BI Solutions Strategy: Business Suite or Best-of-Breed?

Transcription

1 BI Solutios Strategy: Busiess Suite or Best-of-Breed? Alex Chaves-Saz ad Ihsa Al-Awamy Alex Chaves-Saz, MBA, is a recet master of ERP systems graduate from Victoria Uiversity, Melboure, Australia. [email protected] Abstract A best-of-breed approach to deployig busiess itelligece (BI) capabilities i today s eterprise provides the opportuity to exploit tools ad applicatios to support highly differetiated busiess processes through advaced ad idustry-specific fuctioality. This advatage comes at the price of icreased total cost of owership (TCO) over time for maiteace ad support whe compared with a sigle-vedor platform i which there are ormally o poit-to-poit iterfaces to maitai. Best-of-breed tools should be limited to oly a few that may provide strategic advatage while usig a itegrated platform for most busiess requiremets. Ihsa Al-Awamy, MIS, is a busiess systems aalyst at the Saudi Arabia Oil Compay (Saudi Aramco). [email protected] The greatest value of BI comes from beig icreasigly embedded withi the busiess processes themselves. Itegrated platforms ca provide BI capabilities throughout a compay s eterprise applicatios, such as eterprise resource plaig (ERP) ad customer relatioship maagemet (CRM), as well as withi a data warehouse, thereby makig the use of BI more widespread ad pervasive. As the BI market cosolidates, may iovative best-of-breed vedors will be acquired by large busiess suite players for their uique capabilities, makig their competitive stability a major cosideratio. Itroductio Busiess itelligece systems merge trasactioal data with aalytical tools, eablig the delivery ad presetatio of complex corporate ad competitive iformatio to plaers ad decisio makers as well as other iformatio cosumers. BI is becomig more strategic, helpig busiesses improve the timeliess ad quality of data to the decisio-makig process (Negash, 2004). Most busiesses have opted for multiple vedors to source their BI capabilities i what is kow as a best-of-breed approach. BUSINESS INTELLIGENCE Joural vol. 13, No. 2 15

2 This term refers to applicatios from small, idepedet vedors that offer iovative fuctioal capabilities to a specific idustry or a sigle busiess area (Rao, 2006). A TDWI survey determied that the top three reasos for adoptig a best-of-breed BI strategy were 1) users havig differet requiremets, 2) purchasig autoomy amog departmets, ad 3) a reported lack of fuctioality from sigle-vedor solutios (Eckerso ad Howso, 2005). Garter advises agaist the extremes of ucotrollably proliferatig BI tools ad applicatios o the oe had, ad becomig locked i by a sigle vedor as the BI vedor market cosolidates o the other. They recommed a balaced approach to stadardizatio through busiess itelligece competecy ceters. As ed users realize the icreasig costs ad performace risks associated with itegratig ad maitaiig multiple iterfaces amog applicatios, there is a growig tred toward stadardizatio ad cosolidatio. This tred is beig imposed i large part by the icreasig market presece of large eterprise applicatio megavedors, such as SAP ad Oracle, which are gaiig mometum by developig or acquirig specialized skills that allow them to offer a more complete portfolio of itegrated BI tools (or so they claim). This article explores the beefits ad drawbacks of adoptig a best-of-breed approach to implemetig BI solutios i cotrast to acquirig a itegrated busiess suite from a sigle, large vedor. The pros ad cos are examied from four perspectives or selectio factors to be cosidered whe choosig a solutio: The specific eeds of the busiess The pervasiveess of BI withi the orgaizatio A ifrastructure-based value propositio The competitive stability of BI vedors Selectio Factor 1: Specific Needs of the Busiess There is o sigle BI tool or itegrated platform complex eough that it ca fully satisfy all of the possible eeds of the ed users i ay give busiess cotext (Rao, 2006; Burto ad Schlegel, 2006). Research by Garter suggests that a best-of-breed approach is still eeded. However, Garter also advises