Channel opportunity shifts in BI market

Business intelligence (BI) as an application is starting to disappear into larger performance management suites, or it’s being offered in an on-demand model. For VARs, the opportunity isn’t going away, but it’s shifting – and wise VARs can still make money if they pay attention to these shifts.

Right now we’re on the tail-end of a big wave of consolidation in the BI space. Oracle acquired ­Hyperion, SAP acquired Business Objects and IBM acquired Cognos (there have been a whole series of smaller technology-focused acquisitions as well, largely by Hyperion, Business Objects and Cognos before they were in turn acquired). When you look at the overall positioning of BI, it’s almost like BI is disappearing as an application itself and returning to the infrastructure tier says George Goodall, senior research analyst with Info-Tech Research Group in London, Ont.

“The big vendors don’t necessarily talk about BI anymore as much as they talk about business process improvement, and they look at BI as a supporting technology,” he says. And customers are no longer looking for a specific BI product – instead, they’re looking for functionality that supports their reporting and analysis needs. From a channel perspective, that has some pretty dramatic consequences, he added, because the BI component is like the gravy or a side dish rather than an entrée of its own.

Probably the biggest disruptive influence is that Microsoft has taken SQL Server and some SharePoint products and scaled-out its offerings around reporting, analysis and corporate performance management tools, says Goodall. “That puts some squeeze on channel partners, [because] if you’re in the market of selling BI that can be a concern.”

But the problems that customers have with BI aren’t necessarily related to the application; instead, they’re data issues, and those issues aren’t going away.

“Almost all of our customers are running on at least one or two transactional systems,” says Jeffrey Hunt, president of Shea Business Solutions, a Mississauga, Ont.-based reseller that focuses on business intelligence. “That might be CRM or ERP or a manufacturing system, and BI brings all those sources of data together.” While transactional systems are great at capturing process and spewing out lots of data, the BI system converts that into usable information.

Gathering data from disparate sources

It also removes the use of ad hoc business systems; companies that aren’t using BI have upwards of 50 per cent of their business information held in ad hoc systems like spreadsheets and user-developed databases. With compliance requirements like Sarbanes-Oxley, it’s a real business risk if people don’t know how that data is managed, he says.

One of its customers is GPX International Tire Corp. in Brampton, Ont., a global distributor and manufacturer of work tires. The company was formed out of the merger of two independent tire companies, Dynamic Tire in Canada and Galaxy Tire in the U.S. Along the way it acquired some other companies, established manufacturing plants in China and went through a large growth spurt over five years.

“Part of the reason for having the BI tools was to be able to pull together information from various different sources,” says Andy Soares, business intelligence and data integrity manager for GPX.

The company had chosen ProClarity as its analytics tool, which is now part of Microsoft PerformancePoint Server. “We have management meetings on a regular basis and a lot of the figures that are reported on and discussed and used to analyze the operations of the business are coming directly from ProClarity,” he says.

Previously this was a manual process, with a full-time employee dedicated to running and preparing reports. “Most of it was dumping the data from our ERP package and then massaging it in Excel,” he says. “Now I would say 90 per cent of the data we get comes out of ProClarity in a usable format that requires very little outside massaging.”

At this point the company is mainly using the ProClarity component, but it has experimented with the business scorecard manager. “To be able to take all of the data that we gather on a daily basis through our ERP system and look at that data from many different angles, summarize it, drill down on it, it’s a huge competitive advantage,” he says.

Many organizations have between five to 15 different reporting systems, and they’re looking to reduce that number to either a handful or one reporting platform, says Ryan Dochuk, product marketing manager for business intelligence with Microsoft Canada.

In the past, the tools used for BI were typically costly and complex. You would request a report from your IT department, and a few weeks or even a month later, IT would come back with the report.

“There’s this iterative process resulting in a lot of strain on IT and a lot of lag between business users’ needs and the availability of that information,” he says.
This is why we’re seeing a trend toward integrated performance management. Most organizations used to get information about their business on maybe a quarterly or monthly basis, but with the pace of business today, there’s a desire to have immediate access to information to plan and make changes and react to it.

But if no one uses those tools, no matter how great that information is, you’re going to have pretty poor results with the deployment of BI, says Dochuk. “Make sure that those tools are easy to use and they’re broadly accessible within the organization – that’s where a lot of BI projects today can go awry.”

Most small and mid-sized companies first look at some type of business transactional system, such as ERP or CRM, and over the course of time start producing a huge amount of data. At that point they start looking at BI says Todd Rowe, vice-president and general manager for the mid-market with ­Business Objects, part of SAP.

More than 70 per cent of SMBs in the Canadian market have some form of business transactional system or some way of automating their transactions, but only 15 per cent have some form of BI beyond simple spreadsheets, he says.

A lot of Canadian companies are first looking at simple reports, and then moving toward dashboards or scorecards. Where Rowe is seeing the greatest adoption in the Canadian market is financial services, healthcare, oil and gas and government.

Channel opportunity is in services

For the channel, the opportunity lies in professional services, says Rowe. If you look at the professional services to license ratio, it’s usually a one-to-one ratio up to a three-to-one ratio, meaning if they sell a $50,000 BI license, they can get another $50,000 to $150,000 in professional services.

We’re also seeing a move toward industry specialization. In the past BI was a horizontal toolset. “But if I’m a mid-sized oil refinery out of Ottawa and I want to create a dashboard, don’t just tell me how well am I doing,” he says. “How well am I doing relative to my peers? What are the other ­industry standards around oil refinement that I should be looking at?” Industry-specific reports allow channel partners to offer a more customized solution, and it also gives them an opportunity to sell more professional services.

When it comes to software-as-a-service, research firm Gartner says only five per cent of companies using BI use it in a SaaS environment, but by 2010 that should increase to 15 per cent. “It’s still a minority, but it’s a growing trend,” says Rowe. With SaaS there’s less customization and professional services. “The wise VAR has a separate division that just works on SaaS and most of their revenues come from license resell – less in terms of the technical implementation, more on management consulting,” he says.

Primarily in the mid-market, SaaS is really the only affordable way for companies to embrace analytics, says Michael Turney, manager of market segments and strategies with SAS Canada in Toronto.

“Now we’re seeing the application of these more sophisticated pieces of the BI puzzle starting to be adopted by smaller companies,” he says. The problem is that they’re all over the place, and integration is a real challenge.

“Typically what we do through our resellers is find the sweet spot where we can really offer a high return on investment through the application of predictive intelligence in one area of the organization, and use that common platform to address common issues across the organization,” says Turney.

In the short term SaaS offers this ability, and the reseller will be prescriptive as to what that looks like – they present that intelligence back to the customer on a regular basis. So we’re starting to see resellers build a SaaS practice, he says, and creating a hybrid model of selling both on-premises and on-demand solutions.

Where SaaS has been successful is around CRM, and that’s because the workflow is fairly static, says Info-Tech’s Goodall. When we look at BI in the SaaS space, where BI has worked is in heavy BI applications, where you have a ton of data that would otherwise cripple internal systems. “SaaS and BI is a very interesting market right now and one that in some ways is still struggling to find its way,” he says.

The biggest problem with BI right now, however, is that most companies don’t know who needs what data. “If you don’t know that, you’re not going to get anywhere, whether it’s hosted or not,” he says. “Until someone can answer those questions and put strategy around that, it doesn’t really matter what the BI application is.”

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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