In the last decade the business intelligence market has been relatively fragmented with a lot of different vendors offering open solutions, which were designed to operate with a large variety of different databases, data-sources (ERP, CRM, SCM …), operating systems, portal technologies and web/application servers.
Consolidation in the BI market had been forecasted and rumored for many years, but finally happened with a vengeance in 2007. Oracle started the rush with its acquisition of Hyperion, followed closely by SAP buying OutlookSoft and then Business Objects, which had already acquired Cartesis and ALG earlier in the year. By the end of 2007, IBM finally announced the Cognos acquisition.
With the completion of these acquisitions, only a few significant vendors of Business Intelligence technology remain. The most important of these vendors are now obviously IBM, Microsoft, Oracle and SAP. Often their market share is still made up of numerous different BI products, not always already tightly integrated. However, there are also some companies that continue a more independent course, such as MicroStrategy, Information Builders, SAS and Qliktech.
Is there any room left in the BI market for smaller independent vendors, such as Microstrategy ? Is it better for companies to have their BI infrastructure software (front end, database, back end) supplied by a single source vendor or by a variety of independent vendors, potentially different ones for each of the BI layers ? In this Insight we look at the main differences between both approaches and the possibilities for Microstrategy to remain a successful independent BI vendor.
One-stop shop versus best-of-breed for Business Intelligence software selection
Some companies prefer a single software vendor strategy. The -newly acquired- BI software of the "big” vendors will become an easy choice with this type of customers, when they embark on a BI journey. These kinds of companies will often purchase their software from their preferred vendor without any comparative analysis at all. The reflex tends to be that only if their preferred vendor does not have a solution in a certain area, a study of offerings on the market is conducted.
On the other hand, there will still be a large number of companies that mix technologies from different vendors looking at the software best suited for their organization and needs. Often functionality, price or a combination of both, will be the reason for these companies to not just rely on the BI offering of their "main” software vendor. These companies will go through a BI selection process comparing software of different vendors. Here the "independent” vendors will also be taken into account, and most probably get a fair chance to prove their added value.
It is likely that companies that purchase their software from one vendor, for example Oracle, will either purchase the BI application from that vendor or will compare the BI software from that vendor with the software of leading "independent” vendors. It is to be expected that eg. Oracle customers who want to compare Oracle BI to an alternative will compare it with independent vendors such as Microstrategy rather than the alternatives from IBM, SAP or Microsoft, with whom there might not be a fit in the rest of the architecture.
How "open” will BI solutions of the "stack vendors” be able to be ?
The main goal of the closed system vendors is to sell their customers as much as possible of the complete "stack” of software applications and layers that they offer. They will still promote their suitability for use in open systems, but their BI software will eventually work best when it is used with the other technologies from their parent company.
Most consolidated vendors will declare that they will remain open and optimised for each others' technologies. But it will be evident that Microsoft BI will work better with SQL Server than it will with IBM DB2 for example. The "big” four SAP, Oracle, IBM and Microsoft are too often tough competitors in all kind of software submarkets, to become the best of friends for perfect interoperability. This jeopardizes the ability to integrate their technologies with each other. It is unlikely that Microsoft will share their DBMS development plan with Oracle or SAP to share its ERP data model changes with Oracle to help their BI products integrate well.
Integration & optimisation of BI components is key
Nowhere are custom optimizations more important than between the Business Intelligence platform and the database system. Integrated custom optimizations between the BI technology and DBMS technology for example can make the difference between a 20-second query time and a 0.5-second query time. So if a customer chooses to work with a database of a certain closed system vendor, then that same customer will be likely to choose the BI software of that same vendor as well.
The same applies to integration beyond the RDBMS technology. From an integration point of view, there are also other relevant technologies that have to be taken into account in the BI selection process, such as integration with the applications being the source of the data for the data warehouse, the security layer, the type of web / application server and the enterprise portal technology.
The "independent” Players
Historically, companies have always enjoyed their ability to assemble open system BI solutions that did not "lock” them into a single vendor. After all, Business Intelligence was often about "bringing together” information from a lot of different systems and databases across platforms. This freedom of choice brings them numerous benefits, such as the leverage to negotiate on price (and not only at the moment of the initial purchase !) and the ability and flexibility to change software if business needs change over time.
This freedom of choice forces vendors to be highly responsive to customer needs as any vendor can be replaced by another. The independent vendors cannot afford to get behind in the innovation race. They should try to stay one step ahead of the competition in order to be invited and potentially win in a BI software selection process or else they will face the danger of not making it on the long or short list at all.
In the open systems market, an independent vendor thus should try to optimize its technology to work with many other vendors' technologies. A BI vendor should also work closely with database vendors for example to be able to create database optimisations in their BI software.
