Adjusting the HorizontalWhile aiming for the vertical sweet spot, enterprise application providers must also deliver a strong foundationMy unflagging quest for insight into the whys and wherefores of strategic business applications most recently deposited me within the confines of two of America's most famous altered states of reality: the Walt Disney World Resort, outside Orlando, Fla. and the desert phantasm known as Las Vegas. The first location was the setting for SUGI, SAS Institute Inc.'s annual North American user group conference. The Paris Las Vegas Hotel offered the son et lumiere for PeopleSoft Inc.'s Leadership Summit 2002. These locales befitted the gyroscopic reorientation necessary to understand what's going on with today's enterprise applications. On an April evening delightfully free of the mugginess that normally makes a Californian who visits Florida stagger as though immersed in a steamy, invisible swamp, I strolled down on the Boardwalk, which shares a lagoon with Epcot Center. The Disney folks did a good job of replicating the visuals of a typical boardwalk scene: but the quiet promenade full of baby-strolling tourists bore no resemblance to the carnival of licentious activity that still clings to the shadows of Atlantic City or around the ocean piers in Southern California. And why should it? Disney is striving to spare its vacationing guests anxiety from just this sort of danger and behind-the-scenes turmoil. SAS, still one of the largest privately held software providers, is celebrating "25 years of profitable revenue growth," as founder and CEO Jim Goodnight put it during his presentation. With an effective demonstration of SAS's executive business intelligence (BI) dashboard solution, he reported on the company's performance by tooling around a range of sales, market, and other data, broken down into numerous slices and views. The dashboard depends on "one version of the truth": that is, SAS's own enterprise data warehouse. Goodnight showed how the company stacks up against competitors based on revenue data culled from external sources for key sectors of the BI, CRM, and data warehousing markets. If alerted to trouble spots by key performance indicators, he could drill down to see what's going on not only with sales regions, but also with individual salespeople. Web site performance is a source of keen interest; as an example, Goodnight pulled up statistics showing how popular SAS's employment pages have become recently with visitors from IBM sites. Taken as a whole, Goodnight offered a rather awesome display of the new data power that could be on every CEO's desktop if they cared to invest in what it takes to make it happen. In my last column, I discussed how BI and analytics are becoming the elixir of differentiation for all sorts of enterprise applications. This "second generation" trend should expand the market for packaged applications by delivering greater strategic value over standard, transaction-based operational functions and reporting. However, I noted that the trend might also hit the traditional BI/data warehousing market with some difficult structural changes. Based on what I heard at SUGI, SAS would seem to interpret this trend conversely: that is, the growing strategic importance of BI and analytic applications could ultimately marginalize the world of operational packaged applications, rather than the other way around. Who Owns "Actionable Intelligence"?Working up some lather with pointed competitive distinctions, Goodnight and other SAS officials took particular aim at Siebel Systems Inc., by most measures the leading CRM software vendor. After a year of intensive acquisition and partnership activity, the company now fields Siebel Analytics 7 as a Web-based platform integrated with its CRM solutions. The idea is to have analytic function and content aid the user in the course of performing business processes. Several software providers across the BI and enterprise applications spectrum (including PeopleSoft, which I'll discuss in a minute) are using the term "actionable intelligence." The term defines the new world of analytics delivered through dashboards tailored to the user's role as defined by the enterprise portal and its underlying applications and data resources. Intelligence becomes "actionable" when it's presented in a context that allows the user to perform a role in a business process. The term also draws a distinction between what's perceived as the "passive" structure of traditional reporting-oriented decision support, data mart, and data warehouse systems and the new world of real-time, event-driven intelligence delivered through metrics and key performance indicators. SAS doesn't intend to compete on Siebel's operational turf. Instead, SAS argues that "relationship" management belongs on a different plane, defined by a broader, more complex, and definitely more data-driven range of activities. First and foremost, companies need to bring together data from a range of operational systems, not just one. "We understand the issues involved in preparing data," said Jim Davis, SAS's chief marketing officer, touting the company's data cleansing, transformation, and warehousing capabilities. Second, relationship management demands deep analytics, "not just a bunch of canned reports," Goodnight asserted. Companies need to focus on "building an intelligent enterprise" that will support the pursuit of competitive differentiation based on data intelligence. SAS is developing supplier and other "relationship management" solutions that the company says will offer strong domain expertise supported by new hires with experience in key industries. Horizontal tool suites will continue to have their place, but the company expects the stronger growth to come from vertical analytic application packages. Integrated with the vertical domain expertise will be software to enable evaluation of business performance, more sophisticated forecasting, and communication of business goals throughout the organization. The key to this evolution is SAS's recent acquisition of ABC Technologies, a software firm devoted to activity-based management and balanced scorecard implementations. Peoplesoft: Vertical VigorHorizontal is passe; vertical is where it's at. Rather than spend resources customizing the inner workings of the software, user organizations want to tweak performance metrics and business processes so that they fit industry requirements. That's fine with enterprise application providers, who would rather not have to support numerous customized code bases for essentially the same implementations. Oracle, SAP AG, PeopleSoft, and other vendors have been trying to find the right words to express their desire for customization control as a customer benefit — which it is. But it's also in their interests to reign in chaos and mushrooming consulting costs to survive in a tough, ROI-obsessed economy. Vertical depth will allow enterprise application vendors to offer more knowledgeable, "active" systems that employ activity-based management and performance metrics to align employee efforts directly with corporate objectives. At its Leadership Summit, PeopleSoft announced a series of CRM industry solutions, within which the company's Enterprise Performance Management (EPM) analytics suite, Balanced Scorecard, and activity-based management will play an important role. However, as vertical specialization becomes infused with new capabilities for analytics and process automation, horizontal strength can't be neglected. "We're trying to challenge customers to see the big picture," said Chuck Teller, vice president and general manager of PeopleSoft EPM. Built on an enterprise data warehouse foundation, EPM is designed to deliver analytics but not exacerbate the "information silo" problem that the legacy of previous vertical and functional specialization has already created. The same could be said of business processes; PeopleSoft and other enterprise application vendors are pointing to Web services as the emerging glue for business processes running both internally and externally. The challenge software providers face is avoiding chaos with competing vertical standards for XML and other key technologies. "It's now about business processes, not software applications," said PeopleSoft's CEO, Craig Conway. Users shouldn't have to be aware that they're moving among a range of possibly heterogeneous applications to perform their roles in business processes and gather intelligence through analytics. The narrow vision implicit in specialized vertical and functional packaged applications of the past is what doomed them to failure, according to Conway. Vertical orientation must grow out of a strong horizontal base. David Stodder [dstodder@cmp.com] is editorial director of Intelligent Enterprise.
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