agaist the extremes of ucotrollably proliferatig BI tools ad applicatios o the oe had, ad becomig locked i by a sigle vedor as the BI vedor market cosolidates o the other. Rather, they recommed a balaced approach to stadardizatio through busiess itelligece competecy ceters (BICCs), which lead the evaluatio, balacig, ad prioritizatio of busiess requiremets. Whe user requiremets for a BI solutio are highly specialized, the best way to realistically meet the wish list of features is to select a few best-of-breed techologies available for highly specialized, busiess-critical processes, as log as redudacy i data ad fuctioality ca be avoided (Burto ad Schlegel, 2006). If specialized fuctioality is required to operate i a particular idustry sector, cosider vedors that offer poit solutios. Accordig to Garter research, a sigificat proportio of fiacial services, healthcare, retail, ad busiess services firms prefer to source BI solutios from best-of-breed vedors ad pure-play BI vedors (Sommer ad Graham, 2007). Best-of-breed vedors are the umerous, relatively smaller iche compaies that offer iovative tools for specific BI market techology segmets, icludig advaced visualizatio, data miig ad predictive modelig, text miig fuctioality, 16 BUSINESS INTELLIGENCE Joural vol. 13, No. 2

3 metadata, busiess process maagemet, ad busiess activity moitorig. I fact, some of these vedors such as SeaTab Software ad Celequest (acquired by Cogos) offer outsourcig of BI capabilities ad data warehousig eeds through software-as-a-service (SaaS) hosted delivery. SaaS is a viable optio for a busiess with limited IT resources that eeds high-performace aalysis ad reportig o large data volumes. Pure-play vedors are those that offer BI-oly itegrated platforms with a strog focus o corporate performace maagemet (CPM) i additio to a portfolio of specialized ad idustry-specific 1 aalytic tools. Leadig pure-play vedors iclude Busiess Objects, Cogos, Hyperio, MicroStrategy, Paorama, ad SAS Istitute (Sommer ad Graham, 2007). I geeral, busiesses with a decetralized corporate culture, departmetal autoomy, ad highly complex busiess processes will implemet BI solutios that best fit the specific user eeds of each busiess uit, favorig the advaced fuctioality that oly a best-of-breed system ca provide. A itegrated approach is preferred where the busiess has beefited from itegratio efficiecies by usig eterprise applicatios such as SAP or Oracle. I this situatio, the highly specialized best-of-breed fuctioality is the exceptio oly where it supports busiess-critical processes. Best-of-breed vedors are likely to provide more frequet or regular upgrades or ehacemets tha itegrated suite vedors, ad their shorter developmet cycles could make them more up-to-date techologically. Best-of-breed tools also ted to be Web-eabled. These beefits ca be a clear competitive advatage by providig differetiated features ad offerig a more dyamic eviromet (O-Lie Cosultat Software, 2003). Fially, there are distict cases where the sources of data fed to a aalytical tool are so disparate ad the data so ustructured that a itegrated process flow is difficult 1 Garter wars that Labelig a product idustry-specific does ot mea that it meets comprehesive, specific requiremets for every aspect of a idustry. to implemet, such as applyig CRM aalytics to ad persoal digital assistat (PDA) data about sales calls (Hall, 2002). Best-of-breed vedors are likely to provide more frequet or regular upgrades or ehacemets tha itegrated suite vedors, ad their shorter developmet cycles could make them more up-to-date techologically. Selectio Factor 2: Pervasiveess of BI withi the Orgaizatio The risks of choosig a best-of-breed approach iclude focusig o the techology per se, followig the treds i the idustry, ad fallig prey to the excessive marketig buzz (ad hype) promoted by BI techology vedors. Over the ext several years, busiesses will have to shift their focus from the techologies that deliver user-cetric iformatio access, query, ad report capabilities to process-drive capabilities that make BI less tactical ad more