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New Directions For BI Solutions in 2008


2008 is proving a confusing year for business intelligence solutions market. Since the acquisition round in 2007 settled down, other factors are entering the fray to further confuse the selection process for the best BI solution for the clients needs:

 

ERP Integration

With the 2007 acquisition of BI pure play vendors by SAP, Oracle and IBM, the market is naturally confused as to what the mega vendors are up to and how well they will integrate or lock down access to analytical applications independent of ERP solutions.

The remainding pure-play BI vendors propose that they currently offer better options to clients. Are these BI independents under-estimating the strategic intent behind these acquisitions?

It is more likely that SAP, Oracle and IBM will leave the BI software as stand alone but build deep integration between the newly acquired BI solutions and their current ERP solutions within a proper architecture. If so, this will benefit clients greatly.

The center of confusion for clients is with the many customers that are currently using a combination of ERP and BI solutions that are now competitors, for instance, they may be using SAP ERP with Hyperion [now owned by Oracle] or using Oracle ERP with Business Objects.

The key will be for the ERP giants to provide solid assurance that their BI solution will continue to get solid support as an independent solution - and that includes continualy innovations and refinements to functionality.

 

Open Frameworks

The key to this assurance by be in 'open frameworks'. This means that whilst the ERP vendors strongly integrate their new BI solutions with their current offerings they will simultaneously keep them fully compatible with third party ERP packages. In turn, that depends on the ERP vendors' support of open framework. The difficulty will be in doing so whilst gaining the competitive advantage IBM, Oracle or SAP have sought by acquiring their new charges.

Excluding clients from using their BI solutions with competitor ERP applications will severely impact valuable revenue streams.

 

 

Market Verticals

One other distinguishing element that may prove a greater differentiator going forward is that each of the acquired BI solutions are strong in different market verticals, for instance:

  • Business Objects - is weak in the financial sector
  • Hyperion - is strong in financial sector

Read more on industry vertical BI solutions

 

Data

The key to extracting full value from a BI solution is in feeding it clean, current and valid data. Previously, BI solutions did not focus on the data element, leaving that area of expertise to other market segment providers. The new partnerships will strengthen this area - Cognos implementation methodologies do not have the competency to do data cleansing, but new owner IBM will effectively provide a good data solution in house.

That means that IBM's acquisition of Cognos makes Cognos a far stronger product.

The same applies to Hyperion and BusinessObjects.

 


Cloud Computing

As more enterprises are seeking the benefits of Software as a Service [SaaS] solutions to beat the high cost of inhouse application infrastructures and licensing fees, cloud computing is appearing on the radar of many BI application seekers.

Cloud-computing is roughly a Platform as a Service, giving enterprises a little more control and security over their data that a shared, multi-tenant SaaS model. If a business is already using an SaaS application such as CRM, then their data already being outside the corporate walls makes BI cloud computing models more feasible.

This is especially so for operational BI tools such as query and reporting. Analytical BI is not so easily digested by IT in a cloud computing arena. This is the core competitive IP that will often be the pivot point of success for many enterprises. Letting go of such as asset outside the corporate walls is a big ask for many IT security staff. My contention is that most corporates host their own servers and data in a data center any - often the same one that the SaaS or Cloud computing service is hosted in, so whats the difference!

Overcome the psychological barrier and the cloud-computing model for BI could become a future model contender.


Market Verticals

For BI vendors, the only true differentiation domain appears to be in the embedded industry knowledge each of their BI solutions encapsulates. Certain vendors have in-depth IP on certain industry verticals, and have integrated this knowledge into the data models and processes their BI solutions operate with.

 


Software Licence Models

As the economics of SaaS and Cloud computing are realised by more businesses, the traditional high cost of front end licence models is coming under attack.

Microsoft has already recognised this and already offers a model that allows businesses to rent functionality they need from a service provider, forgoing the capital expenditure normally associated with BI.

Other vendors are facing the same demand from the market, but are also facing resistance from application resellers, who see the disappearance of large commission bundles adversely impacting their ability to attract and retain top sales personnel.

Its just a matter of waiting for reality to filter down the market hierarchy.

Those who do embrace the new model early, will likely reap benefits as yet undiscovered through these new commerce models.

 

Summary

Business intelligence applications are currently at the mercy of ERP system vendors. It can be expected that Oracle, SAP and IBM will tighten integration between their ERP applications and their new BI solutions, but the road for clients currently using a combination of vendors to meet their ERP/BI needs is uncertain.

Operational BI tools are likely to commoditise and move into SaaS and cloud computing environments, with analytical BI remaining in-house until more confidence is gained in retaining security around the IP their data contains.

New commercial models for BI solutions, along with many other corporate applications is evolving from high up front cost models to month by month models, independent of per seat charges.

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