Acquisitions in BI – End of the best of breed?

Last time I talked about the trends in the BI space. Let’s look into one of those trends – M&As and how it is shaping BI as we know it.
A recent BusinessWeek article claimed the end of the best-of-breed approach to BI with the demise of the major pure-play BI vendors like BOBJ now owned by SAP thanks to a friendly takeover or Hyperion acquired by Oracle or the latest – IBM’s acquisition of Cognos. While it is true that some of the major players have been acquired by the bigger businesses, there is no reason as to why the mid-size companies should go out of business.
For one, with the recent convergence of BI into the SOA (service oriented architecture), most pure-play vendors have hastened to upgrade their offerings, which means that there isn’t any single vendor which goes the entire distance in the BI-SOA convergence. Business Objects which introduced its web services add-on QAAWS for its dashboarding product Crystal Xcelsius, has now added support for embedding Xcelsius in its latest release of reporting products – Crystal Reports 2008. Yet to be acquired pure-play BI vendors like Actuate and MicroStrategy are adding SOA interoperability in product upgrades.
As is common in the technology industry, something disruptive always keeps happening. The latest trend riding on this disruption is the use of data warehousing appliances and the use of in-memory databases and in-memory calculations. From Netezza to QlikTech to Tableau, there is plenty happening in the BI innovations scenario which run counter to the forces set in motion by the big four (IBM, SAP, Oracle and Microsoft).
The most convincing force against the consolidation spree is the fact that different vendors are better at different aspects of the entire BI space, so to build competency across the entire BI spectrum would require multiple acquisitions in a string-of-pearls approach along with subsequent costly integration and the resulting delays. It remains to be seen how IBM integrates Cognos’ offerings with its existing product lines, even as SAP has given BOBJ an independent run.

Best of breed works because there are investments with licensing of pure-play technologies which work with all the databases including IBM’s DB2 and Oracle’s eponymous database, as well as the middle-ware from both SAP and Oracle, both of which have Java as the underlying open standard. With Oracle itself licensing Informatica in its data warehouse offerings, it is easy to see that it is not the end of the road for the smaller players as long as they stick to innovation, the technology credo.
Add to this mix the open source products from JasperSoft, Pentaho and Talend, and, best of breed does start sounding like the best value for money.

Trends in Business Intelligence

By definition Business Intelligence (BI) has been about making decisions based on information obtained from meaningful data. At one point of time we had terms like decision support systems (DSS) to define technology which has finally evolved into BI as we know it now. Or has it? Somewhere along the line, we became entangled in the technology aspect of it and with all the buzzwords of data warehousing, data mining, dimensional modeling, data marts, CRM and SCM it is not difficult to see why. It is only of late that the focus has moved back to the “decision making” aspect of BI rather than focusing on the technology per se.

In the Gartner BI Summit which was held in the first quarter of the 2007 calendar year, we got to see the focus shifting from traditional data warehousing and OLAP applications to the technology which ties together all the OLAP, reporting and query tools along with performance management applications and dashboard-ing tools. The net effect is the coming together of information, analysis and performance management to assist decision making, the ultimate goal of BI.

There has been a lot of M&A activity going on in the data warehousing-BI-performance management space throughout this year. However this wave of consolidation (the last time we saw such a thing was in 2003) hasn’t yet pointed to a specific direction in which technology will move and decide the future of BI. Rather what can be made of this M&A boom is the rush to acquire “hot” technologies which can be bet on to power the future. Three distinct categories of applications can be found in this trend:

1. Traditional reporting and OLAP applications. These include all flavors of OLAP including the Business Objects popularized relational OLAP as well as the various multi-dimensional models,notably Microsoft Analysis Services. This set of applications has become the “hygiene factor” in the BI industry
2. Strategy or Performance driven BI applications. These have variously been called strategy management applications or performance management applications and over the last few years this has been a major growth driver for BI as the traditional analyst-reporting-tools market has matured and scope of growth has decreased. Performance management is the new USP to get that cutting edge over competition.
3. Workflow BI applications. An offshoot of dashboard tools as well as the recent Web 2.0 buzz of using AJAX, web services, Flash and similar technologies, this set of applications appears to position themselves midway between traditional enterprise applications and BI reporting. Embedded within workflows or processes, these applications add the ability to “take action” based on a decision made on the basis of the information provided by BI.

With the latest acquisitions of Business Objects by SAP and Cognos by IBM, it remains to be seen how these technology trends shape the industry. The next couple of years promise to be interesting on a scale we haven’t witnessed before in this space.