strategic (Schlegel, 2006). Garter s aalysis predicts BI vedors must be able to provide calculatio egies ad sceario modelig, predictive aalysis ad data miig, real-time evet data capture, scorecards, Web services itegratio, search capabilities, ad collaboratio ad workflow features to the already mature olie aalytical processig (OLAP) ad dashboard solutios curretly offered (Burto ad Rayer, 2006). This greater focus o busiess process ad performace maagemet is ecessary to alig operatios with corporate strategy ad to guide the selectio of BI applicatio architectures that are busiess process specific. BUSINESS INTELLIGENCE Joural vol. 13, No. 2 17

4 Pure-play BI vedors such as Hyperio have developed performace maagemet capabilities to differetiate themselves from the busiess suite vedors that offer basic BI capabilities. Eve though larger vedors such as SAP have ot yet reached the same level of sophisticatio i process-orieted capabilities (such as CPM applicatios) as that of pure-play ad best-of-breed BI vedors, they have a strategic advatage: They ca deliver aalytics fuctioality embedded withi their widely used eterprise applicatios, such as statistical aalysis i CRM, fiacial plaig i ERP, ad busiess plaig ad simulatio i NetWeaver BI. The risks of choosig a best-ofbreed approach iclude focusig o the techology per se, followig the treds i the idustry, ad fallig prey to the excessive marketig buzz (ad hype) promoted by BI techology vedors. Offerig BI ad CPM fuctioality itegrated ito applicatios at the busiess-process level makes BI more pervasive, reachig more users throughout the orgaizatio ad hasteig user acceptace ad adoptio as BI becomes more relevat to users roles. Accordig to a report by TDWI, Eterprise Busiess Itelligece: Strategies ad Techologies for Deployig BI o a Eterprise Scale, the top challege for BI-tool stadardizatio efforts is idividual resistace to chage (Eckerso ad Howso, 2005). SAP iteds to offer advaced aalytics as a itegral part of everyday process workflows, with access to metrics ad calculatios providig isight o trasactioal data. This offerig will merge BI ad CPM ito a sigle platform, i keepig with the stadardizatio, cosolidatio, ad itegratio tred, which could make best-of-breed applicatios redudat. The pervasiveess factor favors larger vedors i the log ru if advaced process-drive aalytics are ot immediately required (Chadler, 2007). If, however, it is ot feasible to wait for a vedor to improve its offerig either by developmet or (more likely) by acquirig specialist competitors the a viable solutio would be a sigle-vedor, pure-play BI platform that fully itegrates with the eterprise trasactioal systems ad/or a data warehouse (such as MicroStrategy or Cogos). Selectio Factor 3: Ifrastructure-based Value Propositio May larger compaies ofte deped o a IT ifrastructure ruig may applicatios that itegrate data across the eterprise. Garter s research shows that more tha half of maufacturig firms have a preferece for BI vedors that also offer eterprise applicatios ad ifrastructure (such as servers ad databases). Larger eterprises are more likely to choose the vedor of their curret busiess applicatios (Sommer ad Graham, 2007). Market Treds IDC s competitive aalysis foud that BI tools remai a attractive market for software vedors. IDC says that database-embedded (as i data warehouses) BI solutios have bee gaiig market share, growig at almost twice the rate of stadaloe BI tools (Vesset ad McDoough, 2006). This fidig further cofirms the tred toward stadardizatio, cosolidatio, ad itegratio. Seamless Itegratio Ievitably, as they exted their presece i the BI market, large vedors are acquirig best-of-breed vedors to gai the fuctioality lackig i their ow solutios. The challege for these large busiess suite vedors is to seamlessly itegrate their stadard OLAP ad reportig data warehouse applicatios with the segmet-specific tools they purchased. The resultig architecture-desig ad platform approach to BI has o uified user iterface: users must switch to 18 BUSINESS INTELLIGENCE Joural vol. 13, No. 2

