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SAP and IBM: A tale of two business intelligence integration strategies

It's been just over a year since SAP and IBM completed acquisitions of Business Objects and Cognos, respectively. Their BI integration strategies are a study in contrasts.

It's been just over a year since SAP and IBM dramatically shook up the business intelligence (BI) market by acquiring Business Objects and Cognos, respectively.

Since then, however, the two mega-vendors have taken markedly different paths to integrating their new BI technologies -- according to analysts and executives at both companies -- owing to philosophical differences and differing circumstances.

At SAP, the first order of business after the Business Objects acquisition was developing its BI product roadmap because the combined companies had a number of overlapping BI technologies. IBM and Cognos, on the other hand, had virtually no competing technologies to reconcile.

"They would never say this publicly, but SAP realized their NetWeaver BI applications were really lacking, behind the times, and with the [Business Objects] acquisition they acquired best-of-breed technology," said Boris Evelson, an analyst with Cambridge, Mass.-based Forrester Research.

SAP ultimately decided to standardize a number of its BI offerings on Business Objects technology, either slowly phasing out or discontinuing support of corresponding (and in most cases inferior) SAP BI technology.

SAP settled on Business Objects XI as its flagship BI platform in preference to its own NetWeaver technology, for instance, though NetWeaver is still being supported. But its BEx product line, including BEx Report Designer, will be phased out completely by 2016 in favor of Business Objects reporting tools, according to the company.

The strategy so far has worked well in terms of increasing the functionality and breadth of SAP's BI portfolio, analysts say. It even propelled SAP back into Gartner's Leaders' Quadrant for BI technology this year, after falling out in 2008.

"I think a year later we have to say the merger is pretty successful," Evelson said. "I really give them high marks for pulling that off."

IBM's integration of Cognos BI and performance management technology, on the other hand, was a much more straightforward proposition, agreed Evelson and John Hagerty, an analyst with AMR Research in Boston. IBM is well known for its infrastructure technologies – including databases, data warehouses and data integration tools – but lacked front-end BI tools. The Cognos acquisition changed that.

"When IBM acquired us, the thing we were most excited about was the lack of overlap," said Rob Ashe, general manager BI and performance management at IBM, who was the Cognos CEO at the time. "We didn't have an overlapping set of products that was going to cause us to get off our trajectory of innovation and on to one of [product] rationalization."

Instead of reconciling competing products, IBM and Cognos worked quickly to integrate Cognos technology with IBM's so-called "Information Agenda" framework, including packaging Cognos with DB2 and making Cognos available on the System Z mainframe.

Both firms also continued to upgrade their acquired BI technology. In October, SAP released Business Objects XI 3.1, which includes improved integration capabilities with Microsoft SQL Server and Windows Server. Likewise, Cognos 8.4, also released in October, added interactive, flash-based dashboards to IBM's repertoire.

Not all SAP BI customers thrilled with acquisition

Customer reaction at IBM has been largely positive – Cognos 8 was rated the single highest-scoring BI platform in a Gartner user survey -- but the same can't be said at SAP, though not for technological reasons.

Despite the overall improvements to SAP's BI portfolio, some SAP BI customers have expressed pricing concerns, Hagerty said.

Specifically, customers that invested heavily in SAP BI technology before the Business Objects acquisition are now in the difficult position of having to decide whether to spend even more money on SAP's Business Objects-based products or make do with tools that the vendor has effectively said it will no longer enhance.

"There has been some frustration [from some major customers] that they're being asked to pay for something they've already purchased," Hagerty said. He declined to name specific customers.

Evelson agreed, saying that some customers he's talked to, especially those that bought BI technology from SAP in the year or two prior to the Business Objects acquisition, are less than thrilled with SAP's BI product roadmap.

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The vendor assured customers it had best-of-breed BI technology then, he said, but is now telling customers, "Actually, we didn't have the best BI, but now we do, and in a few years you're going to have outdated SAP BI tools unless you spend millions more on Business Objects, and we're not giving you credit but actually raising prices."

According to Gartner, customer satisfaction with SAP's BI technology is among the lowest in the industry precisely for this reason. "Client inquiries from the SAP installed base indicate concern and resistance to negotiating/funding the additional product, support and migration costs associated with SAP's new BI platform product roadmap and strategy," the firm said in its Magic Quadrant report.

SAP defended its BI product approach. The combined and rationalized portfolio offers improvements not just in BI capabilities but also in governance, risk and compliance (GRC) and performance management functionality, which will benefit all SAP customers, including SAP BI customers, according to Jonathon Becher, senior vice president of marketing at SAP.

Different approaches, same goal

One commonality is that both vendors are keen to stress that their BI technologies are database agnostic, meaning they are compatible with non-SAP and non-IBM applications and data sources. But that hasn't stopped SAP, like IBM, from bundling Business Objects technology with its existing products as its BI roadmap has become clearer.

The difference, however, is that while IBM has taken a bottom-up approach, integrating Cognos BI products with its infrastructure technologies, SAP has used a top-down approach, embedding Business Objects BI functionality into its transactional applications, like ERP and financials, Hagerty said.

The goal of both firms is the same, though: to spread BI technology throughout the enterprise, thereby expanding the customer base. On that front, both companies seem well on their way.

"Both approaches are equally valid and both have been fairly successful in their ability to sell through to more accounts over time," Hagerty said. "Both firms have been able to exceed the revenue totals that [Business Objects and Cognos] had as independent companies."

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