CBR recently gathered a few local BI vendors and practitioners at another CBR Round Table to discuss the trend to consolidation in the BI space.
Looking at the business intelligence (BI) market today is observing an industry that is well established and mature, while still going through the growing pains of consolidation and finding its place in the corporate world.
On one side of the industry there are independent BI vendors and service providers developing and deploying expert systems with in-depth functionality and the expertise to really find the golden nuggets of information users need. Also in this market, we see constant movement as the consolidation train cuts the number of independents down with boring regularity. As an example, during the CBR BI Round Table discussion, Cognos announced its acquisition of Applix.
These diminishing independents offer services and expertise that no one else can, although the other side of the industry is trying to eat their lunch. This other side is made up of the business application vendors that are trying to squeeze everything into their packages, including BI.
Apparently, according to your friendly neighbourhood ERP salesperson, buying everything from one supplier is the way to go. And apart from that, when it comes to BI, if all your data is supposedly contained in one central database it makes reporting, queries and analysis simpler and faster. The question is, does it?
On the panel at this CBR Round Table were: John Olsson, director of Ability solutions; Filip Vanden Houte, business partner at MCI; independent consultant Paul Booth; Julian Field, business development manager at Knowledge Integration Dynamics; Estelle de Beer representing The BI Practice, part of Sybase SA; Christo Nel solutions manager at Cognos; Sean Camp of Informatica South Africa; and Carel Badenhorst, BI product manager for SAS Institute SA.
Pictured from left: Christo Nel, Estelle de Beer, Julian Field and Paul Booth
The first question we put to our panel of BI pundits dealt with the all-in-one issue. Is it worth getting BI built into your business applications or do organisations still need the depth and expertise found in independent vendors’ products and solutions?
Julian Field: The perspective of the large application vendors and service providers is that they want to be everything to everybody. What happens in this scenario is that focus is lost and customers do not get the chance to opt for best-of-breed solutions from companies focused on developing in-depth functionality is a certain sphere, such as ETL [extraction, transformation and loading], for example.
So having one full suite might not be what the customer really needs. It would be better to look at the products you have available from all the vendors and use the best tools for the specific job, such as the ETL side, the front-end, the back-end and so on.
I do not believe that you can just walk in and buy one package solution that will do everything well. There will be components that are not particularly good in their suite or not the correct one for the job or what the user wants to achieve.
Christo Nel: What is interesting, from my perspective, is that you see a lot of customers making the decision to go the ERP way to see what they get from the suite’s BI offering. Then after a couple of years that come back to us and say, “we know what they offer us, but we need focus now, we need specialisation in certain areas … how can you meet our need in this specific area.”
As a pure play vendor, we therefore need to focus on an open strategy and adopt the approach of how can we link or partner with others and create an integrated solution.
So even with the intrusion of the ERP vendors, there is still market share in the BI space up for grabs. Also, another point I need to raise is that there is no client out there with just a single ERP of data source.
Filip Vanden Houte: I agree with that. One of our customers, at last count, had over 30 different business systems that they needed to run the organisation. Many ERP vendors tell you the blue-sky notion that you can replace everything and have one integrated solution, but the reality is that these things are always in a state of flux. You are always busy implementing something here, busy finalising something there and you never have that Nirvana where you can put the flag in the ground and say, here is our one system.
John Olsson: I think you also need to go back and look at what motivated the Microsofts or Oracles of the world to move into this space. The dollar is king and obviously they are trying to lock in a section of the market, but I am a bit more cynical than that. In some environments they have deployed BI to disguise a weakness in the underlying ERP environment through a lack of consolidation facilities or lack of, shall we say, audit-ability to address compliancy issues and the like.
In our experience, companies that have purchased a total solution find that as they go through a maturity process, the out-of-the-box solution is actually only addressing 50% to 60% of their needs.
At the end of the day the reality is, we are all trying to solve a business problem. Now whether that is done with BI or with any other of the spectrums of the ERP space, the question should not be with what it is done with, but how.
Sean Camp: My question is why are the ERP vendors chasing the BI market? Do they want to have a world-class BI solution? I do not think so and I do not think it has anything to do with the bottom line because either many of them give it away or it is very cheap if you buy the ERP package.
The only reason they are putting BI in their systems, in my opinion, is because they do not want to lose out to their competitors. Many tenders or RFPs have a section that says: “What reporting do you have, what analysis capabilities do you have?” So they are adopting BI to enhance the attractiveness of their ERP systems.