5 separate applicatios to work with data, request reports, view dashboards or scorecards, or use other BI tools. The problem here is that all those eviromets might coect to the same cube, but all have separate metadata ad require separate cofiguratio (Cyr, 2006). Coectivity Although access to commo data usig stadard iterfaces may be a advatage of BI-iclusive eterprise busiess suites, itegratio with a trasactioal systems ifrastructure is ot a obstacle for best-of-breed or pureplay BI vedors. Most of these vedors solutios already support built-i custom iterfaces to major eterprise systems from SAP, Oracle, Microsoft, ad others, providig at least data-level coectivity usig stadards such as extesible Markup Laguage (XML) ad Web services, ope database coectivity (ODBC), ad COM 2 -based iterfaces (Hall, 2002). Furthermore, best-of-breed aalytics tools ted to icorporate Web techologies, a feature that eases implemetatio. Flexibility Holtz (2005) argues that best-of-breed applicatios offer greater flexibility i coectig with best-i-class poit solutios such as e-commerce. This could be due to a more techically advaced plug-i architecture of bestof-breed systems. I additio, they are more customizable tha busiess suite applicatios. I cotrast, the emphasis o stadardizatio makes busiess suite products easier to cofigure ad faster to implemet withi a eterprisewide platform, but the depth of itegratio betwee modules ad busiess applicatios may make customizatio more difficult. Measurig Retur o Ivestmet Accordig to TDWI research, oly 9 percet of orgaizatios have performed a retur o ivestmet (ROI) assessmet of their BI stadardizatio efforts (Eckerso ad Howso, 2005). Some geeral guidelies ca be applied to measurig ROI whe comparig a siglevedor architecture with a best-of-breed eviromet. 2 COM is a commuicatio compoet or simply a class used i C/C++ ROI must cosider the beefits realized i proportio to the delivery costs over time (that is, the TCO). The ROI assessmet should evaluate the expected quatifiable beefits ad all the cost categories below, as outlied by Rade (2004): Acquisitio costs. The iitial purchase price of idividual best-of-breed applicatios is lower tha that of a itegrated platform. However, as best-ofbreed products are added over time (to address the growig user eeds for ew fuctioality), the cost of the overall BI solutio icreases, but these additioal costs may ot be accouted for as part of the iitial acquisitio ivestmet. If these cost calculatios are overlooked i the iitial ROI assessmet, ROI may be urealistically high for a BI best-of-breed solutio. Ifrastructure costs. A best-of-breed solutio may icur icremetal costs as a result of etwork or hardware upgrades required to attach each ew applicatio to the existig ifrastructure. I the case of a BI-oly platform solutio (e.g., Busiess Objects or Cogos) iterfacig with a itegrated busiess suite (e.g., SAP or Oracle), these icremetal costs ca be avoided, as most major BI applicatios already iclude adapters for most major ERP systems. I the case of a itegrated busiess suite, it is possible to icur oly margial costs by sharig ifrastructure compoets (such as Web servers, etwork badwidth, ad storage/disaster recovery facilities) amog multiple systems. Implemetatio ad deploymet costs. These costs, icludig cosultig, traiig, ad iteral project staff expeses, ca be sigificat for both best-of-breed ad sigle-platform approaches. For best-of-breed solutios, havig multiple implemetatio cycles as ew compoets are added may be a disadvatage. A oe-time deploymet (for a sigleplatform solutio) would require oly release upgrades. I additio, i a sigle-platform approach, a familiar user iterface could expedite traiig. programmig laguage. BUSINESS INTELLIGENCE Joural vol. 13, No. 2 19

