BI Scorecard Blog

IBM to Acquire SPSS ... and Announces New Analytics System

Yesterday IBM announced its intent to acquire the advanced analytics vendor SPSS for $1.2 billion.

The acquisition fills what had been a void in IBM’s business intelligence capabilities and is a further expansion of its Information on Demand portfolio, with $10 billion in acquisitions over the past several years.

Predictive analytics has been a hot topic for years but one in which there seems to be little consensus on how to bring it from the back room to the front lines.  It’s clear that building good predictive models requires a high degree of expertise and is not something that will become main stream any time soon.  However, incorporating the results of those models into every day decisions that even the most novice of information users can consume and act upon has become the holy grail. So what does that mean – store everything in the database? Execute at run time and surface in a report?

Not surprisingly, SAS has made the most inroads here by both pushing analytics into the database for faster execution and based on larger data volumes, but also, surfacing the results in standard reports in its BI platform.  Of leading BI vendors, Microsoft and MicroStrategy also have good solutions that surface results in either Excel 2007 or a MicroStrategy report, respectively.  (see the BI Scorecard Summary report for more information.)

Interestingly, SAP BusinessObjects began shipping an OEMd version of SPSS last spring. The SAP BusinessObjects Predictive Workbench allows the BusinessObjects universe to act as a data source to Clementine modelers. It will be interesting to see if this agreement remains in place following the acquisition’s close. The challenge of course is that beyond SAS and SPSS, the predictive analytics space is predominantly smaller players.  

Amidst this announcement, IBM says it was purely coincidental timing that many press and analysts were at their R&D offices attending a briefing on their new “Smart Analytics System” (due out in September) and “Smart Analytics Optimizer” (due out in Q4). The Smart Analytics System is more than an appliance, including the hardware, software, and services optimized for a particular BI deployment, or as IBM calls it “analytic workload”, whether predictive or not. IBM guarantees a 50% lower cost of ownership versus the current approach of buying and deploying components a la carte. A lower cost of ownership and faster deployment time is of course appealing. However, it seemed odd to me that the first versions of the systems only include Cognos as an option, not a standard component. Same applies to ETL capabilities. In this regard, while the vision is enticing, I can’t help but remain skeptical customers will continue to have the degree of flexibility they currently have. 

Or has the market gotten to the point that time to value and lower cost of ownership trump flexibility and the desire to mix and match components?

Regards,

Cindi Howson

 

 

 

 

 

IDC's BI Market Shares - Will the Real Leader Please Stand

I always look forward to IDC’s annual BI market shares, awaiting to see who comes out on top and who is losing ground. I’m sure everyone noticed that they were in fact a month early this year! Call me a bean counter at-heart, but I like the irrefutable, quantifiable comparison they bring that other evaluations (including my own BI Scorecard) lack. Or so one would think.

Most product evaluations involve a degree of subjectivity, with varying definitions and opinions of what capabilities and criteria matter more. The IDC market shares, on the other hand, are cold-hard facts: what were the revenues, who’s leading, who’s growing. While such data may have been somewhat trackable on 10Ks when BI vendors were independent, it’s now largely impossible as BI is often but a small part of a larger company.  Software vendors don’t have to report their revenues by market segment, and throughout the year, we only get vague, imprecise references for how the BI business is going.  The IDC report lays out the break down by vendor.

Ah, but here-in lies the rub: it’s all a matter of which beans get counted where. As Doug Henschen has frequently written, our industry uses terms like performance management and business intelligence interchangeably, and we can never be sure if analytics are predictive or not. So when a vendor claims they are the market leader of “anything” according to IDC, you need to be clear on what exactly gets counted (in other words, study that Taxonomy on page 3). Oracle, for example, will often lay claim to being the “Business Analytics” leader that includes the relational data warehouse. As much of my focus is based on core BI tools capabilities, excluding the data warehouse plumbing, I was not surprised to again see SAP BusinessObjects as number 1, but at first blush, I was surprised to see SAS as now number 2, ahead of IBM Cognos.

But wait! It’s the taxonomy! Included in IDC’s “Business Intelligence Tools” are the statistical software too, where SAS is the leader and derives a greater portion of its revenues. If we were looking mainly at query, reporting, and analysis, then IBM Cognos remains number 2, followed by Oracle, Microsoft, and then SAS.