Field: I would like to pick up on that point. It is important for us to take a step back and understand what ERP does and what BI does. They are two totally different things.
ERP is operational. BI tries to solve a business problem. For an ERP system to try and disguise itself as a BI system is impossible. The data models are different, the way you process the data, the way you integrate the data, the way you clean the data, everything is different in the BI environment compared to the operational environment.
So, it is therefore fairly difficult, even for an Oracle that tries to integrate all of these acquisitions to be everything to every person.
Paul Booth: You have also got to look at what the objectives are of some of the big companies that are trying to be all things to all people, like SAP, Microsoft and Oracle. They are trying to lock down and close a customer and make sure he has everything he needs from one particular vender. There is an enormous user resistance to that scenario.
These companies could not not have a BI component. It has to be a tick in the box and that is one of the reasons they have done what they have done. But if you look at it from a user perspective, users want to solve business problems using people who specialise in solving those particular problems. The generic companies cannot offer that capability and there is also a resistance about putting all the eggs in one basket from a user perspective, and I think that is a far stronger scenario than the integrated one.
Estelle de Beer: The other thing is that when a vendor buys a new company, everyone assumes it is integrated with the vendor’s other systems. This is not true, so when you are trying to integrate these systems at the user’s offices, it is the same issue as integrating Cognos to Informatica or any other BI systems. You end up with the same technical challenges anyway.
It is also true that there is a huge resistance from customers to be locked in by one vender and that still gives us best-of-breed types a lot of opportunity.
Carel Badenhorst: What we find out there is BI is not a tool. BI is a process, it is an outcome. The underlying tool is irrelevant because all of us here can provide that system or process. The business outcome is the most important part of it.
So our focus really should be on what is the outcome you desire. That is true business intelligence not, our tool does your outcome best, but what is the outcome you desire and let us see if it fits in.
CBR: That brings us to the question of how do you educate your customers as to what they want? Why should customers not go with Microsoft or SAP or whomever? These companies seem to offer all the intelligence and reporting required. Do your customers understand what BI delivers?
Camp: A very large part of the delivery of a successful solution is actually in the people. Technology only makes a part of it and I think it is not even the major part. You take the top 10 BI vendors in the world and they will pretty much give you a similar solution, but where the difference comes in is in the ability to understand your requirements from a business intelligence perspective. And that is a very different skill.
And the dedicated BI vendors live and die by business intelligence. If they do not sell their solutions, they do not survive. There is therefore a lot more focus on putting in a proper foundation to meet the business’s current and future requirements. I doubt whether the SAPs and the Microsofts of this world have those type of components or have sufficient skills in-house to be able to focus on delivering a BI solution of that calibre.
Field: You know, the executive does not care how he gets his data, he wants the report or the analytics or forensics or whatever it is, how it gets there he does not care. It is the CIO that is actually the one that has to take the risks on technology and often they will go off to their IBM shop or their Oracle shop, or whomever they have their enterprise agreements with. It is a lot easier just to say, 'just throw it onto the contract' rather than going out and doing investigation, education, looking through all the different products and choosing the best of breed.
So the education process we have got to get to is that the CIO should actually look outside the current toolset the business uses and find the ones that are actually correct for whatever they need to deliver.
Vanden Houte: We find we get a much better response when we go to a business user and show them how we solve their problem and then when we go to a CIO.
Field: I think the other major difference between the BI space and the traditionally ERP space is the nature of the animal we are talking about. ERP has to be a big bang approach. You have to get her in, you have to automate those processes, and you have to have the support for running that business because, at the end of the day, the ERP system is the underlying transactional process. BI is an evolving, educational process.
Quite often, we have gone in and done one simple solution, the customer has seen the benefit of that and the BI process has then evolved into a full-blown exercise throughout the organisation.
De Beer: We did a pilot for a company recently. During the process the company went through a technology change, so we actually changed the technology during the project and the customer accepted that. They would not have accepted that if they did not trust our opinion and if the outcome was not the same. So technology does play a role, but ultimately the outcome and the trusted partner is what makes it successful.
CBR: That is one case. How technology independent are CIOs out there really?
Olsson: My frustration is when you engage with an organisation that has spent an absolute fortune on a heap of rubbish. From a shareholder point of view they are now in a position where they have to make it work. They cannot afford, or they think they cannot afford to bite the bullet and say, hey we have made a mistake, we need to sit back now and see what is the right tool for the job. They have committed to a strategic direction based on the CIO’s recommendation and that money has been spent and nothing and no amount of excess cost in trying to get the system to work is going to change that.
