Business intelligence vendors are scrambling to find a niche in a Web- enabled world where several key new drivers are dramatically altering the landscape. On the "push" side, Microsoft's entrance into the business intelligence business with a low-cost, easy-to-use and extremely functional data mart platform has forced most vendors to search for higher, safer ground. But there are also many new business opportunities "pulling" vendors in new directions. (See Figure 1.) These include the burgeoning markets for analytic applications and e-business intelligence tools as well as customers' desire for a single, Web-enabled, enterprise-caliber tool that meets the information requirements of all their users.
Whether being pushed or pulled, many vendors are stumbling in their rush to occupy new beachheads. Most companies are failing to execute their business plans, at least in the short term, because of a lack of attention to organizational and cultural issues, among other things.
Rather than move upstream, Seagate Software has decided to take on Microsoft at its own game. Recognizing that the combination of SQL Server 7 and Excel 2000 has effectively made basic query, reporting and OLAP a set of commodity technologies, Seagate developed a strategy dubbed "Project Tiger." The goal of Project Tiger is to "change the dynamics of business intelligence," according to Seagate's own marketing literature.
On June 5, Seagate distributed 1.3 million CD-ROMs containing Seagate Analysis and Seagate Info 7.0. Seagate Analysis is new desktop software (not Web-enabled!) that provides integrated report viewing, OLAP analysis and ad hoc query with tight links to Excel. Seagate Info is Seagate's enterprise (i.e., server- and Web-based) software for full-fledged query, reporting and OLAP analysis.
Seagate has decided that Seagate Analysis will always be free. In addition, users who download the CD will receive 50 free seats of Seagate Info. Seagate's stated goal is to raise visibility of Seagate as a business intelligence vendor and get Seagate Info invited to more bake offs. Secondarily, giving away client software is an attempt to pulverize fast-rising Brio Technology, Inc., whose desktop product sells well in departmental (i.e., under 50 users) settings.
Unfortunately, no one seems to have told Seagate that Brio now sells multi- hundred seat licenses for the Web version of its product. In addition, Microsoft SQL Server 7 commoditizes the back-end server, which is a direct threat to Seagate Info, more than Excel commoditizes the front-end analytical client. In fact, Microsoft's stated strategy is to get as many client tools as possible to run against SQL Server 7.
Until Microsoft's Office group decides to turn Excel into a full-fledged business intelligence tool (not likely any time soon), the only truly safe ground for business intelligence software is actually on the client. But that's what Seagate is giving away.
If Microsoft has pushed many vendors to reposition themselves, the market for analytic applications has provided an equally strong pull. IDC predicts that the analytic applications market will top $3.5 billion by 2002.
But the migration from technology vendor to "applications" vendor is treacherous. Deploying analytic applications requires that a company bring in domain expertise and embed that knowledge in a technology-based application. This doesn't happen overnight; it takes two years at a minimum to develop a mature application that business professionals won't laugh at.
Perhaps more problematic is the impact of this strategy on the sales force. Companies need to reorient their sales force from selling tools to IT managers to selling "solutions" to businesspeople. This usually requires dismissing a portion of the sales force and bringing in people with direct industry experience. Of course, under this scenario, the sales force just might quit before executives get a chance to fire them! That's because selling solutions takes time.
Gentia's Last Gasp?
This is pretty much what has happened to a number of business intelligence vendors that have decided to target the analytic applications market. Gentia Software decided to focus on using its OLAP infrastructure to supply balanced scorecard applications. After teaming up with the prestigious management consulting firm Renaissance Worldwide, which invented the balanced scorecard concept, Gentia shipped the Renaissance Balanced Scorecard in March 1998.
However, even with Renaissance's pull and size (Renaissance generates $750 million in revenues), Gentia has had difficulty making the transition. Gentia's revenues have been flat for the past three years (hovering at just below $30 million), and it racked up $15.6 million in net losses in 1998. Gentia's sales folks have been departing, and the company has now put itself up for sale. Comshare and Pilot Software OLAP vendors that have also pursued the applications market have not fared much better.
Other vendors are taking a less risky approach to analytic applications. They are collecting their consultants' experiences at customer sites and packaging them up as application templates. These templates are typically geared to work off a specific enterprise resource planning application such as SAP R/3. This way, business intelligence vendors can package up predefined extracts, a predefined target data model, meta data catalogs and a set of predefined reports designed to work with their toolsets. Examples are Cognos's Sales Analysis for SAP and VIT's SeeChain supply chain applications.
