The spin-doctors at SAS Institute, MicroStrategy and Cognos, which are part of a dwindling band of independent BI vendors, have been working overtime to craft responses to the proposed $6.8bn merger.
The official line from Cary, North Carolina-based SAS was that the takeover was long expected; though it believes that SAP is late to the BI party. In a prepared statement, SAS pointed out two major holes in the deal – lack of analytics and vertical industry focus.
The first has always been a hobby horse for SAS, a company that prides itself on the breadth and complexity of its own analytic suite of data mining, predictive analysis and optimization tools and applications.
The second hole, unsurprisingly, also highlights another SAS strength, that of its impressive suite of industry-focused analytic applications. A verticalization trend in BI has been happening for some time now, with SAS leading at the forefront.
While many BI vendors have tried to dabble with vertical analytic applications, most have failed miserably. SAS however has persisted more and now boasts a healthy, growing packaged analytic applications business backed by a growing suite of products for industries including banking, insurance, retail, pharmaceuticals and telecoms.
Like other BI industry pundits, SAS believes that SAP bought Business Objects mainly for its traditional BI query and reporting tools, which fill a gap in its SAP NetWeaver BI platform (based on the SAP Business Information Warehouse) as well as general reporting against its mySAP ERP suite.
In its statement SAS asserted that such BI functionality has become a commodity. Yet at the same time it also said that ‘Enterprise Intelligence, which it defines as the combination of BI tools, data integration, data quality and predictive analytics) is one of the hottest growth areas in the sector. Clearly SAS sees traditional BI tools as a front-end component of a much broader and richer analytic proposition.
MicroStrategy, a vendor that generally likes to keep a low-profile in the market and let its well engineered and highly scalable relational OLAP BI platform do the talking, however pushed out the whole boat in its official email response, including a four-page analysis of the deal that would have blessed any Gartner or Forrester analyst website.
Like SAS, the McLean, Virginia-based company said in an email statement that the acquisition is continuation of a shakeout process in the BI market and that several acquisitions done by Business Objects over the past years have masked some fundamental weaknesses in its technology offerings.
The statement went on to say: Business Objects’ BI products are fragmented, lacking both scalability and integration, making them inappropriate for many applications in the new generation of enterprise BI.
MicroStrategy also said the merger threw up many unanswered questions like why was Business Objects so eager to be acquired?
We believe it had to be because it had accumulated a large collection of non-integrated technologies in a market where organic technical integration is essential for providing enterprise BI solutions.
But the biggest question mark over the deal is technology overlap, according to MicroStrategy and asks how will Business Objects and SAP reconcile their overlapping technologies?
MicroStrategy has even taken the trouble to draw up a detailed comparison table that highlights ten areas of significant product overlap; including query and analysis, dashboard development, portals and performance management.
MicroStrategy might have a valid point in some product areas. But other categories like master data management and ETL can hardly be described as significantly overlaps, with either one company providing a strong or weak offering that is blindingly obvious to the eye, and which should not leave customers scratching their heads if they need to chose.
What that overlap means of course, and which MicroStrategy has rightly pointed out, is that SAP is likely to sunset some of the Business Objects products that it is not integrating, though it would probably be unwise to do that. Indeed even some of SAP’s own technology might now be winded down. For example the future of SAP’s Business Explorer (BeX) analysis and reporting tools will probably give way to Business Objects superior set of front-end BI tools.
MicroStrategy therefore believes that customers undergoing integration on both sides will face painful migrations.
Unless SAP maintains Business Objects purely as a portfolio investment, it is likely that Business Objects’ various architectures will be changed to help them integrate with the more cohesive SAP suite.
The implication is that, MicroStrategy asserts, is that several major migrations are in store for Business Objects’ customers.
Following the merger, MicroStrategy now likes to call itself the second largest independent BI provider in the market. The company said it remained committed to its industrial strength niche and an organic architecture which has differentiated its BI platform in the market up to now.
We have maintained our consistent focus on this market for large organizations with vast amounts of data, large user populations, and the most sophisticated analytics. Nor have MicroStrategy customers had to endure any architecture migrations since the major re-architecting of our BI platform that was completed in 2000 with MicroStrategy 7.
The official response from Businesses Objects’ Canadian rival Cognos however paled in comparison to the aggressive assertions of MicroStrategy.
Cognos instead preferred dwelled on the fact that that it is now the last remaining independent performance management software provider in the market; though a few small startups might argue otherwise.
In a prepared statement, Cognos CEO Rob Ashe wrote: This is a great position for us to be in, and it validates the vision we laid out more than 6 years ago…to be the leading independent provider of performance management solutions for our customers.
Ashe believes that the bulk of the market is still looking for an ERP-neutral solution because of the fundamental difference between transactional and analytic systems and the need to work with multiple vendor-sourced business applications, which is the norm in most large enterprises today.
We will continue to pursue an ’embrace and extend’ strategy for the ERP environments we support – taking full advantage of what the ERP provider offers, and at the same time, extending to cover other data sources and environments, Ashe said, adding that Cognos will not waver in that vision.
But that statement probably won’t be enough to keep the company pout of the limelight as the next big acquisition target in BI. Rumors have swirled around the market for years that IBM has the Ottawa, Ontario-based company in its sights. And Hewlett-Packard, which recently stepped into the analytic data warehousing market with its NeoView offering, is also thought to be on the prowl for BI and analytics software, as is the newly launched Teradata, which officially broke away from parent firm NCR earlier this month.
Our View
It’s always interesting to see how competitors will react when a dangerous independent rival is taken out of the market by a larger IT vendor. But it’s often yawningly predictable as well. This is again the case with the SAP-Business Objects deal. Overall BI vendor responses have either emphasized the obvious FUD factors or grabbed an opportunity to trumpet their own BI platform and market differentiators, like SAS has done.
Of course making hay over the merger of a rival isn’t a new phenomenon in the IT industry; in fact it’s become somewhat of a tradition now. But the SAP-Business Objects deal has been on the cards for at least half a year now. Surely the PR and marketing brains at rival BI vendors could have come out with something more creative; especially Cognos, whose response was quite muted, which could tell us something about its own future moves.
Perhaps Cognos doesn’t want to beat the independent drum too loudly, especially as the company remains firmly in the acquisition spotlight itself. Of course other vendors that are not, like MicroStrategy, can afford to be more aggressive in their FUD-mongering. Nevertheless credit must go to MicroStrategy for its diligence in analyzing the deal from all angles, particularly a deep-dive into product comparisons, but one that is flawed in several places.
Regardless of whether some of the FUD mongering is valid or not, expect BI vendor sales people to be busy on the phone or on the road in the next several months calling and visiting Business Objects customer sites. Also expect the now-customary spate of attractive migration programs and safe passage migration offers to appear on the desktops or email boxes of many CIOs and IT directors.
