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BI Approaches of Enterprise Software Vendors

Written By: Olin Thompson
Published On: March 19 2004

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Introduction

The need for business intelligence (BI) is real for all enterprise software users. It is rare to find a user who feels they get the information they need from their enterprise software system and even those who do want more. The need is not just reporting; they need business monitoring, analysis, an understanding of why things are happening. They need diagnostic tools.

Enterprise software systems are designed as transaction processing tools and job one is to optimize for this need. For most enterprise software systems, reporting is a secondary objective and not usually a driving force when the system was originally designed. BI is designed with the objectives of reporting and analysis. BI has the power to significantly increase the value of enterprise software by turning the information captured in the system into knowledge and guidance about the business.

Today, the majority of enterprise software vendors sees this need and are proactively addressing it. However, their strategies different as do the impact of these strategies on their customers.

Enterprise Software Vendor Approaches

The enterprise software vendor community has delivered or is working on BI solutions. Their strategy options have included

  1. Develop its own system
  2. Partner with large "horizontal" BI vendor
  3. Partner with small "boutique" BI vendor
  4. Remain "BI agnostic" encouraging customers to choose their own

Enterprise Software Vendor Develops Its Own

Large enterprise software vendors have the resources and the business motivation to invest in their own solutions. This includes the underlying technology and the analytical applications. For example, Oracle and SAP have built and are marketing in-house developed solutions.

Large enterprises choose this strategy because they

  • Have the internal resources to build and maintain their own solution

  • Can leverage their product knowledge

  • Feel they have a better understanding of their customers needs

  • Have total control over the development direction (enhancements, fixes, etc.)

  • Find it more profitable (they control pricing and don't have to share license, support, and services revenues)

  • Have a mindset of products should "be invented here"

What is the impact on their customers? For most customers, this is probably a good choice for many of the reasons stated above. The possible exceptions to this include

  • Price is too high (often, the vendor expects a premium over alternative options for the reasons stated above); and

  • The need to integrate other data sources into the BI solution and the enterprise software vendor's solution is weak in this area.

Enterprise Software Vendor Partners With Large "Horizontal" BI Vendor

Both first and second tier vendors partner with large "horizontal" BI vendors. Examples of these vendors include SSA GT (Cognos) and I2 (Business Objects). The large horizontal vendors they partner with include Cognos, Business Objects, and Brio (now Hyperion).

They choose this strategy because they

  • Realize they don't have the resources to develop and support

  • They see a recognizable (BI) name as a marketing advantage

  • Attach the BI vendor's large size to the image of stability

  • See the BI vendor's reference customers as an assist in selling efforts

  • See a very broad BI product line from the horizontal BI vendor

What is the impact on their customers? Many customers certainly see benefits in the relationship with a large horizontal BI vendor. Stability and a broad product line are important. These vendors also enable the connection of other data sources to the BI solution. What issues should customers investigate if their enterprise software vendor follows this strategy?

  • These BI vendors tend to offer product suites that are broad but lack deep industry specific needs. Are your industry specific needs provided by the solution?

  • The horizontal BI vendor may have a large customer base, but limited customers in your specific industry. Does this make a difference to you?

  • As both the enterprise and BI products evolve, who is responsible for keeping the two in synch? Who is responsible for the integration?

  • A solution based upon a BI product from a horizontal may be overkill in terms of function, support requirements, and cost.

  • Can you support the hardware and software required for a solution based upon a horizontal BI vendor?

Enterprise Software Vendor Partners With a "Boutique" BI Vendor

Enterprise vendors, especially those focused on the small and mid-market enterprises (SME), often choose to partner with a "boutique" BI vendor. These boutique vendors are typically focused on the mid-market and a specific industry. For example, Medical Scientists (www.medicalscientists.com) and Strata Decision Technology (www.strata-decision.com) focus on healthcare; Thazar (www.thazar.com) focuses on insurance and Vanguard Solutions (www.vanguardsolutions.com) focuses on manufacturers.

Enterprise vendors choose this strategy because they

  • Realize they don't have the resources to develop and support or choose not to expend their resources in the BI direction

  • Want an industry-focused BI to provide industry specific BI "thought leadership"

  • Expect greater influence with the boutique vendor

  • Often find the business terms of the boutique BI vendor more in keeping with their market position and needs of their target industry

  • The boutique vendor's solutions better fits the needs of their mid-market customers relative to technology, support cost, implementation requirements, complexity, etc.

  • Appreciate the more focused set of references customers

What is the impact on their customers? Many customers certainly see benefits in the relationship with a boutique BI vendor. The industry focus, shown in the products and the "human knowledge and experience", of both the enterprise and BI vendors increases the value of the resulting system. What issues should customers investigate if their enterprise software vendor follows this strategy?

  • If other data, such as CRM, SCM, spreadsheets, etc., must be included in the total BI solution, does the boutique vendor provide the tools and services skills required?

  • Boutique vendors are, due to their tight market focus, smaller in size. Do you feel comfortable with the financial viability of the boutique vendor?

  • As both the enterprise and BI products evolve, who is responsible for keeping the two in synch? Who is responsible for integration?

  • Are you able to provide the internal hardware and software support required?

Enterprise Software Vendor Remains "BI Agnostic"

Some enterprise vendors have chosen to enable any BI solution to work with their product and have either no formal partnerships or many. For example, for a long time, the JDE (J.D. Edwards) approach was to be "agnostic". Many BI vendors have formal or informal relationships with JDE.

These enterprise vendors choose this strategy because they

  • Do not see BI as an area of strategic importance for their company.

  • Do not think they can drive enough revenue to justify the investments required

  • See BI as outside of their "core competencies"

  • Prefer to make their systems openly available to BI solutions, letting their customers decide for themselves which BI solution suits them best

What is the impact on their customers? Customers who prefer a "best of breed" strategy or must follow an existing corporate dictate in BI tools will find this approach to their advantage. If your enterprise vendor follows this strategy, you have the entire range of plus and minuses of the "best of breed" approach.

Recommendations

End Users—Your enterprise vendor's strategy will dictate how you proceed with BI. For each type of vendor strategy, different recommendations apply:

Enterprise vendors—Those enterprise vendors without a BI strategy or with an agnostic strategy should focus on the value of BI to their customer set. Your customer's needs are real and therefore it provides you with a path to customer value and satisfaction plus additional revenue. Vendors should be realistic about the investment required to build, maintain, and support BI applications. They should select a strategy that matches their ability and willingness to invest, time to market requirements and alternative uses of the required resources. The strategy selected should reflect the realities of your existing and future customer base relative to industry needs, support requirements, terms and conditions, etc.

About the author

Olin Thompson is a principal of Process ERP Partners. He has over twenty-five years experience as an executive in the software industry. Thompson has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce, and the impact of technology on industry.
He can be reached at Olin@ProcessERP.com.

 
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