An acquired taste

One of the signs of a maturing market is vendor consolidation. Business intelligence (BI) may be maturing quickly if that yardstick is anything to go by. Some large-scale acquisitions have taken shape since ITWeb last covered the BI space, foremost among them Oracle's buyout of Hyperion for $3.3 billion.

ITWeb's round table guests had plenty to say about the real reasons for the buyout (see the Q&A section), but it's clear to most observers that BI vendors are proving successful where some ERP vendors are struggling.

BI vendors tend to pride themselves on flexible and quick delivery of real value, with a special focus on doing the back-end integration properly; they're doing well as a result. But then again, they've had over ten years to get it right.

Oracle and Hyperion are naturally upbeat about the acquisition even though the transition period is a great time for other BI vendors to go shopping for uncertain customers of the two companies. Some independent observers are also happy.

Adrian van der Merwe, MD of 8th Man Consulting, says the buy-out bodes well for the local market as it means customers will now have access to a large organisation that is well-established in this country and has an extended network of partners.

"Following the acquisition, local customers will be able to obtain software and services for Hyperion products from any of Oracle's long list of partners," says Van der Merwe.

"The organisation has a huge presence. Hyperion products will now also benefit from Oracle's solid and long-standing research and development programme, another plus for local customers. In addition, Oracle plans to keep Hyperion heterogeneous so it will function against all platforms, including SAP and Microsoft."

Strategic BI is... also about better predicting the future.

Davide Hanan, MD, QlikView South Africa

Microsoft hasn't been idle on the acquisition front either. It quietly bought BI vendor ProClarity last May and has spent the last year consolidating the vendor's functionality into a low-priced offering that should appeal to SMEs.

Keith Jones, managing director of local ProClarity distribution partner Harvey Jones Systems, should have been out of a job when the buyout happened. Instead, he estimates his business will quadruple.

"Microsoft's history of acquisitions isn't great and it was a bit of a wobbly time. The market traditionally goes into hibernation when this sort of thing happens, but this is the best acquisition it's ever done," he says.

This month, the company will hand over its client base to Microsoft, but Jones says he will probably struggle to cope with the increase in services and training business after the handover. Part of the reason for that is the commodity factor Microsoft hopes to bring to BI through its new asset.

"Having all of ProClarity in a single, aggressively-priced box is the single biggest change in the BI market in the last 10 years," says Jones.

"Every other vendor is going to have to compete somehow. It's great for consumers because they will get better deals from the price pressure Microsoft is able to apply. I call it information democracy, where the cost used to be very high. That has now tumbled and barriers to entry for large deployments have fallen. And the opportunities for us will be in consulting and services because 80% of any solution is how you use it."

Van der Merwe says the Oracle deal should also open up new opportunities for local partners.

"It's a positive development for us and will give all local partners the opportunity to grow their existing customer base, and further enhance their expertise at the database level."

Van der Merwe points out that the Hyperion acquisition is the latest move in Oracle's strategy to expand its offerings to SAP customers. Thousands of SAP customers already use Hyperion as their financial consolidation, analysis and reporting system.

"It's been said that Hyperion is the lens through which business people view and analyse their SAP data," he says.

"This move gives Oracle direct access to the chief financial officer. We have to bear in mind, however, that local Oracle skills are already in high demand. This means the market is likely to be flooded with newcomers. Users must insist on partners that have a track record and are able to provide referenceable customer sites."

As if major acquisitions didn't provide enough flux for the BI user, there's also a new kid on the block, although the company has been around since 1993. Swedish player QlikView, which has a local office in Cape Town, is starting to win some big deals with its simple approach to data analysis: do it all in memory rather than on disk. The company has just released version 8.0 of its analysis tool.

"QlikView represents a radical break with previous generations of BI software," says QlikView South Africa MD Davide Hanan.

"You can do business analysis without the need to write or rewrite complex queries. Strategic business intelligence is not just about analysing the past, but also about better predicting the future. Businesses need to review and compare detailed what-if scenarios on budgeting and planning, for example. Because we don't use hierarchies, users don't have to understand how the data is organised. As soon as you use disk-based methods - like traditional OLAP - then you're pre-aggregating the data. That is already forcing a certain view of it before you even start. But if you do it in memory, then it is possible to organise it in any way you choose."

Business intelligence has historically been seen as the preserve of large, well-financed organisations, but smaller organisations also need the benefits of such software.

To deliver BI to the SME market takes innovation and flexibility.

Aubrey van Aswegan, MD, KID

Aubrey van Aswegan, MD of Knowledge Integration Dynamics (KID), says SMEs have tended to be at the end of the queue for suppliers of enterprise-class software.

"This has, to date, been true for almost every class of software. It's certainly been true of ERP software and it's equally true of the BI market. In considering SMEs, it's useful to draw a distinction: for the BI market, the dividing line is companies with revenues of R200 million and under. These companies have precisely the some pains and challenges as Global 10 000 companies: they struggle with data accuracy, they need insights into their operations, they need to understand which customers to target, and why they are losing customers to the competition. And they need to be able to align strategy with insights into the business.

"They also need to be able to give management quick insights into the day-to-day activities of the business, so corrective action can be taken when it still matters; and they need to be able to present this information to executives in a manner that is easy to understand, typically graphical in format, and ideally in a dashboard."