6 Support ad lifetime maiteace costs. Expeses for direct traiig i multiple applicatios (to esure a wide set of staff skills for maitaiig the greater umber of iterfaces), plus opportuity costs ad reduced beefits from multiple itegratio cycles (each with a associated learig curve ad possible dowtime) must be tallied i the best-of-breed sceario. I additio, icompatibilities arisig amog heterogeeous applicatios must be resolved; a homogeeous sigle-platform eviromet, where compoets are stadard, avoids this problem. Noetheless, i a busiess suite, licese fees ad maiteace are a sigificat ogoig cost. I the case of a itegrated busiess suite, it is possible to icur oly margial costs by sharig ifrastructure compoets (such as Web servers, etwork badwidth, ad storage/disaster recovery facilities) amog multiple systems. Other factors that ca affect ROI iclude the reliability, performace, ad availability (or uptime) of a give applicatio. There are more potetial failure poits at the iterfaces, ad more performace tuig may be required betwee the BI tools ad the eterpise systems or data warehouse i a best-of-breed sceario. I a sigleplatform eviromet, the eterprise works with a sigle vedor to resolve issues. Proper valuatio of a BI ivestmet, however, is more complex tha the calculatio of traditioal ROI. Williams ad Williams (2003), for example, argue that the assessmet of the busiess value of BI i orgaizatios is a strategic ecessity i order to improve results. They recommed a broader aalytical view tha just ROI, which is udoubtedly a itegral compoet of the overall busiess value aalysis. As with ay asset, the busiess value of a ivestmet should be measured i ecoomic terms as the et preset value of future after-tax cash flows from the ivestmet, rather tha o the basis of et profit or savigs. However, these cash flows ca be difficult to determie ad to lik directly to the BI ivestmet, especially to less tagible factors such as reliability ad performace. Selectio Factor 4: Vedor Stability Whether small, iovative compaies will survive i the log ru is the biggest ucertaity surroudig best-ofbreed vedors. Those that do survive may still ed up beig take over by larger vedors lookig for specialized capabilities. Vedor cosolidatio i the BI idustry poses the biggest challege for customers who have or are cosiderig best-of-breed solutios. I cotrast, the challege for busiesses optig for a itegrated sigle-vedor solutio is to avoid losig leverage ad egotiatig power where they are depedet o that vedor for their etire applicatios portfolio. As they cotiue to acquire smaller vedors, large vedors (which are supposed to offer itegrated platforms) are themselves offerig a portfolio of disparate, best-of-breed products. The best example of this is the acquisitio by Oracle of Hyperio Solutios. The full itegratio ad stadardizatio of the Hyperio CPM products ito Oracle s ow BI platform, accordig to Garter, could take several release cycles to complete. They are curretly offered separately ad will most likely cotiue to be offered as separate product lies for some time (Hostma, Va Decker, ad Rayer, 2007). The biggest issue to a best-of-breed customer is losig cotiuity of product support if their vedor is acquired. They also risk havig their existig product replaced by a ew product that does ot offer the same fuctioality (Rao, 2006). Eve where a forced product chage proves techically satisfactory, there could be pricig chages ad both fiacial ad productivity costs associated with migratio ad retraiig of users (Hostma ad 20 BUSINESS INTELLIGENCE Joural vol. 13, No. 2

7 Schlegel, 2006). However, a best-of-breed customer will always have the leverage of fidig alterative suppliers for a give stad-aloe applicatio, whereas for a customer of a itegrated busiess suite, the switchig costs are much higher (O-Lie Cosultat Software, 2003). A viable alterative is to adopt a middle-of-the-road approach ad go for oe of the larger pure-play BI vedors (such as SAS Istitute or MicroStrategy) for a BIoly platform, retaiig the eterprise suite for the rest of the applicatio portfolio. This optio has the dual beefit of icorporatig market-leadig specialist BI capabilities while avoidig vedor lock-i. Still, ot eve these established BI vedors are exempt from beig acquired by eve larger vedors such as SAP or Oracle, as evideced by Oracle s Hyperio acquisitio i the first quarter of 2007 ad SAP s acquisitio of Busiess Objects i the last quarter