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Business intelligence software: Invest now or wait?

Should companies wait to invest in business intelligence software, due to a shifting landscape of consolidating vendors and converging technologies?

For companies planning or implementing business intelligence (BI) software, recent market events may be enough to inspire decision paralysis.

Framingham, Mass.-based analyst firm IDC just released a study saying that 2005 marked the start of a new wave of BI investments, but it ominously predicted vendor consolidation. Another study from Northamptonshire, U.K.-based Bloor Research International Ltd. predicts that large enterprise vendors will dominate corporate BI, while niche vendors will consolidate, and general-purpose reporting platforms will disappear. Meanwhile, open source BI has generated interest for its potential. Many firms, including Stamford, Conn.-based Gartner, are touting the benefits of converged BI and corporate performance management (CPM). And Microsoft has announced plans for a new CPM offering, PerformancePoint Server 2007, with a release date next fall. It prompts perennial technology questions: Buy BI now or wait? And which vendor is a safe choice in a consolidating market?

"You can't wait forever. If you wait, business users are going to use Excel and Access to create their own information resources -- which isn't the best way to develop BI in terms of consistency and quality," said Rick Sherman, founder of Athena IT Solutions, a Stow, Mass.-based BI consulting firm.

A company's size and BI budget quickly narrow down vendor options, Sherman said. Major BI vendors tend to do million-dollar deals that are just too expensive for smaller companies or budgets. It can be risky to go with a niche vendor, but not always much less risky than going with a large vendor, he said. A large vendor could be acquired or its product line could change -- potentially more often than with smaller companies.

Consider niche players?

For the third year in a row, the IDC study found the fastest-growing BI vendor was Radnor, Penn.-based Qliktech Inc., one of the few 64-bit BI providers. It competes with technology that utilizes in-memory processing, doesn't require prebuilt analysis cubes, and has a unique user interface, according to Anthony Deighton, vice president of marketing. While major vendors sell "top down" enterprise-wide deals, Qliktech takes small deals and wins over a company one department at a time. Many companies standardize after the tool has proved itself operationally, Deighton said.

That approach worked for Raleigh, N.C.-based flooring materials maker Pergo Inc., which had an underutilized Cognos tool and wanted to increase usage of BI, according to Barry Daly, director of BI.

"Cognos would seem to be the natural fit," Daly said, "but if you have a low level of usage, then you have to say what's broken or how can we fix it?"

The BI group saw Qliktech at Pergo's sister company in Sweden, tested it and rolled it out. Now, Pergo uses both Qliktech and Cognos, based on the same data sources. In the company's BI community, 90% of users access QlikView, while 10% of users still prefer Cognos, Daly estimated. The QlikView aficionados tend to be business users that like the interface for looking at retail statistics, inventory and other sales data. Cognos has power users, looking at shipping data and planning functions. But there's a place for both kinds of tools, he said. Qliktech's tool has helped drive adoption, but it's not an OLAP device. He'd recommend Cognos for that.

Go with the majors?

There's a race among major vendors such as Business Objects, Hyperion and Cognos to see which company can deliver a complete BI stack, said Gerry Brown, senior analyst with Bloor Research. Much of it is being done via acquisitions, which could spell trouble for customers.

"There are potentially lots of incompatible products being put together under a BI umbrella, and they don't work as well as they should because they're sourced from different places," Brown cautioned.

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Enterprise IT vendors such as SAP, Oracle, IBM and Microsoft may lag the specialty BI vendors now, but Brown foresees that changing, because those vendors ultimately control the data sources. Rather than trying to keep databases and platforms integrated with BI tools, companies might find it easier to get everything from one vendor. Companies should evaluate such vendors as SAS, Business Objects, Hyperion, Oracle, IBM and Cognos because they have "critical mass," a good track record in BI, and a depth and breadth of support, Brown said.

Buy BI and CPM together?

The ability to link insight from BI tools with corporate objectives and processes managed by a CPM tool will be essential for remaining competitive, Brown and other analysts agree. Any tool decisions should take that into account.

"In five years, BI and CPM will be the interface that is running businesses," Brown predicted. "Get started planning now … it will take three to five years to get systems embedded in processes."

Wait for Microsoft?

While Microsoft made a BI market splash with its acquisition of analytics vendor ProClarity and plans for PerformancePoint Server 2007, Brown believes that it will be a stretch for Microsoft to compete in the enterprise market. It will probably do well in the small to midmarket, thanks to the popularity of Excel. But Microsoft is not set up to support mission-critical enterprise platforms -- which is what BI should do, Brown said.

"I wouldn't wait for Microsoft. [Microsoft's] whole strategy is about reducing price points and making it affordable," Brown said. "For small business users, it's fine … but if you want to run your whole business on BI/CPM, Microsoft is the wrong supplier anyway."

For companies that find the promise of Microsoft's long-term BI strategy compelling, Sherman recommends deploying SQL Server 2005 Analysis Services as the underlying, back-end technology, then deploying BI tools from vendors such as Business Objects or Cognos as the front-end presentation tool. Then, when Microsoft comes out with its tools, a company could transition its front-end technology.

No BI market crystal ball?

When it comes to protecting itself from predicted BI market consolidation, a company finds that its level of risk depends on factors such as how widely the tool is deployed, how much time and money have gone into the implementation, and how dependent its operations are on the tool, said Dan Vesset, research director at IDC.

But all analysts agree: Don't wait too long to invest in BI. Just investigate all options, they said, definitely do proof-of-concept projects, and negotiate contracts wisely.

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