Business Intelligence Network - The Vision for BI and Beyond

After SAP's Acquisition of Business Objects, Where Next for Business Intelligence?

Published: October 24, 2007

How will SAP's recent acquisition of Business Objects and other acquisitions in the business intelligence space impact customer business intelligence investments and buying trends?

SAP’s recent announcement of its intent to buy Business Objects for $6.7 billion created quite a stir in the IT industry, and everyone from bloggers to financial analysts had something to say about the acquisition. Most of the blogs and articles, however, focused on what the acquisition means to competitors such as HP, IBM, and Oracle, and about which independent business intelligence (BI) vendor will be acquired next. Little has been said so far about the long-term effect on the BI marketplace. In this article, I want to add my own two cents’ worth to the dialog about the acquisition by discussing in more detail its likely impact on customer BI investments and buying trends.

To provide a basis for the discussion, let’s first review some of the key business intelligence technology requirements customers have today.

Customer BI Requirements

Many IT organizations are trying to reduce the number of standalone BI products they have and are focusing instead on deploying an integrated and scalable enterprise BI platform. The hope is that an integrated BI platform will allow the organization to handle increasing business demands, reduce IT backlogs, and manage the phenomenal data growth that is occurring in most companies.

In parallel with moving toward an integrated BI platform, IT organizations are also looking for BI solutions that are more cost effective, faster to deploy, and easier to use. Reduced costs help in a time of constrained IT budgets, while faster deployment enables the organization to react faster in a rapidly changing business climate. Ease of use helps business users to become more self sufficient, thus reducing the load on the IT department.

If these IT needs were not enough, there is also a subtle, but even more significant, requirement beginning to appear in most companies. People currently entering the workplace for the first time have grown up in an Internet and high technology environment where, at a personal level, it is easy to communicate with other people, and create and share information almost instantly. At work, these new employees expect these same capabilities to be available in their jobs, and they quickly become dissatisfied and disillusioned when this not the case.

Current approaches for delivering and sharing information in companies cannot satisfy many of the needs of new workers; and unless organizations rapidly adjust to meet those needs, they are going to be in serious trouble. Those companies that can satisfy the needs of new workers will become the future information leaders and, therefore, also the future market leaders. As Doug Wilson, the CTO for IBM collaboration and portal products, said at the recent IBM IOD conference, “In the past, we have been happy if we can do some of the things at home that technology allowed us to do at work, but today the reverse is true. Workers expect to do at work what technology allows them to do at home.”

To summarize, business intelligence customers are looking for an integrated and lower-cost BI platform that is easy to deploy and use, and that also supports new technologies for collaboration, and for delivering and sharing information.

Having defined the business intelligence needs of customers, let’s now examine the ability of the established BI vendors to satisfy those needs, and whether the current direction toward vendor BI consolidation is helping or hindering developments in this area.

The Acquisition Frenzy

Vendors trying to satisfy the need for a complete business intelligence and data integration platform can build the platform from the ground up, acquire and integrate products and technologies from other vendors, or use a combination of the two approaches. To reduce product development and delivery times, many of the larger vendors take the acquisition route. Of course, there are other reasons for acquiring another BI company, including gaining skilled developers and researchers, building a larger customer base, quickly moving into a new market, and putting a competitor out of business.

As I began writing this article, I tried to recall the various acquisitions that have taken place over the past few years in BI-related areas such as query and reporting, analytics, performance management, data management and integration, master data management, and content management. I came to the conclusion that there have been enough acquisitions for a BI trivia game! Outlined below are some of the main ones, but I suspect I may have forgotten a few.

• SAP acquired Business Objects, OutlookSoft, Pilot Software, Callixa, A2i
  
  
• Business Objects acquired Crystal Decisions, Infommersion, Cartesis, Nsite Software, SRC Software, OLAP@Work, ISoft, Acta, Medience, Firstlogic, Inxight Software, FUZZY! Informatik
  
  
• Oracle acquired Hyperion Solutions, IRI Express, Thinking Machines, Sunopsis, One Meaning, TimesTen, Stellent, InnoDB, Siebel, PeopleSoft, J.D. Edwards
  
  
• Hyperion acquired UpStream Software, Brio, Razza Solutions, Decisioneering
  
  
• Microsoft acquired ProClarity, Stratature
  
  
• IBM acquired Informix (including Metacube and Cloudscape), Ascential, AlphaBlox, DWL, FileNet, DataMirror, Venetica, Trigo, Green Pasture, SRD
  
  
• Cognos acquired Celequest, Applix, Adaytum, DecisionStream, Frango
  
  
• Informatica acquired ItemField, Similarity, Striva, Influence

Many of these acquisitions have been successful, while some have not. A key success factor is the ability of the vendor to efficiently integrate the acquired company into their existing environment. This not only means the development, sales, marketing, and support organizations, but also the technology itself. Vendors have the same problems as their customers with respect to being able to absorb new technologies and products into their existing technology platforms.

Another issue when a vendor acquires a product is the level of overlap with functionality in existing offerings. Most vendors are unwilling to phase out existing components in favor of new ones because it disrupts the development organization, upsets customers, and impacts revenue streams. The situation gets worse as more products are acquired; and as a result, offerings become gradually more complex and marketing messages confused. The approach being taken by many vendors to solve this problem is to connect legacy and new products and components together in a service-oriented architecture (SOA). This is similar to the direction being taken by their customers to solve similar problems.

How Do These Acquisitions Affect Business Intelligence Customers?

The trend toward vendors offering a platform of business intelligence capabilities is, of course, in line with the customer need for an integrated BI solution. The issue, as I have already pointed out, is the level of integration and overlap between the various components of the BI platform. Products may appear to be integrated on marketing charts; but, frequently, under the covers, they are not.

The integration problem is compounded by the fact that a large number of product acquisitions are by large infrastructure vendors such as IBM, Oracle, and SAP. These vendors often bundle and/or integrate their BI-related solutions with their application platforms and database products where there are also many acquisitions taking place. Although a vendor may state its business intelligence and data integration solution is application platform and database agnostic, realistically it may not be because to fully realize the capabilities of the solution, the other components of the platform are required. The net result is lock-in to the vendor’s complete application platform and database solution. This situation is frequently made worse by the fact that the vendor will not let you purchase just the BI components you need. Instead, you have to buy sets of components packaged into various editions that have labels such as “standard edition” and “enterprise edition.”

For large enterprise customers who want to standardize on a complete product set from a few key infrastructure and application vendors, the current BI marketplace direction is a positive one, even given the issues I have raised. However, for a large number of smaller enterprise and medium-size customers, this direction is definitely detrimental to being able to provide a cost-effective and easy-to-install and use BI solution. The problem is the number of independent BI and data integration vendor alternatives is diminishing rapidly. Examples of key ones are Actuate, Cognos, Informatica, Information Builders, MicroStrategy, SAS, Teradata, and SPSS, but even some of these may also be acquired over the next twelve months.

Personally, I feel it is tragic that the number of independent BI vendors is dropping. However, given recent BI acquisitions – in addition to continued market growth by Microsoft and its BI partners – I believe this opens up the market to new and innovative BI companies, BI appliance solutions, and to Web 2.0 and search-driven approaches to delivering information and analytics to business users. I’ll look in more detail at the latter topic next month.

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