of Therefore, clear guidelies should be defied, derived from the compay s IT guidig priciples that pertai to software ivestmets. I ay case, the ivestmet choice must be based o a firm busiess case. Those optig for a best-of-breed optio will have to prepare a more detailed ad rigorous cost/beefit aalysis to quatify, justify, ad commuicate their selectio decisio. Ultimately, vedor stability as a selectio criterio favors a larger player, but its road map for future cosolidatio ad itegratio of acquisitios should be a key cosideratio. Coclusio Optimizatio of the parts does ot ecessarily optimize the whole. Tryig to attai the best possible idividual architecture compoets to satisfy each fuctioal requiremet may lead to a sub-optimized eterprise architecture. Costs for a itegrated busiess suite are more predictable ad cotrollable tha costs for a best-of-breed applicatio portfolio. For a busiess with a log traditio of usig ERP ad other eterprise systems, it makes sese to acquire BI capabilities from the same vedor, cosiderig the coveiece of itegratig the back-ed trasactioal data with the frot-ed aalytics o a sigle platform. Geerally, most busiesses still prefer to obtai BI from best-of-breed vedors, but there is a clear tred toward stadardizatio ad cosolidatio, eabled by a BICC, which plays a key role i defiig the compay s overall BI strategy, stadardizatio efforts, ad prioritizatio of busiess requiremets, as well as drivig user adoptio. As they exted their presece i the BI market, large vedors are acquirig best-of-breed vedors to gai the fuctioality lackig i their ow solutios. The challege for these suite vedors is to seamlessly itegrate their stadard OLAP ad reportig data warehouse applicatios with the segmetspecific tools they purchased. Best-of-breed vedors are highly skilled ad iovative i developig BI fuctioality. The best of these smaller vedors may ultimately be acquired by larger software vedors, so their competitive stability should be a factor for selectio. Large eterprise applicatio vedors offer a promisig way forward, itegratig BI fuctioality ito busiess processes to esure user acceptace ad adoptio, ad to make BI use more strategic ad pervasive. Refereces Burto, Betsy, ad Kurt Schlegel [2006]. BICCs Drive Busiess Itelligece Platform Stadardizatio, Garter Ic. BUSINESS INTELLIGENCE Joural vol. 13, No. 2 21

8 Chadler, Neil [2007]. Employ a Coordiated Approach to Busiess Itelligece ad Corporate Performace Maagemet, Garter Ic. Cyr, Daw [2006]. Paorama Strives for All-i-Oe BI, Vedor Briefs, SQL Server Magazie. Eckerso, Waye W., ad Cidi Howso [2005]. Eterprise Busiess Itelligece: Strategies ad Techologies for Deployig BI o a Eterprise Scale, TDWI Research, August. display.aspx?id=7744 Sommer, Da, ad Collee Graham [2007]. User Survey Aalysis: Spedig ad Sourcig Prefereces for Busiess Itelligece, North America ad Europe, Garter Ic. Vesset, Da, ad Bria McDoough [2006]. Worldwide Busiess Itelligece Tools 2005 Vedor Shares, IDC Competitive Aalysis, Vol. 1. Williams, Steve, ad Nacy Williams [2003]. The Busiess Value of Busiess Itelligece, Busiess Itelligece Joural, Vol. 8, No. 4. Hall, Mark [2002]. Itegrated Suites Vs. Best of Breed, Computerworld. softwaretopics/crm/story/0,10801,68240,00.html Holtz, Bejami [2005]. Best of Breed vs. Suite What to Cosider Before Makig a CRM Decisio, CRM Today. Hostma, Bill, ad Kurt Schlegel [2006]. Market for Busiess Itelligece Platforms: Roud Two of Cosolidatio Begis, Garter Ic. Hostma, Bill, Joh E. Va Decker, ad Nigel Rayer [2007]. Hyperio Buy Will Add to Oracle BI ad CPM Portfolio, Garter Ic. Negash, Solomo [2004]. Busiess Itelligece, Commuicatios of AIS, Vol. 13, Article 15. O-Lie Cosultat Software [2003]. Best of Breed vs. Itegrated Systems, IT Selectio Strategies Report. Rade, Neil [2004]. Eterprise Busiess Itelligece ROI, Aalysis Paper, Hired Brais Ic. Rao, Shashi [2006]. Eterprise Applicatios: Best of Breed versus Best of Suite, SAP Isight. Schlegel, Kurt [2006]. Deliver Process-Drive Busiess Itelligece with a Balaced BI Platform, Garter Ic. 22 BUSINESS INTELLIGENCE Joural vol. 13, No. 2