frantic first week of June that marked an outright internecine war in the ERP
space, seems to have been somewhat repeated in the second half of July, but
this time in the business intelligence (BI) market. The following acquisitions
Business Objects will acquire Crystal Decisions
Hyperion will acquire Brio Software
Actuate Corporation has completed the acquisition of Nimble
Geac and SSA GT have acquired Comshare and Elevon
Lawson Software has acquired Numbercraft
a comparison of the consolidations taking part in the BI market versus those
among ERP vendors see "BI
Market Consolidation Compared to ERP Market Consolidation"
is Part Three of a three-part note.
One detailed current acquisitions in the BI Market.
Two presented the Market Impact.
SAS Institute and Other Competitors in BI
brings us to SAS Institute, which, with over $1 billion in
revenues, remains the largest privately-held software vendor, and a goliath
in the segment. NCR Teradata would also closely follow SAS'
steps, as both have long focused on very scalable BI and data warehousing deployments
Institute Shoots for the Two-Stop-Shop with new Release of Warehouse Administrator
Puts the "E" in "Data"). Furthermore, although both have been well known
as BI/analytics software leaders, they have for some time been evolving into
true business applications players too, targeting vertical industries especially
in the SCM and CRM areas via deep trend analysis capabilities in areas like
supplier performance, cross-selling opportunities, customer retention, fraud
detection, demand creation, risk and quality management. For example, a recently
enhanced demand management module from SAS, High Performance Forecasting,
is aimed at CPG manufacturers, and allows users to crunch millions of predictions
over hundreds of different stores, or locations, or products in short timeframes.
Leveraging recent acquisitions like Intrinsic campaign management
and Verbind interaction management solution, SAS has become
a notable marketing automation player rather than a BI vendor per se (see Marketing
Automation: Coming of Age Slowly). Other pure BI competitors, except for
NCR Teradata, will have a time of repeating the feat.
new departure for SAS from its traditional scientific and analytical applications
for the high-end of the market is more attention to low-end analytics through
a simplified Web-based query-and-reporting tool. The vendor also continues to
emphasize decision support tools for supplier relationship management (SRM)
and value chain cost analytics with a set of modules called SAS Supply
Chain Intelligence, which contains many of the applications geared
toward manufacturers. However, as for the performance management capability,
SAS still has much room for improvement to its CFO Vision and
Financial Management product suites, with limited penetration
in the North American marketplace. Acquisition of ABC Technologies'
activity based costing and management functionality in 2002 was a large step
forward in that direction.
in all other enterprise applications markets, eventually, the BI market too
will come down to a showdown between the pure BI/CPM vendors (e.g., Cognos,
Hyperion, SAS, Business Objects, etc.) and the enterprise application vendors
(e.g., Oracle, PeopleSoft, SAP, Siebel, etc.), which have been striving to natively
embed more performance management capability into their products, in addition
to the likes of Lawson and Geac filling their gaps through acquisitions. Especially
the remaining tier-two BI vendors (e.g., Informatica, MicroStrategy,
Information Builders, Silvon Software, etc.)
could find themselves in a very shaky position of either being acquired or joining
forces with a complementary functional or platform technology vendor (IBM,
Oracle, Microsoft, Computer Associates, Sybase,
Progress, etc.) via alliance or acquisition. A good example
thereof would be recent acquisition of Sagent by Group
Competition from ERP Vendors
As usual, the enterprise vendors will bet on leveraging existing customers who will have deeply invested in them, and have even reorganized operations around their ERP systems. However, the BI vendors' daily grind has always been working with information from heterogeneous sources, an order du jour' within many large organizations, which often have more than one ERP system and/or various legacy systems. This is analogous to the EAI market, since in larger corporations, customers still may prefer integration vendors with renowned product strength, vertical expertise, financial viability and savvy in XML-based B2B integration, multi-platform integration and workflow management.
The current CPM leaders also offer the advantage of superior analytics and planning capability, but, like in the case of the SCM and CRM markets, these advantages will diminish as the ERP vendors continue to improve their analytic capabilities and accessibility and add universal interfaces, including the new Web Service standards to facilitate access and integration of data outside their own environment. Thus, the BI vendors need to establish as strong a hold on the market as possible before the enterprise and platform vendors, some of which have begun to embed BI within their relational databases, catch up, despite BI's proven staying power within IT departments. Further, the BI vendors have earned the reputation of selling big BI infrastructure deals but leaving it to IT departments within user enterprises to figure out and define the scope of the entire project.
BI vendors often seem content to leave fragmented data models of the applications
they will even try to enhance in the future, as their pet project is often mainly
tackling the layer of decision, and leaving master data management (e.g., rationalization
of supplier or item master data), bidirectional integration, or business process
management (e.g., forecasting or sales planning) to enterprise vendors and/or
their system integrators. Unfortunately, users want functional performance management
systems, and not a bunch of data-marts. They also want scorecards in which target
values can be entered and tracked, and most BI product do not yet cater for
feasible forms management and data entry to easily track this. Given a big emphasis
on data integration products within Business Objects' Enterprise 6
product suite and given Actuate's acquisition of Nimble Technology, it appears
that the BI vendors have been getting the hints.
