Over the last decade, the successful adoption of enterprise resource planning systems has been a primary goal of IT organizations across industries. With increasing IT sophistication and business acceptance of IT systems, the next challenge lie in extracting valuable information from this storehouse of data. BI systems were designed to leverage the data from ERP systems for functions like ad hoc and enterprise reporting, dashboards and scorecarding.
Until recently, ERP vendors had not invested in BI technology, and that void was filled by specialized BI solution vendors. But with the growing demand for greater accountability and visibility into enterprise-wide performance, the era of enterprise BI has unfolded. The eras chief mandate is the tight integration of BI applications with ERP systems not by adding a BI layer on top of a massive ERP base, but by fusing two systems that store and explore data. Enterprise BI will bridge the gap between enterprise systems that store business-related data and the many users in the organization that seek intelligence based on it. As the organizations front-end information anvil, BI will now seamlessly convert static data residing in enterprise systems into dynamic decision-enablers.
The Converging BI Marketplace
The big four megavendors have invested heavily in the area of enterprise BI. IBM, Microsoft, SAP and Oracle have an established presence in enterprise products and applications and will lead the charge in the enterprise BI space. They have built BI strengths organically and through acquisition. In such bustling times, customers will ponder the need to transition from a multitool environment to one where there is close alignment between BI tools and ERP investments.
Even as the acquisition spree and the consequential integration take time to stabilize, the players have set out to create a tight, end-to-end enterprise BI service platform. This entails enterprise information management, BI and analytics tools and applications well integrated with the respective ERP system. As these companies assimilate the new products, some level of specificity is bound to be built into the suite, thereby making it difficult for products from different suppliers to interact. Under such circumstances, clients will have to choose between continuing with existing investments or moving to an end-to-end suite of products from the same brand.
How Customers Are Impacted
The consolidation in the marketplace is bound to result in greater integration among the host of tools owned by a particular brand. As a result, tools from different brands will not be easy to just plug-and-play anymore. Multitool environments, while under no direct threat, will find it increasingly difficult to sustain disparate tools and leverage them to extract maximum value. As a result, the temptation to migrate to a common platform (and brand, in this case) will be imminent. This will impact the organization in multiple ways.
Business impact: For customers who decide to migrate the BI environment completely to a single vendor, then the additional cost of new products, extra licenses of existing software and training have to be coupled with the sunk cost of licenses that had already been bought but will be of no use post-standardization. On the other hand, if companies are satisfied that a multivendor tools environment is sustainable in the longrun, then the increased requirement for systems integration will lead to a need for extra services, which again translates into extra costs.
IT impact: The fact that a migration decision needs to be made will be an onus to the IT organization. IT must play a pivotal role in the decision regarding when and how to migrate and to which vendor. Technologically, it will become increasingly difficult to step up to a new version of a tool without facing integration issues with existing tools. While vendors work toward creating better integrated versions, companies with multitool environments will find it difficult to simultaneously work on new versions of tools from different providers.
Organizational impact: It should be noted that the reins of BI as a whole might once again change hands. When it emerged in the early 90s as a decision support system, BI was considered a purely IT initiative. Reports and dashboards generated by the IT team were used by managers to keep tabs on key indicators a bottom-up approach. Over the years, businesses realized the importance of the role data in strategic initiatives and BI became a business mandate, a top-down approach. However, with consolidation in the market, the control of BI initiatives will revert once again to the IT team, thereby completing the ownership loop. Migration and tool-centric decisions will again fall to the IT organization, upon whom the business will rely for their judgment.
Critical Decisions and Services
The critical decision for businesses becomes whether or not to migrate to the enterprise BI suite as well as when to migrate. At issue: Is it judicious to hold on to the multiple licenses for now and work on keeping them well integrated, or should the organization align its BI tools with those provided by its ERP supplier?
When making this important decision, several factors help the decision-makers analyze the situation. Some of the considerations include:
Licensing model: This refers to the way in which enterprise BI tool providers price licenses going forward. The megavendors must concentrate on reducing overhead costs and creating efficiencies in all aspects of distribution by leveraging commonalities in their broad range of products. This will allow them to provide well-integrated suites at lower prices and still improve their profitability.
Impact on architecture: While it is too optimistic to assume that the new versions of these products will be independent of the databases or other tools, companies might have to redefine their architecture to make room for BI tools that will fit snugly with their ERP infrastructure. With increased lock-in, the choices in tweaking architecture become limited as customers will have to adhere to architectures that are best suited for the tools they intend to use.
Ease of transition: If the company must move its applications and data to a single provider, changes will permeate across the organization and across both technology and business users. The relevance, strength, compatibility and interoperability of the transitioned and the existing parts of the BI system must optimize productivity.
Vendors product strategy: Insight into vendor strategy in terms of products in its BI stack also play a critical role in the migration decision. How does the vendor plan to build or develop new products? What is the level of integration it seeks to achieve from its portfolio of current products? What level of partnerships is it looking to maintain with other players products?
Industry focus: Industries as a whole have tool and software preferences that an experienced eye can notice. Long-term business user comfort level with a particular tool might make it difficult for an organization to shake up the inertia and change course.
Externality impact: Impact of a tool or platform migration will also be felt in external relationships and entities, e.g., regulatory compliance, industry-level best practices, data sharing or third-party data proliferation.
Tighter integration between products and migration to a unified platform will lead to an increased demand of some services from system integrators. These services include:
Enterprise architecture: With tighter integration, the customer must delve deeper than user functionality and consider other criteria, such as usability, manageability, reliability (i.e., architecture, user, and data dimensions of performance and scalability) and the levels of adaptability (customization, development and integration into the enterprise architecture).
Tool migration/consolidation: Moving to a new tool involves an exhaustive approach including assurance of business rule compliance on new tools and even moved data. All this entails a migration service which begins with an assessment of the impact of migration, building a roadmap and finally implementing the migration to a successful end.
Shared services: With increased standardization in the data warehousing and BI technical environment of an organization, customers can look at sourcing end-to-end support work for all BI requirements to a support team that specializes in the particular brand of tools and can take care of all ad hoc user requirements.
Change management: Better access to data doesn't provide any benefits. That only happens when business processes change based on the new information. Training must be more than a one-off activity and encompass all aspects of business change management. Faster user adoption of new tools will result in reduced lag time for the organization in terms of business impact.
Governance: Increase in BI investment should be accompanied with improved BI governance to ensure that investments result in proven value. The chosen governance model must include strong executive sponsorship, organizational accountability and representation from both business and IT stakeholders.
It is going to be interesting to see if the megavendors find greater success with go-it-alone strategies or a regime of cooperative development. Meanwhile, large businesses with major investments in ERP packages will increasingly migrate their BI tools to those owned by the ERP provider. Small and midsized businesses might be the target segment for specialized BI vendors. Under all circumstances, the future beckons to system integrators to provide best-in-class services for clients who are looking for a pervasive BI or enterprise BI environment.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access