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Business Intelligence Heavies Look to the Mid Market

For SME firms with limited IT know-how, Business Intelligence is an especially tough nut to crack. It's a nut BI players of every stripe desperately want to crack, however.

• By Stephen Swoyer
• February 7, 2007

Over the last twelve months, business intelligence (BI) vendors have really talked up the importance of small- and medium-sized enterprise (SME) customers. These companies are viewed as ill-served by traditional BI and performance management (PM) offerings, BI vendors concede, in part because such tools are typically difficult to deploy and manage. For SME and mid-market firms with limited IT know-how, BI is an especially tough nut to crack.

It’s a nut BI players of every stripe desperately want to crack, however.

That’s the conventional wisdom, anyway. And, even though software vendors in nearly every industry seem to undergo come-to-SME experiences on a periodic basis, this time might be different.

Consider a recent report from market watcher International Data Corp. ("Worldwide Business Intelligence Tools 2005 Vendor Shares"), which suggested that the user constituencies which today consume the bulk of enterprise BI tools—namely, analysts and power users—are nearly saturated. One upshot of this, IDC speculated, is that BI vendors will start to look elsewhere for profit.

"[T]he market for reporting and OLAP tools for power users and analysts has reached a level of maturity that cannot sustain the growth rates of the past in terms of new license revenue. Instead, larger IT vendors such as Microsoft, Oracle, and IBM along with the existing specialty BI vendors are now targeting this market," wrote IDC analyst Dan Vesset. "As the market continues to mature, it is highly likely that the larger IT vendors will continue to gain share."

One obvious opportunity, of course, is to drive BI deeper and wider into the enterprise, exposing BI capabilities to new and hitherto untapped end-user constituencies. Another opportunity, and one which is in a sense subjacent to that of more pervasive BI, is to drive BI into the notoriously difficult SME space. After all, if BI vendors can conquer the usability problem—i.e., successfully recast their tools as adaptable and intuitive enough to suit a wide range of users—surely they can lick the deployment and manageability problem, too?

Some vendors say they’re already doing as much. Consider Microsoft Corp., which markets a combined SQL Server and Office BI stack that—with the late 2007 release of PerformancePoint Server—will grow to encompass PM, too.

Microsoft also has a credible mid-market applications portfolio, in the form of its Microsoft Dynamics stack. Elsewhere, Microsoft officials point to the traditional ease of use of Windows and the availability of SME-friendly Windows Server and SQL Server packages. With the forthcoming PerformancePoint release, officials say, Microsoft expects to expose PM concepts and functionality to SME customers, too.

"Over the next several years we’re going to see increased integration between PerformancePoint and all of the Dynamics products. And we are very, very optimistic about the opportunity to bring performance management to the mid-market space," says Michael Smith, director of marketing with Microsoft’s Office Business Applications group.

Oracle Corp., for its part, has articulated a similar strategy. The database powerhouse not only pushes "Express" editions of its 10g database and Project Fusion applications, but recently expanded its universe of software-as-a-service (SaaS) offerings, too. Ditto for SAP AG, which announced a SaaS version of its CRM software last year, fleshed out its analytic line in both 2005 and 2006, and—thanks to a number of related SME initiatives (including an SME-ready version of IBM Corp.’s System i midrange server that ships preconfigured for SAP)—hopes to expand its own footprint in this space. BI pure-play vendors, too, say they’re serious about snagging SME and mid-market mindshare. To a degree, the gradual movement of prominent BI players such as Business Objects SA, Informatica Corp., and Cognos Inc. into the SaaS space speaks to this desire. Although SaaS is frequently deployed by enterprise customers, it’s especially attractive to SME and mid-market customers, who respond to its twin value-add: SaaS is off-premises (so there’s little ongoing maintenance) and boasts an essentially turnkey deployment model.

As a result, BI pure plays that embrace SaaS typically tend to emphasize—and perhaps even overemphasize—its applicability for SME and mid-market customers. There’s a reason for that, of course: most BI players-cum-SaaS-providers have lucrative on-premises BI practices to protect, too.

"We are targeting a class of user that is adopting SaaS. They may be smaller companies that don’t have the dedicated resources to do data warehousing or heavy duty data integration. They need to get their job done, to get data in and out of Salesforce.com. they need to do it fairly quickly. That user needs a basic UI to get the job done. [That’s [what is] sustaining SaaS," says Ivan Chong, vice-president of business development with Informatica. "[SaaS is] not going to have the flexibility of a general purpose environment that you would have with on-premises PowerCenter or on-premises data quality." SaaS isn’t the last work in turnkey BI. In a sense, it wasn’t even the first: the data warehousing appliance arguably came first.

Consider the case of Teradata, a division (for now) of NCR Corp. No one could seriously claim that Teradata as it’s now constituted is an SME player, even though Teradata officials, for their part, stress that they’re loath to write off any market segment. For a while, after the demise of data warehousing competitors such as Red Brick Systems and Informix (both of which were gobbled up by IBM), Teradata was effectively the only name in the data warehousing appliance space. (For the record, Teradata officials have alternately embraced and/or disavowed the appliance label.)

Over the last half-decade, however, the appliance market has seen a bustle of new activity, such that Teradata now competes with appliance specialists Netezza Inc. and DATAllegro Corp., as well as late-comers IBM Corp., Sun Microsystems Inc., and Hewlett-Packard Co. (HP), among others.

"There are these new vendors who are trying to position themselves lower at the data mart appliance space," says Randy Lea, Teradata’s vice-president of products and services. "Is it making us maybe focus on that space maybe more than we have in the past? Yeah, it might have highlighted that there’s maybe more opportunity there than we had thought, so we’re taking a look at it."

Why so much activity in a market that—as recently as five years ago, at least—was comparatively somnolent? The key attraction, data warehousing boosters say, is an obvious one: turnkey appliances such as those marketed by Netezza, DATAllegro, and (in a less obvious way, by IBM, Sun, and HP) help bring the black art of data warehousing down from the mountain.

In this respect, appliances seem tailor-made for SME customers that want to do data warehousing-on-the-cheap. Or so appliance boosters say, anyway. Of course—as DATAllegro CEO Stuart Frost puts it—how else is one to explain the sudden interest of mainstream players such as IBM, Sun, and HP in this segment?

"Appliances are now seen as the way to go. There aren’t too many people who are saying ‘Appliances aren’t here to stay,’ and we’re also seeing the bigger vendors coming out with appliance-like bundles," Frost indicates. "Why have [these vendors] all come out with these bundles, or whatever convoluted language they’re using to describe [these appliances], over the last year? None of them seemed to take any notice of what was going on here before."