In general, existing customers of involved merging vendors should be alert, but they should still look at these events as positive. That is particularly true for Brio customers, since as their long embattled vendor comes under Hyperion's umbrella, which should provide customers more stability and a certain future for the product, given Brio's customer base of the thousands of companies should be a very attractive asset for Hyperion to nurture. Hyperion customers should continue to use Hyperion platform and applications as usual. However, as Hyperion continues to round out its CPM suite, its strategy to deliver the BI suite internally or through alliance and its integration plans remain unclear, and Brio customers may need to plan for migration in a long term.
On their hand, both Crystal and Business Objects products will likely continue to be sold and supported, and, only over some time, the two lines will converge into a single reporting and analytic architecture that will give companies a sole supplier for a broad range of reporting and performance management capabilities. There will be a few rough spots on the path until then, though due to the envelopment of formerly competing products. Although Crystal's products are complementary to those of Business Objects, the integration work ahead will involve some areas of overlap, which will have to be handled carefully. Users should not expect a unified suite of applications to be available before second half of 2004, and should challenge the company to commit to more certain product development and migration strategy roadmap. Very likely the first step will be to deliver a portal giving users access to both products from a single interface. Consequently, until the merger is consummated, users evaluating the above individual products should keep themselves informed, and consider generally available (GA) functionality only.
In a short to medium term, customers should demand from Actuate, Business Objects and Hyperion to articulate a technology integration road map and demand contractual independence for each brand, while prospective clients should be wary of being tricked to buy both when there is need for only one. Users should ask the following questions when evaluating the Hyperion-Brio and/or Business Objects/Crystal Decisions combined offering:
Are there any price advantages offered to existing clients who elect to purchase/migrate
to the future integrated products?
What technology will be used to integrate the applications?
Will (and when) the applications share a common server platform and user interface?
The users of each acquired vendor in case will likely be offered a free or highly discounted copy of the acquirer's product, and over time they should evaluate whether they wish to adopt more of the incoming suite for their CPM platform. Existing users currently using a competitor's product, particularly in case of Hyperion's use of Crystal, might end up with a difficult choice, because ultimately they will need to change either their BI/analytic suite or their reporting application, while at the same time they should also evaluate the opportunity of adopting more components of the acquirer's broader CPM product. Although this decision will not have to be made immediately, users will need to evaluate their situation down the track, to discern the lesser of two evils. They should urgently clarify their support status and the long-term product development and migration strategy with the new management.
On a more general note, the CPM evaluations should involve the IT organization, finance and operations, and most firms should create a joint committee or task force to evaluate how automation can improve enterprise-wide performance management. Although CPM starts with strong financial management, it will eventually extend beyond financial planning to almost all areas of corporate activity. Therefore, organizations choosing BI suites should consider both their financial management tools and future integration with key business-area solutions (e.g., PLM, CRM, SCM, etc.).
The most important point for prospective buyers of CPM technology -- do a very thorough analysis of your existing systems, where your corporation's business needs will be in the next few years, and how you intend to integrate the systems (do not forget that mapping data from one place to another is the most arduous, expensive, and time consuming part of the whole process, and one of the major reasons for BI projects failure) before you even talk to any vendor. Be both open-eyed and open-minded, since it is tempting to create specialized data models and tactical data marts to support quick deployment of CPM portfolio, but this can lead to the long-term inflexibility. The best start for CPM initiative towards building the entire Corporate Information Factory (CIF) would be to identify the most painful points and to try solving them by leveraging existing BI/analytics initiatives, while bewaring of being inflexible and of automatically settling for an incumbent vendor if its products and plans don not match up well to your strategic requirements. Also, one should not fall in the trap of "low-hanging fruit" and easily obtainable short-term return on investment benefits (ROI) at the expense of long-term strategic benefits that are either of a soft' nature or are of lower value in the short-term.
While the needs of employees, customers and business partners will vary, successful integration tools will need to provide access to such applications as inventory control, ERP, CRM, data stores, packaged applications, legacy systems and a myriad of other applications. The effort will be grueling, but the returns from an integrated information portal can be significant. As with any such purchase, users choosing point planning or BI products should consider the integration infrastructure and effort needed to combine these products versus the cost and functionality issues of choosing an integrated CPM product suite (if still possible to find). Mission-critical issues like scalability, reliability, manageability and ease-of-use go without saying. For smaller enterprises that are more inclined to rely on their ERP vendor on extended functionality such as BI and portals, the route to the complete CPM might be more straightforward. Thus, while the ongoing consolidation may reduce users' choices, it may also simplify their standardization endeavors some time in the future.