Booth: Very few ERP projects have ever gone in on time and on budget and there are therefore many CFOs with a very poor perspective of ERP. I think many of them are not prepared to wait and know that these projects, if they go with a big bang approach are going to be put in successfully and on time. They have a business problem that they need solved quickly and there is a strong inclination to go to the specialist because they cannot afford to have the delays and the overruns in terms of budget that they have had on the other systems they have put in.
De Beer: We have, on a few occasions, tendered with large organisations that supposedly had an enterprise strategy that would have excluded our services in favour of an all-in-one approach. When we asked about it, they say our solution is a throwaway solution.
So, they are willing to spend millions on a throwaway solution for now, while the ERP system is put in place. And inevitably this 'now' becomes the next five years because the throwaway solution proved that it was capable of quickly and effectively solving a business problem [that the ERP system cannot].
Olsson: At the end of the day trust comes through delivery, solving the problem, doing it in a particular timeframe and at a particular cost and delivering what you said you were going to deliver.
CBR: Another area we want to focus on is how you sell BI to customers that do not even know what it is they want apart from the limited exposure provided by an ERP suite? How do you sell your value adds if customers do not actually know what you can deliver?
Field: You tend to start at a point and move from there. It is usually an issue such as money laundering or compliance because these are burning issues.
De Beer: Sometimes you are asked to come in and address a quality problem with compliance and then it grows from there. What I found people can relate to is asking them how short their action time is: how short is the time between an event that happens in a company and making a decision to act on that event. That starts the discussion.
From there I like to highlight three points we need to reduce the data they can see, get the data from that event to the desktop in whatever format they want very quickly, and we need to get it to the right people so the right decision can be made.
Camp: The message also varies from industry to industry. If you take the hospitality industry where it is bums in beds, it is not like a widget sitting on the shelf that they can sell next week. If you have not got somebody occupying that room tonight it is a lost sale.
So the message is very much about using BI as a proactive strategic tool, giving you a vision, both short and long term, specific to your needs.
Badenhorst: Another thing we do is go into an organisation and solve one problem and in so doing identify another. If you have quick turnaround times, the customer sees the benefit from the investment quickly and can quantify the ROI easily. With a huge implementation there are too many variables and it is very difficult to actually get some kind of return on investment – and often the customer does not know what questions to ask.
It comes back to the point of whether you have some outcome the customer wants and how you manage to deliver it.
De Beer: From my perspective, as we have represented almost every product represented around this table over the last seven years, in the beginning it was a religious thing. I was religious about the products that we represented. But then when you have to change technologies you see that 90% of the features and functionalities are really the same. It can be quite difficult to lose that religion but to serve customers effectively you must focus on the process and the delivery.
CBR: Let us end off with a look at where BI is going in the next couple of years. What can we expect from the independent vendors?
Vanden Houte: We are seeing a drive to move BI from the desktop environment into the mobility environment. Therefore, field operators have the latest information and can update the corporate database as they work. This means more time engaged in productive work instead of sitting at the office filling in forms or in update meetings.
De Beer: The sweet spot is on the data quality side. This has been a smaller option in SA until now, but people understand the importance of quality in the final outcome.
Nel: We have made it easy for the end user to gain the information they need and there is a significant drive to the back end to ensure the quality of data is exceptional so that users can rely on the information they are given. We almost are like a broker in-between IT and business at this stage and the specific players who can enable that data quality integration are becoming very important to business.
Badenhorst: For SAS there is a general willingness, more so than in the past and an understanding of what statistics can bring to your business and how it can benefit you. So now I have quality data, what do I do with that, what questions can I answer and so forth.
Another thing is value add. People are expecting added value. I expect to have customers asking me: “what value will this solution add to this company for the next two years?”
Field: The biggest drive for us in the next three years is really the skills. We have to stop stealing from each other. So we have to go on a drive to actually create skills.
Booth: There is a skills shortage in BI worldwide. It is not a South African phenomenon, as more information becomes available to top management, so the requirement of skills is going to increase. There is going to be a global drive to create and train more people in the BI space. We are also going to see a reduction in the number of BI players due to consolidation.
Olsson: I think the all-knowing factor is actually a five-year horizon in terms of what the next generation of the ERP solutions from the five major players will deliver. How are they going to address the issues we have raised in terms of quality and accuracy of the underlying data embedded within those systems, standard data cubes and those sorts of things? And, what impact is that going to have on the specialist players.