The BI market consolidation – is it good for business?

Where have all the players gone?
Less than a year ago, the business intelligence (BI) market was the turf of several powerful, pure play vendors.

Up until 2006, according to research from analyst firm IDC, around 48 per cent of the BI marketshare was divvied up among the top five players – SAS Institute, Business Objects, Cognos, Hyperion and Microsoft.

Fifteen other “second-tier” vendors controlled another 30 per cent.

In short, it was a fairly diversified market, with no dearth of competition and – in theory at least – this meant more choice for customers.

If your current vendor didn’t deliver, you could always take your business [intelligence] elsewhere.

This year all that changed…dramatically following three key acquisition announcements.

In March, Oracle announced plans to acquire Hyperion for $3.3 billion. Last month, SAP announced it was forking out $6.8 billion to buy Business Objects, and around a week ago IBM gave notice of its intention to snap up Cognos.

So in the space of less than 12 months, acquisitions have transformed a once diversified BI market into a territory controlled by three global software behemoths – Oracle, SAP and Microsoft – leaving Cary, NC-based SAS Institute as the only top pure play vendor still in the game.

What does this mean for the users of BI software – the executives, managers, business and financial analysts, and other employees – who rely on analytical tools to do their jobs better?

What does it mean for IT managers?  What kinds of compatibility issues would (say) existing Cognos customers – with non-IBM databases – run into?

Some customers of acquired BI companies say a “wait and see” attitude is the only one they can adopt right now.

Princeton University in Princeton, NJ, for instance, is a Cognos customer, that also happens to run an Oracle database.

How will IBM’s acquisition of Cognos affect the university’s database strategy moving forward?

“It’s too early to tell,” said Ted Bross, associate director, administrative information services at Princeton.

While Bross doesn’t expect any significant strategy shift will be required (such as moving from Oracle to an IBM DB2 database, for instance) he can’t say for sure.

“My hope is [IBM] will retain some variant of the Cognos product as database independent,” Bross told

But there are also those – like Joel Martin, vice-president of enterprise software research at analyst firm, IDC Canada – who predict the impact of the acquisitions will be very positive.

“Customers get value by extracting information from across their systems – databases, office productivity applications, and e-mail,” Martin noted.

He said the major software companies – through their acquisitions – are empowering customers to extract BI from these applications, and use that to drive smart decisions.

Martin cited the example Microsoft’s strategy following its acquisition in April 2006 of Boise, Idaho-based ProClarity Corp.

He said Redmond is integrating ProClarity’s BI software with its own database, portal, and enterprise apps “because it makes a lot of sense.”

At the same time, he said, most of the big software vendors are trying to keep the BI tools of acquired companies – as platform-agnostic as possible.

”SAP set up the SAP Group so Business Objects would be an independent entity reporting into SAP. That allows it to remain application agnostic.”

Oracle, he said, is doing the same thing with Hyperion – which it has set up to take advantage of its new application integration architecture (AIA) that allows customers and partners to use a common set of APIs – so that they can connect third party – even legacy applications to the Hyperion BI platform.

“Likewise, Microsoft is using their BizTalk server and dot-net architecture to do the same thing with their BI [applications].”

He said it’s very likely that IBM – the only big non-ERP player in this market – would also follow suit.

“IBM is likely to use WebSphere application server software and its information-on-demand architecture outlined last month – from a services standpoint – to connect with Oracle, SAP, Microsoft, and whatever apps are out there.”

Martin suggested the big players are doing this of necessity.

“It’s essential that their BI apps stay fairly platform agnostic, because their value comes from extracting information regardless of where it resides.”

Not everyone shares his optimism, however. Another expert believes IBM’s early decision to incorporate Cognos into its Information Management software unit doesn’t bode well for users.

“To put it down at that level [doesn’t square] with how the market perceives the value of BI and performance management,” according to Mark Smith, an analyst at Ventana Research Inc. in San Mateo, Calif.

The Information Management group includes IBM’s database management, data warehousing, content management and data integration products.

According to Smith, the move indicates IBM considers BI tools to be less important than the offerings of its stand-alone WebSphere and Lotus units.

With files from Heather Havenstein, Computerworld (US).

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