -- can help companies weather the economic storm.
Open source BI vendors are also optimistic about their prospects in the economic crunch (see http://www.tdwi.org/News/display.aspx?ID=9207). These players contend the open source value proposition -- which claims a lower-cost (on average) product, improved flexibility, a high degree of customizability, and built-in investment protection (thanks to the open source model) -- is very attractive. Businesses aren't simply going to cancel costly -- but potentially high-value -- BI or DI projects, proponents say. Instead, they'll be on the lookout for products or technologies that enable them to maintain their existing status quo (and, where applicable, introduce additional applications or services) while helping them cut costs.
That's just the tack taken by open source software (OSS) DI specialist Talend, which claims that businesses have so far pumped enormous sums of money into pricey enterprise information integration efforts.
"[In Talend], you have someone who's giving you not only a solution that's flexible and diversified, but you have access to the source code, too. You don't have to sign an escrow [agreement] with us. You're not worried about what's going to happen if we get acquired, or if [in the current financial climate] we disappear," said Vincent Pineau, general manager for the Americas with Talend, in an interview late last year.
Added Pineau: "We come in at a fraction of the price of what you would typically pay in maintenance [for competitive tools], but what's more important in this [economic climate] … would be the flexibility of the licensing [options]."
DI stalwart Informatica Corp., too, stresses the importance of infrastructure spending, which officials say is as important now as it was 24 months ago. This isn't surprising, given Informatica's huge stake in the DI integration segment. But it's precisely in this respect -- the importance of infrastructure spending -- that Adam Wilson, vice-president of product management and marketing with Informatica, takes aim at the OSS community. Rather than hitching their wagons to "here today, gone tomorrow" OSS vendors, Wilson maintains, businesses are instead (re)discovering the importance of vendor longevity.
"I also see that in this economy it's going to be very interesting to see what happens to some of the open source guys. We're hearing from our customers that getting funding for projects is tougher, and any project that they're going to fund is going to be of incredible strategic importance," he says. "If that's the case then [customers are] going to need to bet on infrastructure that they know is battle-tested, so to take a chance on an open source vendor that's only been out in the market for a couple of years, or a [software as a service] vendor that doesn't have a lot of strong enterprise references -- that's a risk they're not willing to take. Some of these [customers are] starting to have déjà vu from 2000 or 2001, where they had spent a lot of money on vendors that just disappeared, and they were left trying to migrate systems that just didn't have what they needed."