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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
- Develop
its own system
- Partner
with large "horizontal" BI vendor
- Partner
with small "boutique" BI vendor
- 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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