Business Intelligence: A Technology Category in Tumult

Market consolidation, technical complexity and customer confusion about BI capabilities are powerful and stubborn forces that will continue to shape the business intelligence applications market in 2008.

No one can deny that the market for business intelligence applications is hot. An Aberdeen Group survey found that the number-one technology spending item for companies was "reporting and analytics" in 2007.

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In addition, enterprise software vendors spent a fortune acquiring leading BI providers last year. With their billions of dollars, IBM, Microsoft, Oracle and SAP showed what they thought of BI's future: SAP acquired Business Objects, Oracle bought Hyperion, IBM purchased Cognos (which closed in early 2008), and Microsoft made smaller value but strategic acquisitions.

A recent Gartner report termed their spending spree as a "tumultuous" event for the industry that shifted the balance of power, and market share, toward the "megavendors." Now, the big four own two-thirds of the BI market, according to Gartner.

"The consolidation in the market has not simplified vendor selection decisions; if anything, it has made them more complicated, because the acquisitions have thrown many existing product road maps into confusion," writes Gartner Research Director Kurt Schlegel, in "Key Issues for Business Intelligence and Performance Management Initiatives, 2008."

In other words, those companies spending millions on BI tools aren't guaranteed anything. "Whatever you buy, it may become something else tomorrow," under a different vendor, says Ken Anderson, an executive strategist at the Burton Group who follows the BI market. That makes it difficult to plan BI strategy. "If you're going to make a large investment in software," he adds, "you just don't know where that's going to go."

In late March, for example, SAP announced the names of the BI products, which had become "overlapping" after it acquired Business Objects, that would be phased out. "They were obviously difficult [decisions], in the sense that each product has customers, each has its merits, each has a team that's passionately committed to it," said John Schwarz, the former CEO of Business Objects who's running the combined BI operations at SAP, in an interview. "So the debates, as you might imagine, were fairly heated."

Another added complexity to the relatively young BI market is customers' inability to figure out just what business intelligence means to them and their company's needs. The unfortunate truth is that the definition largely depends on which vendor is talking and what that vendor is trying to sell.

"Buyers need to cut through the marketing hype to identify the capabilities and solutions from vendors that best meet their business needs," Schlegel writes in the Gartner report.

That's no easy task. The BI application lexicon is vast: Performance management applications. Online analytical processing tools. Querying and reporting. Data mining. Business analytics and dashboards. Decision support systems. Data warehousing. All of these critical functionalities can be (and usually are) grouped under the business intelligence umbrella by vendors.

But the relative robustness of each vendor's offerings as well as the architectural and technology differences among the software applications and the business users they will likely serve can be starkly different.

BI Users Must Define Their Priorities

That pervasive uncertainty places the onus on business users and IT departments to figure out exactly what types of information they need to extract from their BI systems, say analysts.

"You basically have to figure out what items interest you, and what's important to you," says Walter Lee, an analyst at Burton Group. Therefore, companies must formulate a BI requirements strategy, or methodology, as Lee terms it, that is based on the analytic and reporting data that will best synch with their overall business strategy. But that too can be difficult, Lee notes. "It can be a convoluted and lengthy process."

Even when IT departments are able to hammer out the back-office integration and data-sharing complexities (which are not trivial), many companies still struggle to get business users to actually use the BI applications.

A February 2008 Gartner report on self-service options for business intelligence concluded that users find BI tools difficult to use and consume. "Anecdotal evidence suggests no more than 20 percent of users in most organizations use reporting, ad hoc query and online analytical processing tools on a regular basis," writes Gartner's Schlegel. He also notes that most IT departments are overwhelmed with BI requests to meet business requirements and often have difficulty building BI applications due to a shortage in developers' skill sets.

"Lack of both end-user and developer skills is frequently cited as a major barrier when deploying BI applications," Schlegel writes. "In both cases, there is a need to make analytical applications easier to build and consume, to overcome this skills gap."

Burton Group's Anderson doesn't take exception to the 20 percent usability rate, though he does note that that number is common in many application deployments outside of BI. "If you have a complex problem and user interface, no matter how well written it is there's only a certain amount of people who are going to use that tool," he says.

But a sizeable challenge with BI tools right now is ensuring that the data and analytics that are ultimately presented to users are meaningful and actionable by those users.

"Just because you see [a BI trend] doesn't mean you're going to be able to do anything about it," Anderson says. Companies have to figure out "how do you transform that data into actionable items. In U.S. businesses, we sometimes falter on that."

(For more on CIO's special BI series, see Part 2 "Nine BI Vendors to Watch"; 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.")

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