Why Microsoft and Oracle Want to Be Your One-Stop Shop for BI

What IBM should do to prevent their BI market dominance

Microsoft Corp. and Oracle Corp. both want your business intelligence (BI) dollars, and they don’t care who knows it. In fact, both vendors recently made moves that—to varying degrees—put them at odds with their partners in the broader BI tools space. This begs an important question. They already own the database tier and have been steadily building BI capabilities into their RDBMSes for nearly a decade, so can BI market dominance be far behind?

Oracle Corp. last month announced its first-ever discrete BI offering, Oracle Business Intelligence Suite. Oracle didn’t pull its new BI “suite” from thin air, of course: Last year, the database giant announced plans to decouple its former Oracle Daily Business Intelligence technology from the Oracle Application Server. Then, in late September, Oracle acquired the former Siebel Systems Inc., which—in addition to market-leading CRM expertise—gave it credible analytic capabilities.

Oracle’s strategy in marketing its new Business Intelligence Suite keys less on the BI strengths of the offering (which, in addition to the general and industry-specific analytics Siebel brings to the table, include data integration, data mining and analysis, and reporting capabilities) than on the enterprise applications expertise of its PeopleSoft, J.D. Edwards, and Siebel components.

Officials would have prospective customers believe that Oracle—and not Business Objects SA, Cognos Inc., SAS Institute Inc., or any other BI pure play, for that matter—is best equipped to service their BI needs because Oracle, more than these vendors (or any other vendor, such as SAP AG or IBM Corp., for example) understands enterprise applications.

“We understand business process automation because we’re an applications vendor. We understand how to automate business flows across an organization. We understand [these problems] in ways that a pure-play BI vendor doesn’t understand, because they don’t necessarily own any of the business processes,” says Jagdish Mirani, senior director of applications marketing with Oracle. “Across the board, in terms of applications and platform, we are in a great position to take those forward and connect those.”

Not that Oracle is downplaying the BI strengths of its new suite, however.

“What we really announced as the vision and philosophy for pulling all of this together is that Oracle Business Intelligence Suite is the most comprehensive [offering], filled with best-of-breed components; that it’s hot-pluggable and open to all environments, whether those be various enterprise applications, or installed databases and data warehouses, or existing BI tools or security environment—really anything that is available in our customers’ IT architectures,” says Paul Rodwick, vice-president of BI marketing with Oracle.

Oracle’s suite is available in three flavors, although it’s all but certain that two of these—Oracle Business Intelligence Suite Standard Edition One and Oracle Business Intelligence Suite Enterprise Edition—will be considerably more popular than the low-end Oracle Business Intelligence Standard Edition, which includes Siebel Analytics and a limited version of Oracle’s database and is limited to two CPUs.

Enterprise Edition is a high-end entry that includes Siebel Analytics and Microsoft Office support. It should be a no-brainer for most large customers, largely because the middle-tier offering, Standard Edition, does not include Siebel Analytics. Oracle, it would seem, is asking most customers to pony up the cash for the Enterprise Edition and its bundled Siebel Analytics.

Microsoft’s Come-to-BI Moment

Microsoft, so often charged with mimicking the innovations of others, kicked things off in late 1998, when it delivered a SQL Server 7.0 database that included integrated OLAP, data mining, and data integration (called extraction, transformation, and loading, or ETL, in BI-speak) capabilities. Microsoft has refined its SQL Server-based BI stack over the last eight years, introducing a reporting component (Reporting Services) in early 2004 and just last November shipping a revitalized SQL Server 2005 database.

Until earlier this month, however, Redmond had not explicitly ventured into the BI front-end tools space. That changed when Microsoft acquired long-time partner ProClarity Corp., one of two prominent ISVs that marketed client tool complements for its SQL Server BI stack (the other is Panorama Software Inc.).

Spin as it might, Microsoft will be hard pressed to refute the allegation that it now has designs beyond the server-based BI market in which it first rose to prominence. “Reporting Services [and] Report Designer … were only slight threats to other vendors. But now Microsoft has a product that has a chance against larger BI platforms, so vendors of those platforms cannot help but see Microsoft as a competitor,” argues Philip Russom, senior manager of research and services with The Data Warehousing Institute (TDWI).

“Expect to see more deterioration in dwindling partnerships between Microsoft and leading BI vendors. Even so, ‘co-opetition’ must continue, since BI vendors still have to support SQL Server and its many BI and data warehousing functions, and Microsoft must continue to roll out more BI/DW functions, which all tools leverage.”

