Big-ticket acquisitions and consolidations in the business intelligence market were surely the most notable events of 2007. IBM, Microsoft, Oracle and SAP (now known as the "megavendors") staked their claims in the BI market, spending billions on top-tier BI and performance management vendors such as Cognos, Business Objects and Hyperion.
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In a matter of just six months, the BI market contorted into a wholly different picture. Today, the number of large independent BI vendors has dwindled, though many niche players continue to stream into the space. And the four technology behemoths, with their prized acquisitions, now "control the fortunes of the BI and business performance solutions markets," write Forrester Research's Boris Evelson and Paul Hamerman in a December 2007 report.
The reasons behind all the Big Four's moves were many: sound business strategies, the growing BI hype, the need for self-preservation and some fear. Though Microsoft didn't make any deals that were as splashy as the other megavendors', its acquisitions in the BI market didn't go without notice, say analysts.
"There are some who believe Microsoft pushed the others to make these big acquisitions because Microsoft was bundling all these BI capabilities into their OS platforms," says Walter Lee, an analyst at Burton Group, "forcing these other [vendors] to acquire extensive BI capabilities on their own."
Going forward, the Forrester analysts say that IT departments and BI decision-makers should expect more of the same, though that might seem hard to imagine after the M&A action last year. "Forrester believes that the BI and business performance solutions markets will continue to consolidate around these four large vendors but will not be commoditized anytime soon," states the Forrester report.
To help you make sense of all the recent change, here is an alphabetical list of several leading BI vendors (and one on the outside looking in, with much interest) as well as snapshots of each of their strengths, weaknesses and prospective strategies for the future.
Business Objects (owned by SAP)
Business Objects, which is now owned by SAP, offers one of the broadest and most complete BI product sets, and according to Gartner's 2008 Magic Quadrant report on BI platforms, its customers rate Business Objects' "core reporting and ad hoc query capabilities particularly highly." In fact, approximately 90 percent of the customers Gartner contacted as part of its research considered Business Objects "a BI standard in their organization."
That's not to say that everything is A-OK at B.O. "Business Objects' vision and execution will change as it shifts from being a pure-play vendor to being a SAP acquisition," states the Gartner report. "These changes may have consequences for its product lines, channels, support and contracts."
In addition, while the vendor has had some success nudging its customers to upgrade to its XI versions, "this has proved painful in the main, with customers rating their migration experience as challenging and costly," states Gartner. "Several customers with large deployments have been vocal in stating the difficulties they have had with their XI Release configurations, implementations and support."
Cognos (owned by IBM)
Like Business Objects, Cognos, which is now owned by IBM, has "an exceptionally high proportion of enterprise-standard BI platform deployments," states Gartner. And the IBM acquisition appears to be a victory for both sides (and their customers). "Cognos' acquisition by IBM will increase its access to the WebSphere and Data Stage installed base," notes the Gartner report. "Moreover, it should significantly bolster Cognos' data integration and unstructured/text analysis capabilities, which have lagged behind its main competitors."
While Forrester analysts note that IBM's Cognos acquisition is "cleaner" than Oracle's and SAP's purchases (because there's less product overlap), the move does raise serious questions about IBM's vaunted partner relationships and long-term partnering strategies.
The Gartner report notes that Cognos's predictive analytic and data mining capabilities are "much weaker" than the other BI platform leaders. In addition, Cognos 8 "lacks robust caching, resulting in users hitting the database each time the report is refreshed," the Gartner report states. "Based on feedback from some end users, Cognos needs to look at ways to enhance query performance."
Though HP claims to be a business intelligence vendor of note, analysts say they are still waiting for HP to actually deliver a BI solution set. And now that IBM has acquired Cognos, "will HP follow the same path and acquire smaller vendors like Actuate, Information Builders or Microstrategy?" ask the Forrester analysts.
Possibilities abound for HP, it seems. "There's also still SAS, the acquisition of which would give HP a complete BI stack—but acquiring the world's largest privately held company can be a financial and cultural fit nightmare," states the Forrester report. "That's why acquiring Cognos, Informatica or Teradata could have given HP the best-of-breed components in all areas of the BI stack."
Don't be surprised, say BI analysts, if the Big Four megavendors add number five (HP) in 2008.
As one of the remaining large independent BI vendors, Information Builders continues to excel and "prove its worth" in enterprise deployments, despite the presence of the megavendors, states the Gartner report. "WebFocus's use of its own iWay Software integration platform makes Information Builders' BI platform one of the best connected in the market," according to the report, "and much better suited to supporting operational reporting than most other vendors."
On the flip side, Gartner cautions that Information Builders has had more success "giving customers the ability to build analytic applications than it has at delivering end-user analysis tools."
In addition, the company needs to "go beyond its 'sweet spot' of operational reporting and information delivery, and build a large number of successful deployments where WebFocus is used for analysis and self-service reporting," notes the report.
Though Microsoft didn't make any huge BI purchases in 2007, it has been quietly ramping up its efforts. Microsoft's "pricing and integration with its Office (including its major CPM-led innovation of 2007, PerfomancePoint Server) and SQL Server products are especially attractive to organizations that have standardized on the Microsoft information infrastructure," states the Gartner report.