Beyond who’s leading which category, the growth (or lack of) is revealing. But this is where the irrefutable and the speculative begins. Keep in mind too that all of this data is based on 2008 revenues, before the more severe economic downturn. Quarterly income statements certainly would have been interesting. Still, the stronger growth by both SAP and Oracle lends some support to my opinion that business applications/ERP influence BI buying more than IT infrastructure (IBM’s growth at 5%). Or maybe it’s all a matter of which acquired sales force got integrated faster, as Microsoft continued to have strong growth. Counting those ‘beans’ has got to be difficult as the BI revenues in 2008 came from both Performance Point (dashboards) and SQL Server. But how much of the SQL Server licenses actually get included here? Meanwhile, QlikTech’s growth is strong but slower than previous years, suggesting the departmental sell might be harder hit by the economy, or weaker web and administrative features catching up to that vendor.

And if I had any doubt that advanced visualization is a hot topic, TIBCO’s Spotfire growth of 36% confirms it (coincidentally, a featured topic in our next customer webinar).

The bottom line good news is that the BI market – no matter how you slice it – grew over 10%, a rate that few other software or industry segments could claim last year.

Now, if only we all knew how to do BI right! So on that note, before you head out for your 4^th of July BBQs, be sure to take the “Successful BI Survey” here.

Regards,

Cindi Howson, BI Scorecard

What's Your Secret to BI Success?

Two years ago, you helped me identify those factors that most make or break your BI deployment as part of research for this book. I’d like to know if anything has changed since then. Is the economy helping or hurting your BI efforts? Maybe a down economy is forcing you to work smarter, or maybe layoffs and budget cuts are putting a dent in your BI strategy.  For example, two years ago, 42% of you had standardized on a BI platform (see graphic). Did industry consolidation or the economy change that? And if so, which vendors are you standardizing on?

Take the updated survey here. As before, it’s not vendor-sponsored.

As your time is valuable and we are all strapped for cash, the first 200 respondents will be entered in a random drawing for 10 $50 gift cards. All survey respondents will receive a summary of key findings. For more insights, be sure to catch my keynote at TDWI in Orlando in November!

I look forward to hearing from you!

Regards,

Cindi Howson

 

Is BI a Commodity

I was recently at a SAS event in which Jim Davis, their Chief Marketing Officer, described the commoditization of BI. He described their sales efforts for these applications as low and the price sensitivity as high.

I gasped (silently of course), thinking of the many customers I speak to and work with who spend months evaluating software, sending vendors painfully detailed RFIs, and diligently conducting proof of concepts. Some of these customers already own BI tools or will evaluate tools despite what’s being offered to them for free.

So at first I thought SAS’ comments were in isolation and only relative to their efforts to sell analytic applications (which do command a higher price and take more sales efforts.) But then I saw another reference to commoditization of BI in a CIO magazine. And someone referred to this commoditization as a fact at a seminar I recently taught.

Is my head in the sand here? Or are forces at work to give buyers the wrong impression?

A commodity is anything for which there is supply but without much differentiation. Without a differentiation, vendors are forced to compete mainly on price, putting pressure on margins.

So is that where we are today?

In terms of differentiation, the strategies that several vendors are pursuing are quite similar. Several are pursuing end-to-end BI from ERP to ETL to BI tools, analytic applications, and performance management. Note though, that IBM/Cognos doesn’t compete in the ERP space. SAP/Business Objects doesn’t compete in the RDBMS space. Some vendors such as SAS, MicroStrategy, Information Builders, and Qliktech take a more narrow focus of BI. So there are strategic differences.

In terms of product capabilities for BI tools, on the surface all of the vendors now offer a broad spectrum of solutions that include reporting, business query, OLAP, Office integration, and dashboards. Several years ago, vendors competed in only a single segment of the BI spectrum, so indeed, on the surface, the spectrum of offerings seems similar. But this is where the difference ends. None of the vendors are great at all these modules. Instead, they continue to have their strengths and weaknesses in specific modules. Add emerging capabilities such as BI search, mobile BI, rich reportlets, as well as integration with advanced visualization and predictive analytics and the products differ still more.

Price is a slightly different story. Operating margins have declined somewhat in recent years, but not drastically. Microsoft’s increased presence in the BI market helps drive prices downward. Software heavy weights Oracle, SAP, and IBM may further affect BI pricing as these vendors can more readily bundle BI with bigger ticket items, whether the operational apps or the database, but that’s not yet happening. BI needs to become more affordable for it to become more pervasive. Vendors, however, are not yet competing on price alone as they would with something that has been commoditized. Customers continue to be willing to pay a premium for better or unique product capabilities.

So where is this commoditization perception coming from? Perhaps it’s a prediction for the future. Or perhaps some vendors want you to think BI is commodity so you’ll buy from whoever already has a foothold in your company.

I’d welcome your comments on how important price has been in your BI buying … and how well you think the vendors are articulating their differentiators.

Sincerely,

Cindi Howson, Founder,

BIScorecard, a web-site for in-depth BI product reviews

Author: Successful Business Intelligence: Secrets to Making BI a Killer App