This year's business intelligence mega deals have altered the complexion of strategic and tactical decisions. Successful practitioners will be unfazed by shifting vendor ownership, but dissatisfied customers are up for grabs.
Now that we’ve all had a while to digest yet another major acquisition of a business intelligence vendor (the latest being IBM's planned purchase of Cognos), customers need to assess what this year's mega-deals mean to their BI buying plans. Much depends on your current BI position — whether you’re new to BI or an existing BI customer, and whether or not you're satisfied with your current vendor.
BI buyers can be divided into two camps, strategic buyers and tactical buyers. Here's a bit of advice for planners in each camp.
These buyers tend to be enterprise customers who will give more weight to strategic buying criteria. They look to buy additional software from preferred vendors with whom they have an established relationship. For example, an SAP shop that is new to BI will give preference to Netweaver BI or BusinessObjects XI. An Oracle shop will look to Oracle BI Enterprise Edition (which includes some Hyperion modules but not Essbase). IBM adherents new to BI will look to Cognos, and Microsoft shops to Microsoft BI. In the past, these software vendors did not have robust BI solutions, so it was necessary and easy to justify buying BI solutions elsewhere. All these mega vendors now have (or will when acquisitions close) viable BI products as part of their total software portfolio.
When a preferred vendor has a solid BI solution, the buying approach changes from “who has the best product for us” to “why can’t we use the product from our preferred vendor?” Some people may argue that this “strategic” approach to buying software is IT dictatorship. In some cases, it may be, but for the most part, it’s a reflection of the importance of business applications and the IT infrastructure. When you buy enterprise software, customers are investing more than just the dollars for software licensing. They are investing in skill sets and in developing a partnership with a vendor who understands their business, who will continue to innovate, lead, adapt, and scale to a changing industry and to changing requirements.
The biggest battle for market share here will be when a customer considers more than one of the big four to be a preferred vendor — if for example, Microsoft and SAP both have toeholds in the same customer account.
This is not to say that enterprise customers will only buy from their preferred vendors. It does, however, mean that it will be a tougher sell for other vendors. BI pure-play vendors that fail to differentiate and clearly articulate where, why, and when they are a better investment than the incumbent software vendor will lose. For BI buyers who understand the unique value of their desired BI pure-play vendor, be prepared for a more rigorous cost/benefit analysis when convincing IT management of “why not the preferred vendor?” The smartest companies will develop clear guidelines on when to use the preferred vendor and when to supplement capabilities with products from another supplier.
Part of the success that pure plays SAS, Information Builders Inc. (IBI), and MicroStrategy have enjoyed can be attributed to their differentiation: SAS for predictive analytics and vertical solutions, MicroStrategy for high data scale ROLAP with enterprise-class administration, and IBI for enterprise production reporting. The other reason for their historical success, though, was the lack of best-of-breed BI products from strategic vendors.
Beyond the front-end BI tools, there are reasons why vendors like Informatica, Netezza, and Teradata have been able to sell into accounts with a strategic-buying approach. With the Hyperion, Business Objects and Cognos acquisitions changing the BI landscape, the differentiators then, are more important than ever before. Even following the recent SAP-Business Objects acquisition, these independent BI vendors declared the need for an open BI platform. The same, unimaginative message has been repeated following the IBM-Cognos announcement. Maybe the future will prove the vows of openness to be false, but none of these recent acquisitions have a proprietary nature to them. Even Oracle, which has had proprietary tactics in the past, has ensured Oracle BI EE (acquired from Siebel) has remained open to other databases. Microsoft is a bit of an anomaly with its BI server that runs only on the Windows operating system and that lacks Blackberry support. Still, it has opened up support for non SQL Server databases in its latest BI releases.
It may have taken decades, but for the most part, these software heavy weights recognize that even customers with strict IT standards want open and interoperable systems. Can the independent BI-vendors win customers with declarations of independence? It's doubtful. BI buyers should be wary of heavy doses of FUD (fear, uncertainty, and doubt).
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