Its customers seem satisfied with the quality of its BI software: More than half contacted by Gartner report no problems with the software. "This reflects Microsoft's focus on BI, the strength of its product line management team and the fact that much of its BI technology has been internally developed rather than acquired," the report notes.
However, because Microsoft was late to the "BI Ball," it's still catching up to its rivals. According to its customers, the world's largest software vendors "still lags behind pure-play vendors in terms of metadata management, reporting, and dashboard and ad hoc query capabilities," states the Gartner report. Microsoft claims that it's in the BI market for "the long haul," and analysts expect that it will become a strong competitor as it grows its product offerings.
Another independent BI vendor, Microstrategy is known for building its BI products "organically," states the Gartner report. "This is evident in its tight platform integration, very scalable relational OLAP architecture and complete object-oriented metadata model," notes the report. In addition, its customers "rated it highest overall in terms of functional match to their needs and in terms of their implementation experience," according to the Gartner customer reference survey.
Negotiating with Microstrategy can be a different story. "Historically, MicroStrategy has refused to alter contractual terms and conditions, has charged 'a la carte' for functionality such as Office integration, has conducted usage audits, and has re-priced maintenance from previously signed contracts," according to Gartner research.
Because Microstrategy has focused more on BI platforms and less on performance management and data integration, Gartner states that it "removes itself automatically from the shortlist of those organizations that want an integrated approach to these disciplines, particularly planning and reporting," says the report. "This issue will become more prevalent given the stack-centric direction that the market has taken following the megavendor acquisitions in the BI space."
Oracle's BI vision, as Gartner terms it, became a lot more compelling in 2007—especially when its Hyperion acquisition went through. Oracle's "combination of BI platform and analytic applications (Oracle BI Enterprise Edition, or OBIEE, and Oracle Analytic Applications) is one of the better sets of offerings available," Gartner notes. "With its portfolio of BI products and technology, Oracle has the potential to deliver operational and strategic BI capabilities, either stand-alone or embedded into horizontal or vertical applications."
But Oracle's M&A strategy (buy not build) could pose problems as it tries to integrate its BI products into its core lines, Gartner says. "There is strong evidence that Hyperion's BI installed base is taking a wait-and-see approach and not updating to latest versions—in fact, of all customer groups surveyed, Hyperion BI users had the lowest proportion running the latest major release," according to the Gartner report. "Oracle must be careful to ensure it does not lose former Brio customers, in particular, some of whom are unhappy with Hyperion's plan to charge them an 'enablement fee' to move to System9 before the acquisition."
The Forrester report predicts that Oracle may make yet another critical acquisition: Informatica. The move, which would be primarily to "block" SAP from getting the data-integration company, would help Oracle "effectively support the data integration and data quality needs across its application, middleware and database portfolio," write the Forrester analysts. "While introducing some redundancy for sure, Informatica would help Oracle fast-track that goal."
SAP (and Business Objects)
SAP now claims more than 13,000 NetWeaver BI deployments, and its BI Accelerator product, which uses "in-memory analytics and column-based vectoring," has put the pressure on the other major BI platform providers to ramp up their products' data scalability and performance, states the Gartner report.
With its prized Business Objects purchase under its umbrella, SAP is now the largest BI platform vendor, almost twice the size of its next largest competitor, according to Gartner. "Business Objects' areas of strength (such as formatted reporting and self-service report creation)," notes the report, "will help address the areas of weakness in SAP BI."
That girth, however, could have a downside for SAP's and Business Object's customers. The acquisition, Gartner analysts write, could have an impact on SAP's "ability to execute, because of the inevitable uncertainty this creates for its customers with respect to the future of SAP's internally developed BI products and its ability to deliver any promised integration."
According to the latest Gartner customer reference survey, SAP has some work to do in ensuring smoother implementations with its SAP BI tools. "SAP's reference customers, the majority of whom reported that they're running the latest version of SAP BI, ranked it as significantly less functional and harder to implement than the references provided by all the other vendors," states the report.
The Gartner report couldn't be clearer about SAS's market position: "SAS dominates in advanced analytic solutions," states the report. "No other vendor in the [Gartner's] Magic Quadrant has its range of capabilities or can point to the same number of advanced analytic deployments." The report goes on to mention SAS's strong packaged analytic application programs, "with solutions that go well beyond reporting and key performance indicator (KPI)-centric deployments, to include more advanced analytic applications applied to particular business problems such as fraud detection."
And as long as it chooses to remain independent and privately held, the Forrester report concludes, SAS Institute will exert significant influence as the largest BI pure play.
However, there are some issues that SAS needs to watch out for. Most notably, SAS "has a reputation for being very hard to use," states the Gartner report. "In particular, many of the data manipulation and advanced analysis tasks require the SAS programming language; this is an advantage to people with those skills, but a significant barrier to those organizations without them."
(For more on CIO's special BI series, see Part 1 "BI: A Technology Category in Tumult"; Part 3 "BI and On-Demand: The Perfect Marriage?"; Part 4 "What You Need to Know About BI TCO"; and Part 5 "Opinion: Don't Make BI Suck for Users.")