ProClarity gives Microsoft a robust, SQL Server-oriented client environment, complete with OLAP viewing, dashboarding, and data visualization capabilities. Coupled with SQL Server’s increasingly compelling back-end capabilities—Integration Services (Microsoft’s would-be enterprise ETL solution), Analysis Services (Microsoft’s data mining and OLAP solution), and Reporting Services (Microsoft’s report authoring, distribution, and life cycle management solution)—the addition of ProClarity’s front-end tools lets Microsoft credibly tout a more complete BI stack than just about any other vendor—except Oracle, of course.

A Tale of Two Strategies

Oracle and Microsoft already own the database tier. They’ve successfully pursued “stealth BI” strategies in which they’ve seeded the market with their own homegrown BI capabilities. In this respect, then, their eventual expansion into—and dominance of—the broader BI market might seem like a foregone conclusion. Not necessarily. In fact, industry watchers are divided over the potential efficacy Oracle’s and Microsoft’s respective BI power plays.

Many see Oracle’s BI suite gambit as analogous to what historian and cultural critic Daniel Boorstin famously called a “pseudo event”—in this case, as an announcement that’s more hype than substance.

Mark Madsen, a decision support manager with online retailer Harry & David and a member of TDWI’s Research Collaborative, bemoans Oracle’s historically lackluster execution in the BI tools segment. “[Oracle’s] track record on the apps side of the business with reporting and analysis has been relatively poor. Siebel could change that, but I'm not so sure,” he says. “I don't know how the two company cultures compare. Oracle's internal development model doesn't support customer-focused efforts very well … [at least] non-technical customers.”

Cindi Howson, a principal with BIScorecard.com, and (like Madsen) a member of TDWI’s Research Collaborative, likewise questions Oracle’s ability to execute. “I have seen some improvement in their marketing efforts, but relative to pure-play vendors and to Microsoft, it's marginal at best. For Oracle, the money is not in BI. So frankly, they don't seem to treat it as important from a resources point of view or product capability,” she points out.

Howson, on the other hand, sees Microsoft’s ProClarity gambit as the anti-pseudo-event analogue to Oracle’s BI suite announcement. “I think it's great for Microsoft and for their customers and [sends] a very strong signal that they are serious about the BI market,” she comments, adding that “this would give me more pause than Oracle's announcement last [month].”

Similarly, Madsen—who is skeptical about the long-term effectiveness of Oracle’s BI thrust—sees a more concrete upside to Microsoft’s move. “It looks to me like this positions them to compete better in the OLAP and reporting space.” Oracle veteran Mike Schiff, a principal with data warehousing consultancy MAS Strategies (and another TDWI Research Collaborator), sees scads of synergy in the acquisition. “ProClarity has been a loyal Microsoft supporter for many years, ever since it abandoned its former proprietary database in favor of Microsoft SQL Server, in particular SQL Server Analysis Services,” he points out. “Given the two companies’ strong and mutually rewarding partnership, the acquisition makes perfect sense and was long overdue, especially as Microsoft acquired Maximal, a ProClarity partner, in June of 2001.”

What Should Big Blue Do?

The elephant in the closet here is IBM Corp. Big Blue has pursued a middleware-centric BI strategy that has caused it to embark upon a host of data integration-related adventures (the acquisitions of Venetica and Ascential, to name just two) and divest itself of potentially competitive BI technologies (the former DB2 OLAP Server, based on Hyperion’s Essbase OLAP engine, which Big Blue has decided to stop supporting). Even though IBM has made a few putatively non-middleware BI acquisitions (such as the former AlphaBlox), it has nevertheless positioned these moves as complementary to its BI partners, which include Cognos, Hyperion Solutions Corp., MicroStrategy Inc., SAS, and others.

That being said, some industry watchers feel that as a result of Oracle’s (and, to a lesser extent, Microsoft’s) BI power grabs, IBM needs to make an explicit BI power grab of its own. “We also think that IBM should not wait much longer to finalize its recently expanded partnership with [Cognos], as the price IBM would have to pay for the company could increase as [Cognos] fixes its recent operational issues,” writes Michael Nemeroff, a senior vice-president and financial analyst with Wedbush Morgan Securities.

Some BI industry watchers, on the other hand, feel an overt BI power grab—such as the acquisition of Cognos, pace Nemeroff—would have negative consequences for IBM. “As far as a big ERP or database vendor buying Hyperion, Cognos, [Business Objects], or [MicroStrategy]: Oracle already made its BI acquisition, so it's out of the picture … [and] I doubt IBM will reverse the strategy that revived its fortunes and start competing with its application partners,” comments Wayne Eckerson, director of research and services for TDWI.