Beating them at "their" game

Hearing someone talk about one of the big BI vendors usually doesn't grab my attention. Except when I hear Cognos being coined the "Elder Statesman of the Canadian software sector"! I was a little shocked that Cognos was considered in those ranks so I listened. Here are a few tid bits:

Meaning: Elder Statesman is any influential person (company) whose advice is highly respected.

Rob Ashe: "almost all of our sales are from outside of Canada."

Acquisition: Cognos has the "intention" to acquire Applix for $339 Mln. The deal has been compared to the Hyperion acquisition by Oracle, in part, because of Applix's financial focus.

Rumour: Business Objects is on the block to be acquired. Oracle passed them up, so now who else is looking for BO?

Looking Over their Shoulder: Cognos. Trying to grow fast enough organically and through acquisitions to hold off the wolfs.

How?: Through license sales, services, and maintenance fees. This year Cognos earned 12% growth on license fees, with revenues of $252 Mln and $87 Mln in license sales.

Cognos is established and was conceived in 1979 where they started with their PowerHouse product; then produced reporting and analytical products, and now flog a full suite of web-based BI tools.

Oddly they recently partnered with Informatica where the deal has Cognos reselling Informatica products. I can only conclude that Cognos is admitting their ETL tool is substandard - why else would you resell a competitor's product? (Great for Informatica who doesn't really have a home.)

In my opinion and all that being said about elder statesman status, Cognos still has high-end license fees and products with a plethora of functionality (does anyone use half the buttons in PowerPlay cubes? Really. Honestly.)

I'm still looking for BI tools with ease of use for business users who don't have to be techies at heart. However today, is anyone beating Cognos at "their" game?

On-demand BI fits Casual Male

Here's a story about a retailer making the cultural and mindset shift from using mainframes to looking outside their walls for Software-as-a-Service (SaaS) BI to handle their planning and reporting needs. Not only is that a serious shift for any organization and IT department, the retailer, Casual Male, "needed a better way to plan inventory" and "understand customer buying behaviour". And they did what most companies do and "looked at traditional BI software but balked at the price."

Where have we heard this before.

As I'm reading the article from Search Data Management and preparing to rant about the high price for license fees and on-going maintenance contracts (another 10% - 15% annually), I made it to the bottom of the article.

What I found interesting was a mention of the big BI vendors seeing the benefits of SaaS BI. Initially I thought SaaS BI was more of a competitor, however Cognos and BO have acquired smaller SaaS BI companies Celequest, NSite, and Applix. While SAS built in five on-demand BI modules last year.

So what does this do to the traditional software licensing vendors business model, you may ask? Won't offering a pay for service solution cut into their high margin license sales?

And the answer looks like yes... on the surface. So why are they doing it? In my mind, because they are expanding their business to include small to mid-sized customers. The traditional licensing costs are out of reach for these customers (Casual Male sited the same concern over price). By having a BI solution that is now affordable, the big BI vendors now have another revenue stream offering SaaS BI as the service. By having two-tiers for BI solutions, they can reach a more complete range of customers from large to small.

If this is their strategy, they will need to keep the two-tiers separate in the minds of customers. When customers perceive cost and functionality overlapping on both tiers, confusion will build in the minds of customers. They will wonder, "What is the difference between your two products?"

That would be not be a great market strategy.

So you then push the tiers even further apart. Now does that mean increase license fees and provide additional functionality for traditional software? What about reducing the functionality for those low-end customers who cannot afford the expensive tools?

The various ways the big BI vendors may approach this will be interesting. Expect more direct competition between Cognos and BO. And expect an offering to come from the other major players.

And I almost forgot. Those traditional software vendors getting into SaaS BI will need to dive into the hosting business, which brings with it a different business model and mindset for sales and infrastructure. Software-as-a-Service was touted as the traditional software killer back in the day. Now the traditional software pure-plays are becoming hybrids.

The role of business vs IT

Business Intelligence crosses both the business and IT boundaries -- unfortunately for some it is seen strictly as an IT initiative. Frank Buytendijk's post makes an excellent point: "you are not delivering 20 reports", you are helping "business users make really good decisions".

Check out Frank's blog site (he is the VP of Corporate Strategy at Hyperion/Oracle), *new* since Oracle's acquisition of Hyperion.

He goes on to say how the business has bargained (actually leveraged) themselves to the point of 'no responsibility' for initiatives that involve IT support. IT writes the business case for a system to improve the business. IT is responsible for project deadlines and budgets. And who has to live with the results?

The Business.

So wouldn't you want more influence, control, and input into something you have to live with for years, maybe a decade? When I want a vehicle to drive, I don't ask the mechanic to find one for me. Although I'm sure the car would be great under the hood. Because maybe I want my unique style, colour, prestige, the right growl to the engine. Aesthetics. Generally not a mechanic's forte.

So why rely on IT to be responsible for your system's initiative.

Saying that, IT brings much to the table. Such as, people who know what is technically possible, IT project managers, and support staff to keep the lights on once it is built. What they don't bring to the table, which you can, is this:

• Business knowledge and how the business really works.
• What information is important to you.
• How you want to measure your business.
• How a system should improve your processes.
• How a system impacts the bottom line.
• Senior business executive sponsorship.

IT initiatives that only have IT support and little business buy-in is doomed for failure. Maybe not the day the system is released; but months down the line when the business realizes the system doesn't meet their needs.