BI: Shaking out the superpowers

By Angela Priestly

November/December Edition, 2007: Business intelligence has become the latest technology to fall victim to the power struggle between the key technology superpowers.

The hunt has been on for some time for the holy grail of business intelligence. The key prey, pureplay BI vendors with a strong customer/loyal customer base and well-developed technology strategies, have fallen to the likes of the vendor mega players, those with the mega bucks.

The first capture of recent months was SAP who netted Business Objects for AU$7.52 billion. Later, enticed by the smell of fresh meat and a loyal following worth every penny, IBM snagged Cognos for a massive AU$5.45 billion.

With Oracle earlier this year acquiring Hyperion and Hewlett Packard hunting down Knightsbridge, the race for BI has only just hit its climax. Now, all key players have their own comfortable platform and the BI market, aside from the remaining smaller players, has all but disappeared to the technology superpowers.

Why has the race heated up around BI in the last 12 months? A strong contributing factor appears to not so much be about the technology, as in some cases the technologies double-up on existing platforms, but rather the large customer networks these BI already have.

From the superpower point of view, the BI element puts the cherry on top of a sourced-up cocktail of business application needs. “Large suppliers are attracting ever larger share of customer spend, as customers try to reduce the number of suppliers to bring some order to their IT buying,” says David Bradshaw principal analyst at Ovum on the Business Objects acquisition.

However in the case of SAP, the acquisition of Business Objects may inspire a number of conflicts within its existing BI platform, SAP Netweaver BI. “There are huge areas of overlap between the product sets,” says Bradshaw. “We expect any soon-to-be-announced integration plans to detail the areas for rationalisation and the product roadmap moving forward”.

It’s a different situation over at the offices of IBM, where Big Blue is finalising the ink on its deal to acquire Cognos. Speculation around the sale of Cognos has been on the cards for sometime as not a matter of ‘if’ but ‘when’ it would go under the hammer. According to analysts, IBM appears to be a suitable parent.

“IBM and Cognos slots in a little more comfortably for end-users because Cognos is not replacing an IBM product, whereas with Oracle and SAP, there is going to have to be some rationalisation of products,” says Gartner analyst, Neil McMurchy.

It’s big money for big business and according to Gartner, represents a ‘natural selection’ of sorts where the niche players continue doing their thing while the giants of software gorge on the mid tier vendors.

“There is always the disappearing middle market; you end up with the large and the niche players and as the big gets even bigger, the middle disappears,” says McMurchy. “It will leave the smaller players with interesting products, but usually only from an acquisition target perspective.”

One of those smaller BI players believes consolidation in the BI space is actually strengthening their own resolve in the market. Paul Beks, ANZ regional director at Information Builders, say he’s not concerned about the ‘typical’ trend occurring in his market.

“There’s always the classic consolidation that starts to occur. The opportunities then arise for niche players to differentiate themselves because they’re not focusing on the parent company,” says Beks.

For the giants, it’s a matter of numbers by acquisition. “It’s hard to acquire scale if you’re an IBM of SAP or Oracle because there aren’t a whole lot of software companies out there,” says McMurchy.

However the current cycle of acquisitions might not necessarily just be the natural progression of technology, but rather the nature of BI itself. The last two decades has a seen a strong focus has been on applications, a consequence of this has seen an explosion of underlying data sitting on systems, with it’s access and need for use growing bigger but getting more and more difficult to use in a manageable form.

“It’s seen by lots of businesses as an area where they can get a lot of leverage of their data,” says McMurchy.

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