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October 30, 2003

The BI Consolidation Conundrum

Market cleansing is accelerating corporate product consolidation

by Mark Smith

The market events of the last three months — Business Objects acquiring Crystal Decisions Inc., Hyperion Solutions acquiring Brio Software Inc., and Geac Computer Corp. acquiring Comshare Inc., and so forth — have dominated both management meetings and water cooler conversations. But behind the vendor consolidation frenzy are product consolidations that are being assessed and performed more often than you may realize.

Over the last few years, many organizations have already had to choose their preferred provider of BI and reporting capabilities because of vendor consolidation. This reaction has helped fuel further market consolidation.

Another factor driving vendor consolidation is the increasing desire of organizations to have all facets of BI and reporting from one vendor to lower costs, simplify management, and standardize technology. At a time when more and more users are requiring increased capabilities (ad hoc query and reporting, analysis, budgeting and planning, production reporting, and dashboard solutions), many vendors are discovering that organically growing, developing, and selling new products would take too long to catch up to competitors' already mature offerings. Just as other key elements of IT infrastructure — hardware, operating systems, DBMS, application servers, and transactional automation systems such as ERP — have consolidated, BI and reporting technologies must now do the same.

The Vendor Vortex

The recent market consolidation has pulled aside a curtain to the different philosophical approaches to BI and reporting. The notions that reporting is reporting and one vendor's architecture doesn't vary much from another's are not true.

Business Objects' announced acquisition of Crystal Decisions in July 2003 provides a clear example of the variances in reporting approaches. Business Objects provides user-level, ad hoc query and reporting that users can publish and even automate, while Crystal Decisions lets IT and application developers create, embed, and deliver reports to users. Did these vendors compete for business? Absolutely. And while the sales and marketing departments of these competitors were busy trying to convince prospects that their respective approach was best, the product organizations were busy trying to emulate the strengths and sweet spots of the other.

The escalating importance of embedding reporting into applications in the last few years made Crystal Decisions one of the fastest growing vendors in the market. Business Objects decided that taking the time to develop these capabilities, compete with incumbent and new vendors, and convince the market it could do it all by itself was too risky. The challenges now for Business Objects and Crystal Decisions are to maximize operational potential and develop a roadmap that integrates products so customers can leverage their existing investments.

Organizational Impact

Many global organizations have determined that the apparent differences in user functionality aren't significant enough and that their various BI investments have similar software capabilities. However, these conclusions can be misleading. I have found that, in the majority of multiyear global BI deployments, the embedded business logic and rules in the information models, hierarchies, metrics, and saved user views are unaccounted value that may not be easily replaced. In many instances, organizations will continue to require multiple BI suppliers across enterprise deployments where they can't derive enough value from converting from one vendor to another.

To accurately assess your existing BI deployments, you must delve deeper than user functionality. You must consider other criteria, such as usability, manageability, reliability (architecture, user, and data dimensions of performance and scalability), and the levels of adaptability (customization, development, and integration into enterprise architecture). In addition, you must complete a total cost of ownership (TCO) and value assessment to ensure that any replacement system will actually provide greater value at a similar or lower cost than your existing one. Unfortunately, many organizations continue to hold functionality bake-offs between suppliers to determine the "vendor of choice" for future projects.