The independent vendors, like Microstrategy, are more welcomed by all of
the big vendors to work together on integration. The more independent vendors that support the core assets of the big vendors (on the RDBMS side for example), the better these closed system vendors can compete against each other in the concerned area. It is obviously an interesting paradox that through integrating their software with the platforms of the big vendors, the independent software providers make themselves a more attractive target to be acquired by those same vendors.
Microstrategy maintains tight working relationships with a broad range of complementary software vendors. When eg. the database of the data warehouse is changed in a Microstrategy environment, Microstrategy will automatically adapt. No reports and no metadata have to be changed. That could be considerably different in an architecture based on a single stack, moving to another stack.
Innovation versus integration
Business Intelligence still requires rapid and nimble innovation to achieve its full potential. Mobile BI, integration of BI in Office applications, in-memory BI, appliances, integration with search, to name only a few. Independent vendors have everything to gain by driving the innovation agenda. They cannot rely on the safety net of their parent company, and the resulting "base sales”, so they have everything to lose if they get left behind in the innovation race.
The closed system vendors also have a desire to move quickly, but the focus will need to be -in the years to come- on "integration” both from a technological & organisation point of view.
The stack vendors will have to integrate & optimise within
their closed system. In all areas, from portals, over application servers, security, development platforms, supported environments to databases, a lot of the acquired Business Intelligence suites need to be considerably adapted to fit in the overall "stack”. If not, they will not have the extra value for customers, expecting "integrated” solutions, when buying from a stack vendor. The focus of these roadmaps thus is indeed -as highlighted by marketing from the smaller vendors- more on integration then on innovation. Reality might also be that for immature customers, integration is more important that continuous innovation, certainly for now.
Additionally, for the stack vendors a rigid organizational structure prevents rapid movement. These vendors, after initial pains of integration of sales forces, support organisations and product development, need to move forward in a coordinated manner focussing on areas such as technology releases, sales training, marketing programs, and partnerships. Not to mention that in more painful post M&A processes, also a lot of expertise might be lost either by people leaving or by rationalisation.
The independent vendors are committed to innovation and meeting the requirements of their customers' sophisticated BI applications. As long as these independent vendors can stay ahead in this innovation race, they are likely to be taken into account in the BI selection process.
Microstrategy as an example
Microstrategy as a partially private, partially quoted company is well positioned to fulfil its role as one of the leading independent BI vendors and to try to compete against the other major vendors. Microstrategy has a strong financial foundation with revenues over $300 million and direct presence in 23 countries across the world.
Microstrategy 8, the latest version of the Microstrategy BI platform, offers the latest in technical innovations with over 2.000 enhancements across the platform. One of the key differentiators is its integrated BI platform, eliminating the need for customers to use numerous distinct products for reporting, analysis and scorecarding. With a scalable architecture and a single metadata layer, users can seamlessly navigate from scorecards and dashboards to reports and analysis without being required to open and close multiple BI tools and navigate dissimilar interfaces.
Microstrategy 8's newly designed web interface includes an array of "one click” actions to make business users more productive. Users can format reports and scorecards in WYSIWYG mode and leverage the formatting skills they already have.
To ensure that the Microstrategy technology takes advantage of the latest developments, it requires constant focus and attention on partner developments. Close partnerships to stay up-to-date with latest technologies is an advantage they hope to play out against the major "not-independent” vendors.
Their technical compatibility with a very wide range of other software partners is a big advantage. To ensure that maximum freedom Microstrategy has added layers of abstraction in their architecture allowing customers to exchange one component of the technology stack with another with almost no changes to be done in the BI software.
- Change of database technology: When the database is changed in a Microstrategy system, Microstrategy automatically adapts to the new DBMS without any changes to reports, metatadata, user interface, system administration.
- Change to 64-bit BI: within Microstrategy it is a very easy exercise moving from 32-bit Windows to any of the Microstrategy certified 64-bit operating systems.
- Change of web technology: The Microstrategy web interface is written in both J2EE and .NET, so it is entirely portable across Web server technologies.
- Change of portals: Microstrategy provides native integration with the major web portal products.
- Output rendering: Microstrategy ensures constant possible output to any of the following output formats: HTML, Flash, PDF, Excel, PowerPoint, Word and Outlook.
Unlike other BI vendors, Microstrategy focuses on business intelligence and only on business intelligence, not diversifying into Corporate Performance Management. This can be a disadvantage for companies looking at the bigger picture of Performance Management.
But Microstrategy also sees this as an advantage: as their only business is business intelligence, they ensure that their product is known inside out at every level of their company ensuring excellent technical support.
Even though the business intelligence market will be dominated –going forward- by the major stack vendors - like IBM, Microsoft, SAP and Oracle – there will still be room in this market for the bigger independent BI vendors, like Microstrategy. Only time will tell how much room exactly remains for these independent vendors. The pressure of being more innovative and of offering integration beyond one "stack” platform will become bigger on these independent vendors in order for them to stand ground in the business intelligence market.