BI market spawns consolidation

With business software providers like SAP AG building analytic capabilities into their applications and Microsoft Corp. unleashing its own analytic app (“Maestro”), there are a few new business intelligence (BI) vendors for enterprises to consider. But that might not be the case for much longer, judging by the words of one IT industry analyst.

Joel Martin, vice-president of software research at IDC Canada Ltd. in Toronto, figures the BI sector is due for a shake-up by the decade’s end. “We expect to see over the next two years consolidation in the BI market,” he said during a recent interview.

Martin explained that the new crop of built-in BI functionality from the likes of SAP (the company recently released a new CRM application, for instance, with analytic capabilities baked in) could change the prospects of companies like SAS Institute Inc., Cognos Inc. and Business Objects SA — BI-specific app providers that might find it difficult to compete against all-in-one business software vendors like SAP.

To prepare for the ensuing competitive challenge, BI app suppliers will form close partnerships with business software sellers. Some software companies could acquire BI firms, while on the other side of the fence, some of the larger BI firms might acquire smaller business software firms, Martin said.

According to Anuj Batra, SAP’s NetWeaver solutions principal in Toronto (NetWeaver is SAP’s software integration system), his company now includes analytics in applications like the recently released CRM platform because customers increasingly want business software to provide some analytic capabilities. “BI is no longer an isolated task,” he said.

In Batra’s assessment the software industry will continue to integrate erstwhile-siloed BI functions into overarching programs like CRM, human resources and financial recording apps. In the future, “customers will expect pre-integrated business intelligence,” he said. But pre-packaged BI might not provide the sort of deep analytical capabilities that some businesses need, according to Michael Turney, strategy and market development manager at SAS Canada in Toronto.

He said some firms seek insight into how their customers will conduct business, how well clients will react to marketing campaigns and other predictive, behavioural aspects. These firms should stick with the sorts of apps SAS offers. Built-in BI provides “some analysis, but it’s not analytics,” Turney said, describing analysis as the ability to see where your business is now and where it was, say, two years ago. Meanwhile, analytics, in Turney’s definition, is the ability to see where your business is headed.

Turney also pointed out that the BI consolidation is underway. SPSS Inc. acquired Lexi-Quest Inc. in 2002. Business Objects purchased Crystal Decisions Inc. in 2003. “It’s all over the place,” Turney said, adding that the industry shake-up will probably continue as companies aim to fill holes in their BI product portfolios.

Asked which companies he thinks are ripe for acquisition in the next step of consolidation, Martin from IDC Canada said he couldn’t predict. But he did say, “SAS is the only interesting one, because it’s still privately held.” If a software firm aimed to acquire SAS, then, the aggressor would have to use cash, not stock market maneuvers, to make it happen.

Martin also said businesses shouldn’t expect to see the BI space disappear completely. After all, plenty of companies use SAS’s, Business Objects’s and Cognos’s wares. Those customers, often operating in the conservative financial services space, probably won’t drop their existing BI systems without long deliberation.

Batra from SAP said no matter that his company is building BI into its apps, “there are still opportunities for vendors like SAS and SAP to leverage the strength of each other’s solutions,” leaving the door open for business software developers and BI-specific firms to work together in their attempts to satisfy corporations’ analytic requirements.

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