One Size Must Fit All
Another driver is customers' desire for a completely integrated business intelligence suite that runs on the Web, scales to the enterprise and, ideally, provides users with access to any information whether the data is structured or unstructured and resides inside or outside the corporation.
The need to give users an integrated environment has driven vendors to round out their portfolios through acquisition or development. OLAP vendor Brio Technology acquired SQRIBE Technology to flesh out its toolset with enterprise reporting capabilities.
One of the reasons that Business Objects has been so successful of late is that it offers a single product with integrated query, reporting and analysis capabilities. Users like the convenience of buying one product with multiple analytic modalities. Business Objects has had seven consecutive quarters of 40+ percent revenue growth. Much of its growth stems from its indirect channel (44 percent with IBM as its biggest partner), European operations and sales to enterprise resource planning accounts (40 percent) which use Business Objects for operational reporting.
MicroStrategy Reaches Out
In a slightly different twist, MicroStrategy has replaced DSS Agent (a relational OLAP tool) as its flagship product with DSS Broadcaster which is designed to serve up basic reports to masses of users, whether they're on the job (knowledge workers) or off the job (consumers).
Although most business intelligence vendors support broadcasting, MicroStrategy has taken its capabilities to the next level, offering greater degrees of personalization and intelligent formatting across multiple channels (i.e., e- mail, fax, pager, phone). MicroStrategy understands that users don't want to access information anymore they want it delivered to them and only if it's important! This is ironic, since the interface for MicroStrategy's DSS Agent product has long stupefied average users because of its complexity. I guess you could say MicroStrategy learned its lesson well.
In keeping with its ambitious nature, MicroStrategy is poised to parlay its broadcasting and personalization capabilities into the wild and wooly world of e-business. It plans to become a major player à la BroadVision, Vignette and others. It will be interesting to see whether this business intelligence juggernaut can make a dent in this booming market. We're optimistic about its chances.
Other business intelligence vendors that are targeting the e-business market are E.piphany and Broadbase, both of which sell analytic applications for managing customer relationship activities. Data mining vendor RightPoint (formerly DataMind) is focusing on providing real-time customer analytics for Web and call center applications.
The Portal Play
Some business intelligence vendors are trying to achieve product-line integration by putting a Yahoo!-like interface on disparate product lines and calling themselves portal players. This helps buy them time to complete the integration of their various query, reporting or OLAP engines.
On the other hand, Viador (formerly called Infospace) earnestly desires to become a full-fledged corporate portal player. Viador had already done the tough work in integrating its OLAP and SQL reporting engines prior to launching its portal strategy. Its recent technology and marketing partnership with InfoSeek shows that Viador is serious about making good on the promise of delivering a portal that provides one-stop shopping for both structured and unstructured data.
Information Advantage was actually the first business intelligence vendor to jump on the portal bandwagon. However, Information Advantage might admit that it hasn't exactly hit the jackpot with MyEureka! Although the product might be okay, its impact on revenues has been depressing.
Seeking additional financial resources to achieve its goal of becoming a leading business intelligence player, Information Advantage recently agreed to be acquired by Sterling Software for about $163 million in cash. Sterling Software, which successfully sells host-based business intelligence tools to its 20,000 customers, obviously saw an opportunity to gobble up a complementary set of technologies at a bargain basement price. It's clear Information Advantage had few other options but to accept the deal.
In some respects, it's sad to see one of the two remaining independent ROLAP players get subsumed into a company with a growth by acquisition strategy. Information Advantage represents Sterling Software's 35th acquisition. The only remaining, independent ROLAP player is MicroStrategy.
In many respects, Information Advantage's demise as an independent player was inevitable. Despite the hype surrounding OLAP, we've always maintained that ROLAP is a niche technology designed for power users. As such, the true market for ROLAP is rather small, forcing most ROLAP players to revamp their product lines or find a place within the product portfolio of a larger company. It appears that Information Advantage was unable to reposition itself fast enough to target the larger, sweet spot of the business intelligence market before it encountered financial difficulties.
The business intelligence market is once again undergoing rapid transformation. Microsoft's entrance has pushed vendors to pursue new avenues, while emerging markets for e-business, corporate portals and enterprise business intelligence suites are pulling vendors in new directions.
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