How Buying Changes in the New BI Landscape

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.

Strategic Buyers

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).

Tactical Buyers

Tactical buyers are more focused on short-term success, features and functions, price, and ease of deployment, than on strategic vendor relationships. These buyers are often departmental buyers and small and midsized businesses (SMBs). This is the market in which smaller vendors like QlikTech, Panorama and new players like Lucid Era are likely to continue to flourish. As well, despite Microsoft’s size, Microsoft BI continues to succeed with tactical buyers because of its ease of deployment and low entry price; Microsoft's strong reseller model makes it an easy vendor to do business with. Business Objects, with its Crystal/Edge product line, has continued to command share with tactical buyers for similar reasons. Ditto for products like Hyperion Essbase and Cognos PowerPlay, but if these two companies become more difficult to do business with as part of larger companies, it will undermine their ability to compete in these accounts.

Never underestimate the role a tactical buyer plays within larger companies trying to establish enterprisewide standards. Success with departmental BI can become a basis for an enterprise solution. Departments will demand the same best-of-breed capabilities from an enterprise solution. Even at large companies (with more than $1 billion in revenue), there is a preponderance of departmental buying (see the "Departmental Vs. Enterprise" buying chart at right, which is based on survey results from the new book Successful Business Intelligence: Secrets to Making BI a Killer App). The move from departmental BI to enterprise BI is still relatively new for many customers, and on average, only slightly more than half of companies of all sizes deploy enterprisewide.

Frustrated BI Customers

The final wrinkle in the BI buying dynamic is the dissatisfied customer, to which no vendor is immune. In the past, the sales tactics used by many BI vendors were akin to a used-car-salesman approach in which the goal seemed to be to milk the customers for revenue without much concern for their success. Reports of unseen account managers and high turnover continue. A number of vendors have had recent problematic upgrades. Some have had miserable support. BI buyers will never give a large share of wallet to any vendor that is complacent or arrogant, no matter how good the product might be. Customers who have been frustrated for whatever reason — poor service, product problems — will welcome a reason to switch if budget is available and something better comes along.

The BI landscape has changed. Satisfied and successful BI customers are unfazed by the vendor musical chairs. New customers and frustrated customers are the ones who will revisit their buying approach.

Cindi Howson, Founder, BIScorecard, a Web site for in-depth BI product reviews Author: Successful Business Intelligence: Secrets to Making BI a Killer App Author: Business Objects XI (R2): The Complete Reference