Category Archives: Business Intelligence

Hi Ho or Ho Hum?

Call it coincidence, but within the past week, two strangely similar deals reshaped the fragmented BI sector: Business Objects + Crystal Decisions, and Hyperion + Brio. Some background: While SAS and Teradata are the 16-ton gorillas dominating the high-end Terabyte market, the rest of the field is dominated by midsize players dying to break out.

Business Objects and Cognos battle over the ad hoc query and reporting space which targets power users. By contrast, Crystal has blown away virtually all competition (including Brio) for the high-volume, standard reports that are created once and distributed across enterprises and business units. Crystal also boasts a huge OEM business whose contribution is more mindshare than revenue, with Hyperion having been one of its licensees.

At first glance, the combination of Business Objects and Crystal appears a marriage of strength, while Hyperion’s Brio acquisition appears reactive. In reality, both deals are defensive, primarily aimed at putting together critical mass, and secondarily intended to provide more complete soup-to-nuts suites in a sector that until now resisted them.

Of course, amassing size in a consolidating software market is not a bad thing, unless the assembled parts have little or no synergy. Virtually every BI player has traveled the M&A route before to mixed results. In this case, Business Objects and Crystal have more apparent synergies, but both players admit that it will be impractical to merge both product sets into a single line. Ironically, Hyperion may find it easier to unite products since conceptually, it’s not a huge leap to replace the embedded Crystal Reports with Brio. And it may find some benefit adding Brio’s Metrics Builder to its existing corporate performance dashboard products. But the deal won’t garner Hyperion much additional market share, given Brio’s also-ran history.

The real question is what BI companies want to be when they grow up. Business Objects aims to be the “pure play” query and reporting player. Although it (and everybody else) has ventured into analytic apps, it realizes the need to avoid traipsing on SAP’s turf. Hyperion intends to continue emphasizing financial consolidation and planning, while Cognos is trying to serve all of the above. To its credit, Cognos has just come out with a pretty cool next-generation web services reporting capability that has yet to be proven.

Yet, as all this consolidation is taking place, new demand for “real-time” business intelligence is emerging that may — or may not — utilize the capabilities that these vendors have spent years developing. In that context, this week’s M&A is more about shoring up the past rather than looking into the future.

Growing Pains

Not surprisingly, data warehouses are getting bigger and more current. A just- released study from The Data Warehousing Institute (TDWI) — surveying over 700 companies — revealed parallel trends for organizations loading over 500 Gbytes to their data warehouses, and requiring “near real-time” feeds. The proportions of companies doing either are expected to triple in the next 18 months.

Speaking with Wayne Eckerson, TDWI director of research, the big challenge is brains, not brawn. With today’s ETL (extraction, transformation, and loading) tools delivering up to 10x the throughout of a few years back, the big problem is knowing all that data.

Most ETL tools have adequate meta data repositories, which identify source data records, how they are transformed, and when they are loaded into data warehouses. However, BI (business intelligence) usually requires multiple tools, because no single vendor offers adequate soup-to-nuts solutions. Consequently, there is a need to correlate the physical characteristics of data (record structure, transformation processes, etc.) with its logical identifiers (business objects). And that’s where existing meta data stores fall down.

As we’ve noted before, problems such as these prove that BI is becoming a victim of its own success. That’s not surprising, given that BI is one of the few cost-justifiable IT investments during recessions.

While there is some hope on the horizon — the OMG’s Common Warehouse Model (CWM) appears to be gaining critical mass vendor support — technology and lip service to standards won’t resolve the problem. Just look at the track record of the Open Applications Group (OAG), which developed standards for interfacing common ERP business processes as if they were EDI (electronic data interchange) transactions. Today, EAI (enterprise application integration) remains as costly and elusive as ever.

No, we think that people and organizational inertia are the real hurdles. We recall a conversation with data warehousing guru Ralph Kimball. He told us of the difficulty getting one of his clients — a diversified global enterprise — to agree on a standard data definition for customer. Syntax gaps often make technology obstacles look downright trivial in comparison.

Betting on A Bundle

Last week’s Business Objects’ acquisition of Acta illustrates the bounds and limitations of packaged business intelligence (BI).

To recap, business intelligence complements core enterprise systems; while core systems report “how” a company is doing, BI systems can provide the “why” answers. Companies like Business Objects provide “front end” tools and applications that business analysts use to build their own query, reporting, and data mining systems. Back end tools like Acta are used by DBAs and developers to physically get the source data and transform it.

Outside the financial services industry, which largely competes on proprietary software, the rest of the business world clearly prefers packaged turnkey solutions. The latest example is BI, where ERP and CRM vendors alike have begun packaging analytic extensions to their core transaction systems, with BI tool and application vendors like Informatica, Business Objects, Cognos, and MicroStrategy packaging their own SAP/PeopleSoft/etc. add-ons.

The Business Objects/Acta deal is the latest example of this strategy. In buying Acta, which focused on ERP system data extraction, Business Objects is adding the back- end component so it, too, can offer end-to-end ERP analytics to rival SAP’s own Business Information Warehouse (SAP BW).

In this age of modest expectations, the $65 million cash acquisition was a bit of a bargain, representing but a modest chunk out of Business Objects’ $300 million cash.

Back to our main point, this deal shows the potential and limits of packaged BI. Yes, there is a sizable installed base of ERP packaged applications that provides a critical mass market. But most of the world continues to operate legacy systems for which there are no neat end-to-end solutions. Those cases will continue to require best-of- breed strategies that pair front end BI tools with either homegrown data extraction programs or tools from Acta’s former rivals: Informatica, whose strengths are with SQL database sources, or Ascential, whose edge is with legacy sources.

Consequently, there may be a modest rush towards packaged BI solutions. But for the rest of the world, BI will remain an area where assembly is still required.