My Take on BI Cost of Ownership - InformationWeek
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4/21/2010
05:27 PM
Rajan Chandras
Rajan Chandras
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My Take on BI Cost of Ownership

On reading Gartner's take on BI cost of ownership below, at first glance the numbers seemed "out of whack". But the pieces quickly fell into place... and the *real* cost began to emerge...

On reading Gartner's take on BI cost of ownership below, at first glance the numbers seemed "out of whack". But the pieces quickly fell into place... and the *real* cost began to emerge...

In the Gartner symposium (covered here), analyst Rita Sallam indicated that the five-year cost of a typical, 500-seat BI deployment (covering reporting, ad-hoc analysis and dashboards) ranges from about $150,000 for an open-source system to just over $1 million for SAP BusinessObjects, IBM Cognos 8 or Oracle OBIEE.My first reaction on reading this was: $1 million for 500 users over 5 years? Really? Then it dawned on me that this was only a piece of the overall puzzle.

Here's what the $1 million includes:

  • 500-seat BI license and maintenance cost for core BI toolset (BusinessObjects XI, Cognos 8, OBIEE, etc.)

Here's what it excludes:

  • Services to build/deploy the BI solution. Gartner inadvertently gives us a basis for a high-level assessment -- they estimate that the market for BI/CPM software alone is around $8 billion, while the market for BI/CPM services (integration) is about $30 billion. In other words, for every $1 of license costs, customers end up paying nearly $4 for building/deploying/managing the solution.

Adding this alone takes the above figure to about $5 million for 500 users over five years. But there's more.

The estimate above also excludes:

  • Any pre-built analytic applications, e.g. corresponding to the ERP modules. Although this leads to reduced services costs (the "build-vs-buy" paradigm), licensing for these can be complex and substantially expensive, and can reach or exceed the cost to build the solution from the ground up.
  • ETL: The BI suites above typically do include ETL software, but beware of license limitations on usage or the need for additional ETL components, which can further add to the cost.
  • Infrastructure: Last but not the least, setting up development/test/production environments requires potentially expensive hardware and software (including databases). Need fault tolerance and disaster recovery capabilities? You need to shell out yet more.
  • Other components, as needed (e.g. data quality, metadata management tools, any additional need for instrumentation etc.)

Obviously, these are very simplistic, back-of-the-envelope computations, and consider the estimates for the "Big 3" BI vendors (and exclude open source etc.). The cost of a BI solution (and the data warehouse that goes it with) can vary widely, but it shouldn't cost, say, $5 to $6 million for 500 users over five years.

Nevertheless, the message is very clear. Business intelligence capabilities can come at a substantial price, and customers need to take the efforts to thoroughly understand all cost components. If not, BI costs can spiral very quickly.On reading Gartner's take on BI cost of ownership below, at first glance the numbers seemed "out of whack". But the pieces quickly fell into place... and the *real* cost began to emerge...

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