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While leading software companies tout performance management, new players zero in on ''zero latency.'' And of course it all works with Excel.
John Verity, CFO IT
November 17, 2003
By computer industry standards, the business-intelligence sector has reached full maturity. Many software makers have been around for more then a decade, and many of them, Information Builders, is even celebrating it's 26th year. But the market is rife with change and innovation, most of which should benefit corporate buyers in the coming months and years.
True, with IT budgets flat (at best), BI sales have grown a scant 5 percent annually, according to IT advisory firm Gartner, a far cry from the 40 percent jumps that companies such as Brio, Business Objects, Cognos, and others enjoyed during the 1990s. But consulting firm Meta Group says the BI/business-performance management market is far from saturated, and growth could hit 20 to 25 percent if and when the economy recovers. For now, the marketplace has entered into a classic period of consolidation and commoditization. BI providers are merging as a way to maintain market valuations as well as to flesh out their product lines and grab a greater share of customers' spending. Hyperion's acquisition of Brio, completed just last month, is but one in a series of high-profile deals that have affected the market this year.
BI covers a lot of ground, from routine financial reporting to analytical applications to software that helps users model business and develop plans and forecasts. It is a label embraced both by companies that make ready-to-go applications (such as Hyperion and Cognos) and those that make software tools that allow customers to develop their own analytical software (Information Builders and Business Objects, among others).
It's also an arena of interest to enterprise resource planning (ERP) vendors such as SAP, Oracle, and PeopleSoft, each of which has announced expanded BI offerings in the past year. However, feature for feature, many of these tools tend to fall short of the BI software from companies that specialize in that area, says Joshua Greenbaum, principal of Daly City, California-based consulting firm Enterprise Applications Consulting. He says the ERP vendors are virtually giving away BI products to customers that invest in their software suites.
Microsoft, as always, looms large. The software giant seems mainly interested in winning small and midsize businesses, but a forthcoming version of its SQL Server database product, code-named Yukon, is expected to sport much BI capability. "Yukon will be much more competitive with current offerings," says Richard Sherman, founder and head of Athena IT Solutions, a BI consultancy in Stow, Massachusetts. Meanwhile, Microsoft's Excel spreadsheet stands supreme as the bedrock number-cruncher which with other products must interface.
That makes for difficult buying decisions, complicated even further by the advent of new, Web-based versions of older products, which are often redesigned to work as suites. Some say all these factors create a situation in which companies may want to step back and assess a long-term BI strategy to which the entire organization can adhere.
New and Improved
On the plus side, the products are getting notably better. ERP vendors aren't shy about using marketing clout to paralyze markets they seek to enter, but they also have the resources to develop substantive new BI software that can crunch all the data that already resides in their transactional systems. BI and ERP companies are pursuing a common vision of business-performance management (variously billed as BPM, CPM, or EPM). And during the past four years, venture capitalists have plowed nearly $150 million into emerging BI-related firms, according to VentureWire, a Dow Jones daily that tracks venture financing. Many of those start-ups, often founded by veterans of the mainstream BI market, are just now starting to enter the marketplace, making 2004 a good year for scouting future BI-technology trends. Working in the start-ups' favor is that the main BI tool suites remain incomplete: Meta Group says most big companies still have four or five different BI products to meet users' needs. Whether these start-ups can win sales in a tight market or are ultimately acquired remains to be seen, but in either case, BI technology is ripe for enhancement.
Easily the most popular and compelling technological theme among the newcomers is the notion of real time, or zero latency. Even though those terms are two of the most overused buzzwords in computing today—and every supplier means something different by them—there's clearly something to the idea of speeding up the BI process.
Today's typical BI setup centers around a data warehouse, a special database that stores information for the purposes of analysis, sparing a company's production databases the strain of responding to numerous and complex queries. Data warehouses are updated by batch process every few days to as seldom as once a month, and are often cited for lack of data detail and security concerns. That's fine for many types of broad-brush historical analysis, but if up-to-the-minute data could be analyzed and alerts sent immediately as soon as key metrics veered from the norm, that could help companies avert disaster. In manufacturing, for instance, a sudden decline in an assembly line's hourly yield may have important ramifications up and down the supply chain, and quite likely in the CFO's office, too. Retail banks and brokerages, meanwhile, need to watch risk exposures and prime lending rates transaction by transaction, moment by moment.
The proposed solutions to such real-time BI problems vary. A company called Appfluent Technologies, for example, has come up with what it calls a "report server," a self-contained appliance that maintains a fresh copy of just those portions of the production database that analysts plumb with BI tools at any given moment. By monitoring the queries those BI users are posing, the appliance keeps its local copy of the data in perfect sync with the production database, yet doesn't overtax it.
Celequest (formerly Viewceler) and Iteration Software have taken a different tack, each creating software that near-instantly performs complex analyses of incoming transaction data related to any business event and, if necessary, automatically alerts specified employees by instant message, phone, E-mail, or fax.
Earlier this year, Certive launched a product designed to help IT staff manage distributed data as if it existed in a centralized location, and lower the development and maintenance costs of analytic applications, while Juice Software developed technology that provides Microsoft Excel spreadsheets with continuous live connections to virtually any source of data.
2004: Suite Dreams
Companies have tended to buy BI products individually to solve a perceived pain point, be it a need to speed the budgeting process, generate reports, understand sales trends, or assess some specific facet of operations. Makers of BI software are retooling and expanding their offerings in the hope that companies will buy entire suites of products that, in a best-case scenario, provide a complete system for performance management. Prices for such systems can run to six and even seven figures, although a company can buy one product to solve a problem today and build over time.
Nonetheless, expect to see a more-is-better sales pitch from nearly every BI company, most of which will add products (often thanks to acquisitions) and tout the degree to which their suites are integrated. Also expect a blurring of the lines between companies that sell tools for developing BI systems and those that sell packaged applications. The time may indeed be at hand for a top-down reassessment of BI usage and strategy, lest the ad hoc buying across business units hampers potential benefits of the suite approach. Even if the budget isn't there, a plan probably should be.