Monday, January 12, 2009

BI Market Predictions 2009: Vendor Consolidation

My last post introduced four major BI market trends that, I believe, will create dramatic change in the coming year. This post will examine the first trend of these trends . . . and the one that is arguably the most obvious. During 2007, three major Business Intelligence vendors – Hyperion, Cognos and Business Objects - were acquired by Oracle, IBM, and SAP respectively. After more than a year of letting the dust settle, these mega-companies began describing their newly-rationalized, post-acquisition product roadmaps. Regardless of the quality of those roadmaps, some customers are disappointed for at least one of four reasons:

1. Discontinued products. Customers’ favored products are being discontinued in order to merge multiple products across many categories.
2. Stifled innovation. Behemoths are moving sideways, rationalizing code bases and choosing winners and losers, rather than moving forward.
3. Vendor like-ability. Customers’ BI products have become acquired by a vendor with which, for any number of reasons, they don’t feel they can do business.
4. Complex products with expensive licensing options. This will only get worse – more complex and even pricier - because these largest software providers have to cater to the largest, most sophisticated customers of business intelligence.

We haven’t seen the end of this ripple effect. I contend that, in 2009, the consolidation of these largest BI vendors will continue to frustrate customers and in an even more challenging year than the one we just put behind us. This will, without a doubt, provide more opportunity for smaller, faster, and more modern BI software providers because of the disappointment customers feel across each of the reasons cited. In fact, as 2009 matures, the effects from each of these will fuel growth for those business intelligence software providers who cleverly solve a specific business problem that the largest vendors have forsaken. This confluence of “disruptive innovation” and business intelligence is cited by Steve Miller (of OpenBI) in an article written late last year, entitled
“Open Source BI as a Disruptive Technology”. Supporting the need for faster innovation, Steve describes the core disruption coming from commercial open source BI (COSBI) vendors:

“At the heart of the [Commercial Open Source BI]-led disruption is technology innovation, which is occurring on a larger scale and in ways not experienced by the traditional proprietary software market. COSBI leverages a worldwide community of volunteer development talent stewarded by professional R&D teams to create a global innovation engine. This combination is critical to COSBI success because the magnitude of community development effort enables a high trajectory of product improvement, while core vendor-employee R&D teams are free to focus on marketable innovations.”

What do you think? Will these ripples from vendor consolidation play out in ways consistent with my prediction?

Brian Gentile
Chief Executive Officer


  1. Hello Brian,

    I do think that vendor consolidation will continue in 2009 - especially as the larger ones search for and find "bargains" due to the economic downturn. Whether this will lead to your four predictions remains to be seen. No doubt some of what you predict will come true. On the other hand, some companies want the one stop shopping offered by the mega-vendors. Others will be put off by it.

    Regarding COSBI, I believe that this is the year for these offerings to make their mark. Again I put this at the feet of the economy and the mandatory need for companies to reduce the cost of their BI environments. Now more than ever, companies must have sound decision-making support but they must also contain the costs of these infrastructures. Hence the interest in open source and COSBI. Open source companies will have a great chance to impress customers with their capabilities and functionalities.

    This should be a most interesting year for open source vendors like JasperSoft...

    Claudia Imhoff

  2. Thanks for your comments Claudia. I agree that this economy is driving many organizations to quickly consider lower cost options for BI and Data Warehousing. The goal must be to keep vital projects on track, while becoming more and more efficient with infrastructure and systems costs. I hope this continues to spell advantage for open source software and I look forward to seeing how this plays out this year.

    - Brian