It may not be as complex as “big data” or as vital as dashboards, but calculating the price tag for business intelligence (BI) software is no easy task. Vendors often develop new features at their own pace, bundle those features together differently and sell their products based on their own licensing structure.
“There are no published standards out there,” said Nancy Williams, a BI and analytics consultant for DecisionPath in Gaithersburg, Md. “Vendors productize their offerings, have different modules and different names for the products they sell.”
And BI vendors aren’t required to publish a price list of their offerings. That’s why -- when the Radnor, Pa.-based BI vendor QlikTech announced last month that it would do just that -- a handful of industry experts issued comments of support on Twitter.
While analysts and consultants debate just how transparent this makes QlikTech or speculate if other BI vendors will follow suit, they agree steps like this are badly needed. But until then, there are ways businesses can ready themselves before walking into a purchase.
Know who you are
Because of the variability between vendor licensing structures and the secrecy, some BI vendors harbor around list prices, Boris Evelson, principal analyst for the Cambridge, Mass.-based Forrester Research Inc., embarked on a project to develop a BI pricing framework. Six Steps To Negotiating A Better BI Deal, which QlikTech referred when it released its price list, was published in November.
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The framework suggests businesses first figure out who they are by categorizing themselves as a small or medium-sized business or an enterprise. To help businesses do that, Forrester lists 17 criteria, including revenue, number of departments and number of users who will interact with reports.
The report also relies on the interviews Evelson and his colleagues conducted with 25 vendors and 100 BI software users, and the information documented in 23 requests for proposals they received. The data gathered was compiled into easy-to-read charts on vendor product types, license costs and BI pricing, helping to level the playing field for products and leverage the negotiating position for businesses.
Know where you’re going
Figuring out what type of tool to invest in -- cloud-based or on-premises, for example -- is part of what Williams calls the BI road map, which she considers a foundational element in the purchasing process. To create that road map, businesses should either build or refer to their overall BI strategy.
The BI road map is similar to jotting down a list for the grocery store: It will help keep the search focused on need rather than aimlessly exploring aisle after aisle of flashy but unnecessary products. That means figuring out whether a business needs to operate, for example, in a real-time capacity, Williams said, and knowing things like the volume of data the tool will be working with.
“You need some sense of where you’re going with your BI program to be able to have good conversations with vendors,” she said. “You’re directing them.”
Know your users
Potential customers should also consider who will be using the tool, said Cindi Howson, founder of BIScorecard, a consulting firm in Sparta, N.J., that evaluates BI tools.
“Businesses should figure out how much it will cost based on a scenario,” she said. “And that scenario, at least in the beginning, is the number of users.”
That also means figuring out how users will interact with the tool: Will they need to create reports or just to view them? This can help determine the cost for licensing alone. One of Evelson’s six steps, which are designed to help businesses determine a ballpark figure before meeting with the vendor, involves finding the average license cost for your scenario.
Williams said organizations can improve the accuracy of this process by inviting users to take part in the evaluation and soliciting their feedback.
“What I’ve found is the whole idea of usability is highly subjective,” she said.
Williams has been in situations in which some evaluators love the tool, others don’t and they all work for the same organization. Bringing users in to help assess the vendor offerings is a way of ensuring they’re comfortable with the tool before taking the plunge and investing in it. That could, in the long run, take pressure off the IT department, she said.
Know what you want
Businesses should determine what kinds of attributes -- predictive analytics, metadata management, geospatial analysis, for example -- are a priority, Williams said.
“Prior to doing any kind of tool or technology purchase, it’s really important to get a sense of what you’re going to be doing with the information in your organization,” Williams said.
Howson agrees. After businesses have established a scenario based on number of users, they should then add in what they want the tool to do.
“The next thing is going to be, depending on the vendor, it’s the number of users plus the modules,” Howson said.
Because vendors can package modules differently, Howson advises customers to discern what modules are included in the price and what are considered add-ons. She also said to be aware of additional costs like maintenance and training as well as how the tool will integrate into the larger technological framework. Evelson agrees.
“As long as you take into account costs of everything that surrounds and supports BI, such as data integration, data quality, master data management, data warehousing, portal and collaboration,” Evelson said. “And then add on costs of training, communications, change management, et cetera -- one should be clear on what the long-term total cost of ownership is."
Ultimately, Williams said, businesses need to boil down their needs into features and functions, which will help introduce an objectivity into the evaluation process.
“This helps in terms of comparability and putting vendors side by side,” she said.