How BI Buying Habits Are Changing
On the surface, last year seemed like a relatively quiet one in the business intelligence (BI) space -- and with good reason.
In 2007, the BI industry packed a decade's worth of tumult into a single year, shedding its biggest and best-known independent players and bidding adieu to several smaller ones (OutlookSoft, Cartesis, Inxight, Spotfire).
Looks can and typically are deceiving. In 2008, shock absorption in the BI segment was the rule: vendors and customers alike carefully surveyed and explored new strategies or vendor commitments. Fast-forward to 2009, the BI industry as a whole is still trying to process the upheaval of 2007, and as a result, many customers are now adjusting -- in some cases drastically -- their buying and deployment habits.
The acquisition wave of 2007 consolidated BI power in a foursome of heavyweights -- namely, IBM Corp., Oracle Corp., SAP AG, and Microsoft.
With so much best-of-breed functionality concentrated in comparatively few hands -- IBM, Oracle, and SAP acquired BI vendors that had themselves picked up dozens of independent players -- it's no surprise that an increasing number of BI buyers now evince a preference for products from these four players, with good reason. IBM, Microsoft Corp., Oracle, and SAP worked to reposition themselves as purveyors of one-stop BI and performance management (PM) platforms -- with a catch. Oracle's and SAP's come in the form of (what's touted as) tight, out-of-the-box integration with their huge (and hugely popular) ERP stacks. For IBM, it's more an issue of trumpeting a turn-key, out-of-the-box -- and increasingly industry-specific -- BI, PM, and DW infrastructure. Microsoft pitches both its homogeneous Win32/Win64 stack -- its platform runs the gamut from back-end servers and front-end client software to developer tools and operational applications -- and its enormous popularity among developers.
The lesson is the same, the big players say: buyers increasingly want an all-in-one BI and PM platform that's designed to get the most out of their operational applications. To a degree, industry watchers say, that's exactly how a growing number of BI buyers are behaving.
"In 2008, BI platform investment decisions became tethered more closely to strategic sourcing and stack-led factors, and more influenced by organizational relationships with application and infrastructure vendors than before," write James Richardson, Kurt Schlegel, Rita Sallam, and Bill Hostman in Gartner Inc.'s newest BI Magic Quadrant report, issued last month.
Bifurcated Buying Behavior
That doesn't leave BI pure-plays out in the cold, of course. The independent BI segment comprises a shrinking but still teeming pool. The Gartner quartet effectively acknowledged as much, noting: "there clearly remains a demand for independent BI platforms" and citing a "bifurcation" -- namely, between one-stop BI and PM shops and independent tools -- in the buying preferences of BI customers.
"There are … firms that see their BI platform as an extension of their enterprise middleware, and require the platform to fit into more heterogeneous data and application sources" just as there are "those with an inclination for pre-integration of a BI platform into a stack of data and application sources from a single vendor," says the Gartner quartet.
BI industry veteran Cindi Howson -- founder of BIScorecard.com, a contributor to TDWI, and leader of the in-depth BI tool "bake-offs" at TDWI's quarterly conferences -- agrees that all-in-one BI, particularly when yoked to other value adds (e.g., highly-touted analytic applications, a huge and loyal installed-base, or vaunted services/middleware plumbing), does have its advantages.
"I am seeing Oracle BI gaining momentum because of the analytic apps, which are prebuilt integration with [Oracle] E-Business [Suite] and PeopleSoft and Seibel. I don't see them getting their foot in the door because of the [Oracle] database," she observes.
Databases, in particular, don't seem to have much, if any, account-control sway, Howson reports. "SAP has a lot of account control in SAP shops that makes up-selling to Business Objects possible. With IBM, it seems the WebSphere and consulting services bring influence." she says.
"Customers that are only using DB2 -- so that's all that IBM is in the account -- don't seem to be looking at Cognos in a new light. So again, it really depends who has strong account control, if it gives the BI team and PM team any leverage."
For the BI independents, Howson says, success -- even in the face of an emerging preference for all-in-one BI -- is largely a question of articulating a compelling vision.
"I continue to believe that the ones who differentiate and articulate their unique selling point well are the ones who are continuing to do well," she comments. She points to the success of SAS Institute Inc. -- in addition to its independence, the company trumpets best-in-class analytic and statistical analysis expertise, vaunted data integration, and data quality capabilities -- as well as a strong MicroStrategy 9 release from MicroStrategy as two examples.
Buying Trends Resist Easy Characterization
Wayne Eckerson, director of TDWI Research, says BI buying behavior continues to resist easy characterization. The upshot being that both the one-stop and the BI independent models have good and bad points, such that buyer preference is largely a function of company strategy.
"[E]ven before the downturn, large companies were looking to cut costs by reducing the number of suppliers, systems, and disparate applications to support and to conform with compliance mandates regarding data and financial reporting," he points out. "This desire leads organizations to standardize their BI environments." The leaders make it easy to deliver all BI from a single vendor. "What could be more standard than that? Plus, these guys tout end-to-end integration of operations and analytics and everything in between."
Other buyers might prefer standardization of another kind, according to Eckerson. "At the same time, the pureplays can benefit from standardization as well. Most organizations recognize that you need to provide the right tool for the job and that standardizing on a single vendor for everything may saddle you with less-than-optimal toolsets," he explains, "and most recognize that the total integration the Big Four market isn't always reality. So many companies standardize on different toolsets for different tasks and perform the integration themselves -- or lean on their vendors to improve their interoperability."
Other opportunities abound, according to Eckerson and other experts. Gartner, for example, recently touted the return of "workgroup BI," thanks to the efforts of upstart vendors such as QlikTech, Pentaho, and others. Once established vendors started to "focus most of their resources on delivering enterprisewide BI solutions," upstarts were able to step into the void, delivering "solutions for personal and workgroup BI requirements using disruptive technology" such as in-memory analytics. "It seems likely that despite the inherent risk of silo-perpetuation, workgroup BI's light-touch nature will prove attractive in a recession," Richardson, Schlegel, Sallam, and Hostman write.
Eckerson, for his part, concurs, citing -- again -- the attractiveness of best-of-breed functionality, in addition to convenience and low-cost, as a key selling point.
"Another stream is departmental purchasing, which still is alive and well. Here, best of breed tends to dominate since vendors who play here are specialized, new, hungry, or all three. Good value for the price with advanced technology free [that's] from the architectural burdens of the bigger players -- and even some of the best of breed [vendors]."
Eckerson adds that "a lot of these purchases are for power users not the entire organization." Departmental BI doesn't have to involve silos, much less a lack of standardization, he points out.
"I would definitely recommend that organizations standardize on tools and reports for casual users managing well-known processes. But allow power users to use their tools of choice," he concludes. "Would you want to restrict your carpenter to a hammer and a saw when renovating your house? No. You want him to come with a truck full of specialized tools geared to the variety of tasks he'll need to undertake to complete the job well."