What Does the Vendor Consolidation in BI and Performance Management Mean for You?
Information Management Special Reports, March 3, 2009
Now that the big shift has occurred in the business intelligence and corporate performance management market with IBM, Microsoft, Oracle and SAP controlling two-thirds of the market, one might think that consolidation is a purely vendor-driven game. But reality checks in the field show that the supply side is not a constraint, but rather is leading the dynamics. Meanwhile, consolidation scope goes well beyond technology consolidation. Now that initiatives are federated under the same umbrella, BI and performance management are finally positioned to become a core IT component rather than a value-added option.
It took more than 30 years for BI to reach maturity, a little longer than it took for other key components like enterprise resource management and customer relationship managment. But whilst the latter have seen the creation and redesign of entire information system landscapes in a big-bang mode, BI investments have taken place in a gradual and often ad hoc manner. In spite of unifying concepts such as the data warehouse, each decision support project often generated its own tools and selection of service providers, architectures, data models and standards. As a result, despite the fact that BI and performance management represent more than 10 percent of the typical IT budget, it can be compared to a giant with clay feet: strong footprint, but sparse foundations.
As long as the key BI objective was to improve the business, this lack of foundation was not an issue. But its mandate has evolved dramatically. First, it has a significantly extended reach: reporting is not only being targeted for internal use, but also being requested and driven by customers and mandated by regulatory bodies. Decision support systems have become pillars for compliance with regulations such as Basel II in banking or Solvency 2 in insurance. For human resource management or partner relationship management, it is tending toward an arbitrator role in incentive and commission management, while in industries that are sensitive to the fluctuation in price of their raw materials, BI is critical in helping to determine ‘just in time’ pricing. Meanwhile, as entire processes are being outsourced, enterprises differentiate by their governance excellence, not execution. All those examples clearly illustrate that the decision support system has become mission critical, i.e., a core IT component instead of a sideline application.
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Practices are evolving, too, and the focus is on process performance rather than on individual activities, justifying increased cross-functionality and, therefore, a federated decision support system for the company. Lines between planning, analytics and operational reporting are blurring. Even though there is still a long way to go with perceived holy grails like integrated business planning or end-to-end strategy execution monitoring, the journey has started, nurturing stronger business cases for a holistic and consolidated approach to BI.
Finally, BI budgets, like any other budgets, are under scrutiny. Every opportunity to cut costs are welcome in times like these. Now that BI budgets have grown year after year, it has become a serious candidate to consider for cost cutting. The fact that consolidation efforts have seldom been driven in the BI arena makes it low-hanging fruit for improvement. Consolidation is then considered at the organization level: Aggregating all the BI initiatives under a common umbrella may help to reach critical mass, opening the organization up to new delivery models such as shared services, off-site development and off-shore delivery models.
Platform-Based Consolidation
The most obvious way to consider consolidation is to approach it through the eyes of technology. Of course, this point of view typically attracts attention from the software vendor, and drives most of their marketing efforts. From the supply side perspective, platform consolidation is a sound approach to consider: BI used to be a tools market, where companies were selecting their multidimensional databases, ad hoc analysis tools, report writers, data integration tools, budget planning software one by one.
Companies are now shifting from best-of-breed toward more complete platforms capable of handling at least 80%, if not all of their decision support needs. Major software publishers anticipated that fact and launched these types of platforms on the market two or three years ago. However, for their respective installed base, the adoption of these platforms required a significant migration project that many of them have still not initiated. Moreover, companies found themselves having to choose a platform when, more often than not, their existing decision support system was made up of best-of-breed components. Today, as software vendors progress on their roadmap to a holistic BI and performance management platform, enterprises are realizing that their current landscape needs to be revisited.
Today it is advisable for most companies to review and streamline their decision support architecture. The battle for a share of the BI market seems to be heading closer to the major companies. For once, this concentration encourages competition rather than hinders it, with no dominant position being enjoyed by any of the market leaders, and thus the platform battle is raging. At the same time, innovation still lights up the BI markets: companies like Teradata, MicroStrategy and Informatica still differentiate on the high end, while new players appear with attractive value propositions in terms of delivery models (appliances, open source, software as a service, etc.), technology (in-memory databases, integration of unstructured data, visualization, just-in-time data access), or applications (analytics, integrated business planning, business process intelligence, information management and governance).
As a result, defining a cohesive BI roadmap should not be considered as a vendor-driven exercice that companies just buy and implement. Based on their current IT landscape, strategy, priorities and painpoints, many companies need to reinvent the way they approach and architect BI and performance management. They used to manage projects, now they need to manage initiatives: project portfolios rather than individual projects, and the whole lifecycle of each initiative, including continuous improvement and not only initial design. The market disruption we experienced in the past months together with the shift from tools to platforms provide a perfect opportunity to trigger this exercize.
Organizations’ Consolidation: BI Competency Centers and Center of Services
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