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By Bob Violino
It was just last March when Oracle agreed to buy Hyperion for $3.3 billion, the deal that set the stage for last year's business intelligence software market consolidation. Before the year was out, SAP agreed to takeover Business Objects for $6.8 billion and IBM put in place a nearly $5 billion deal to buy out Cognos.
"Many are watching to see what this consolidation means to the direction of BI technology and how it fits with applications and information management," says Dave Stodder, business intelligence (BI) analyst at Ventana Research in San Mateo, Calif. "BI reporting, analysis and data access could become infrastructure features in applications and information management and integration offerings from IBM, Oracle and SAP, rather than a standalone platform as it has been," Stodder says.
For CIOs, making BI more a part of the infrastructure could simplify some technology architecture problems, Stodder says. "It would tighten the integration between end-user tools for reporting, analysis and data access and the back-end database, data integration and storage systems," he says. "These two worlds have not always fit together well; it often takes special coding, tools and expertise to enable end-user BI tools to work well with the back-end information infrastructure."
Having BI as part of the infrastructure could also hasten the move toward "operational" BI, or the deployment of BI software to help business users make more informed decisions on a day-to-day basis.
Stodder says Ventana's recent Operational BI benchmark study found that organizations "overwhelmingly" want to deploy BI to operational managers and workers.
BI software collects and analyzes a variety of business data, such as customer transactions and product speciation's, so that users can make more informed business decisions. The technology can provide historical, current and predictive analysis of business operations. Research firm Gartner Inc. in January said worldwide sales of BI products in 2007 was some 12.5% above sales in 2006, and predicted the market will grow at a compound annual rate of 8.6% to more than $7 billion by 2011.
In addition to the three vendors that were acquired, the BI market includes Microsoft and several independent players such as Actuate, Information Builders, MicroStrategy and SAS.
Thus far, BI has had much smaller, often non-integrated user communities: corporate executives, business and data analysts, and self-contained departmental implementations.
However, enterprises "would like to use BI to improve information flow throughout their organization, and build performance management on top of BI and enterprise reporting platforms to align operations with overall strategic objectives," Stodder says.
Among the key factors driving the growth of operational BI are the desire to improve customer service. "Organizations want people directly engaged with customers in call centers, contact centers, sales or online to have the right information when they need it," Stodder says. "BI reporting and data access are seen as critical to these objectives." If customer reps can analyze up-to-date customer data in near real time, they can make appropriate cross-sell and up-sell offers that satisfy customers and improve profitability.
Another driver is the need for a single view of customers, products, and other objects. Many large organizations have diverse data sources, and departmental BI applications often are designed to only access those data sources that apply to their specific business function, rather than broader information about the organization.
To gain a complete and timely understanding of all customer and supplier interactions, organizations want operational managers and workers to see multiple sources, Stoddard says. "This can only be done by deploying operational BI on top of an enterprise information management infrastructure."
But getting this more complete view does not come without challenges. The use of operational BI means that organizations will have to support more users. Ventana's research found that most operational BI implementations currently are for 100 or fewer BI users, and a significant percentage of organizations say they plan to double or triple the number of BI users in the next two years.
BI also requires more frequent data updates. "We found that the standard for data update frequency for operational BI is once a day, with some users requiring data to be refreshed once an hour or less," Stodder says. "Thus, as operational BI expands, organizations are going to be looking for technology that can enable them to serve more users with more frequently updated data."
One example of such technology would be a dedicated BI or data warehouse "appliance" made of preconfigured database software, hardware and storage systems, Stodder says.
"Organizations can dedicate an appliance to serve a set of users, data sets or queries to improve a particular performance challenge," he says.
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