That's easy enough to say, of course, but as Van Aswegan points out, a large global company can afford the R5 million required for a classic BI solution - SMEs can't justify such an expense as a proportion of revenue.

"To deliver BI to the SME market takes innovation and flexibility," he states.

He adds that there are a number of approaches that work. Firstly, BI can be delivered as software as a service (SaaS).

"This model has succeeded where ASP has failed and is a huge hit worldwide with customers of all sizes, so much so that more than 5% of all software today is delivered in this way. The popularity of the SaaS model derives from the fact that capital payments are avoided, expenses are deferred off balance sheets and risk is shared by the vendor. Hardware tends to be owned and managed by the vendor, allowing the customer to get on with his core business.

"Secondly, open source tools can be leveraged. Relational databases such as MySQL and PostgreSQL, being marketed on the open source model, can help defer capital costs as there is no price tag associated with their acquisition. In addition, there are suites such as Pentaho that have been developed on the open source model, and these can be used in conjunction with open source databases to deliver a full BI solution.

"In such a scenario, skills remain the missing piece of the puzzle. Finally, industry best-practice templates can be used that can make for a fast start, reduce skills and implementation costs, and bring the business in line with the processes of far larger organisations."

Planning is still one of the major failure points of BI. The business intelligence landscape is littered with the corpses of very expensive, failed projects. Whether it is a data warehousing white elephant or some costly analysis tools installed and unused on employees' desktops, there are few CIOs and financial directors without a BI war story to tell.

According to David Greenleaf, commercial director of Ability Solutions, the reason so many companies fail to realise some form of ROI is that they have failed to prepare.

"BI is not a piece of off-the-shelf shrink-wrapped software," he says. "You can't expect to purchase a boxed solution and then tweak it slightly to suit your company's business processes."

He argues that the best practices incorporated into many of the current BI solutions are necessary, but not as vanilla implementations that are designed for and suited to the vendor's IT environment.

"The first step in BI is to understand the business and how it operates. When a clearer understanding of the firm's operational processes has been gained, management is able to better identify vulnerabilities and areas of potential where BI can make a difference. This step might indicate that the solution only involves a dashboard on a manager's desktop that displays key information, highlighting problems when certain measures fall below previously defined critical points. On the other hand, the solution may need to be pushed down the ranks and into the hands of more operational employees to assist them in making better on-the-spot decisions to keep the company running smoothly.

You can't expect to purchase a boxed [BI] solution and then tweak it slightly to suit your company's business processes.

David Greenleaf, commercial director, Ability Solutions

"Once the company in question knows what it wants, it needs to develop an extensive BI roadmap that takes it from its current position to its ultimate goal. The implementation, if it is to succeed, cannot be a big-bang approach of installing everything immediately, but must be done in phases. The BI roadmap will map out each phase, with the results everyone should deliver.

"The final step before implementation is to design and initiate a strategy that will govern how the BI system is to be implemented. Once again, this means a phased, disciplined approach is needed. As each step is successfully completed, it will be expanded, enhanced and integrated into the next until the project is finally complete. Skipping steps or ignoring bad results with the attitude of 'we'll fix it later' will simply deliver a bad outcome - and BI implementations are too expensive for a laissez-faire approach.

"Trying to slap it all down in one quick, cheap burst of energy will not only deliver bad intelligence, but the cost of putting it right will be far higher than the cost of doing it right the first time," he notes.

Market reports confirm that there's room for improvement, both in the implementation and usage of BI. Intelligent Enterprise, in its recently published seventh annual special report on BI "mega trends", described BI as a traditionally disconnected activity, with users "unable to traverse the big gap between being informed and being able to do anything about it".

"Currently, stacks of BI functionality serve only a small fraction of the user community, 10% to 20%, according to most studies, although actual use is probably even lower," says the report.

According to Yolanda Komen, BI manager at local Hyperion representative Intellient, the report agrees with the trends that have already been noted above.

"There is a distinct shift in the market to an environment where guided search, navigation, visualisation, data manipulation, software as a service, service-oriented architecture, master data management and metadata management are gaining a foothold. BI tools designed to provide real-time intelligence are being spread throughout the organisation and incorporated into business process, all making BI a more useful business component."

So what are the trends for 2007? The report says there are a few major ones to watch out for:

* Real-time analysis. What took days can now take seconds. The constant push for regulatory compliance is driving this trend still further.
* Workflow incorporation. BI is invading ERP, CRM and workflow.
* The standards versus customisation paradox. While BI vendors are striving to provide simple all-in-one solutions, organisations are still faced with environments that are quite disparate from many BI solution requirements' perspective.
* Software as a service. This will enable smaller companies to obtain the benefits available from applying real-time BI, as they will not be required to cover the initial expenses associated with implementing a solution in-house.
* Business and user shifts. Organisations will have to determine how best different users can leverage the BI environment.

And users themselves will be having more of a say. Dashboards became popular because users favoured them over complex reporting tools. New products, which allow one-click slice-and-dice operations, are troubling the old guard of BI vendors who might well have to find better ways of presenting data in order to compete.

This year seems to be the year where consumers are determining the direction of software and technology installed in corporates. BI could be yet another tool forced to adapt.