Major Data Warehousing Events of 2007 and Predictions for 2008
Consolidation wasn't the only trend to stir up BI this year. Michael Schiff takes a look at other key events this year, and explains what we should expect next year.
As 2007 draws to a close, it's time to look back at some of the major events of the year and speculate on what might occur in 2008. First, a look at this year's trends. Industry Consolidation
By anyone's scorecard, the major DW/BI story of 2007 was the continuing series of vendor consolidations which culminated in the acquisitions (or pending acquisitions) of three major BI specialists: Hyperion (by Oracle), Business Objects (by SAP), and Cognos (by IBM). As each of these three BI specialists has a long history of acquiring other companies, it now seems that yesterday's acquirers have become today's acquirees.
Acceptance of Data Warehouse Appliances
The data warehouse appliance has emerged from its status as a niche technology to establish itself as an accepted (and proven) part of an organization's overall data warehousing environment. While vendors (and analysts) continue to debate the definition of an appliance and whether or not the underlying hardware and software components must to be sold as a single line item from a single vendor, almost every data warehousing vendor now has an appliance story. Ironically, the vendor that I consider to be the original data warehouse appliance pioneer, Teradata, is still reluctant to use the term "appliance."
Initial Public Offerings
Speaking of data warehouse appliances, another major event, perhaps not immediately obvious, was the successful IPO of Netezza. While this was certainly a key event for the company, it would not qualify as a major industry event unless it also impacted the overall data warehousing industry. I believe it does -- it demonstrates that investors in start-up companies with innovative technology can cash out by going public rather than by being acquired.
This will serve to inspire other successful companies to retain their independence and should result in a more competitive environment, to the benefit of the entire industry. The November announcement by master data management vendor Initiate Systems that it had filed a registration statement with the SEC for a proposed initial public offering is another example of IPO activity.
Predictions for 2008
Looking ahead to 2008 I expect the following to occur.
Industry Consolidation Will Continue
Acquisitions will remain a fact of life in the data warehousing industry. HP, with its Neoview technology and Knightsbridge Solutions data warehousing consulting expertise, may seek to round out its data warehousing portfolio by acquiring one of its business intelligence and/or data integration partners. Among HP's partners are Ab Initio, Actuate, Informatica, Information Builders, MicroStrategy, SAS, and SPSS. If I had to pick a single target, I'd choose Informatica.
BI Deployment Will Become Easier
BI technology will be easier to deploy because of several factors, including on-demand offerings, the deeper integration of BI functionality within operational systems, and the growing adoption of service-oriented architecture and virtualization. Easier deployment will lead to expanded usage of BI both within the organization and to its customers and partners.
Usage of on-demand or software-as-a-service will expand as the small-to-midsize business (SMB) market continues to recognize the value of business intelligence and realizes that companies can deploy tools other than spreadsheets. Recognizing that there are only 500 "Fortune 500" companies, vendors that currently focus almost exclusively on large organizations will further pursue the SMB market, utilizing on-demand as one of their sales channels.
Business Objects and Hyperion were (or will soon be) acquired by enterprise applications leaders SAP and Oracle, and both will continue to offer their products on a standalone basis. I expect that the acquired business intelligence technology will, over time, also be closely integrated within the enterprise applications, making operational BI that much easier to deploy.
The Open Source Market Will Grow
The market turbulence resulting from the acquisitions of Business Objects, Cognos, and Hyperion will cause a realignment of vendor partnerships and, when combined with the fear, uncertainty, and doubt created by the remaining independent BI specialists, may cause customers and prospects to reexamine their choice of BI vendors.
It will also serve as a catalyst for partners and prospects to examine alternative BI technology sources. Open source BI vendors will benefit as enterprises initiative more pilot projects using open source technology. The increased use of open source technology will place additional pricing pressure on traditional BI vendors.
Data Mining Usage Will Grow
Data mining usage will continue to grow and include additional forms of unstructured data such as speech, which, for example, can be used to analyze additional data sources such as call center interactions and/or voice over IP communications.
Since some commercial companies consider data mining to be a major competitive weapon, and some government agencies won't discuss how they deploy it, I believe we will still see only the tip of the data mining iceberg. While SAS has always realized this, the early December announcement that Business Objects will significantly expand its data mining capabilities by OEMing SPSS' predictive analytics technology as part of the BusinessObjects XI platform shows that other major BI vendors also recognize the growth potential of data mining. That's particularly interested since, with a market cap (price per share times shares outstanding) of approximately $700 million, might not SAP be interested in SPSS as well?
I'll report on the accuracy of these predictions next year when I make new ones for 2009.
Michael A. Schiff is a principal consultant for MAS Strategies.