Opinion: commercial BI

Now that everyone on the blogosphere has voiced their opinion on the latest SAP acquisition of BO, I can safely post my own rant as well.

I read all about the pro’s and cons of this deal. IMHO it just doesn’t matter a lot. In the end, the flood of open source software is going to wash away the proprietary sand castles left and right.

Yesterday we actually spent a lovely day at the beach with the family. When you start building, it feels like ages before the water will hit the castle. When the water closes in it looks like those few centimeters of water ain’t going to make a lot of difference. However, here’s a reality check: there’s just no escaping. After a couple of waves there was nothing left but a small pile of mud.

The analogy with closed source BI vendors is a bit flawed. It will not take 6 hours for the tide to come in, it will maybe take 6 years. However, I strongly feel that the tide is coming in and that the waves are going to hit hard.

Wars are already being fought left and right, castles are vigorously defended, there is lying and cheating and even lawsuits are filed against open source companies lately. In the end, it’s just going to be nothing but a small splash in the ocean.

Defending the castle with a passion

Some 8 or 9 years ago I actually started dabbling with Business Objects. It was a revolutionary business proposition at the time. No longer was there a need for expensive “SQL generators / report generators” on the mainframe. You could do the same thing and more for pocket change. You could get licenses for a thousand $US a seat, imagine that! It was the golden age for companies like BO, Cognos and many others.

A dot-com bubble and a few years later and there is an unprecedented consolidation wave going on. You see, the only way these big corporations can get more market-share and increase their turn-over is simply by buying other companies. Never mind that the BO reporting client software is 99% the same as 8 years ago. (Most of the bugs are the same too) Technically, not that much changed. The strategy of all the closed source BI companies is still the same: spend +75% of your turnover on sales and marketing. Innovation, software development and other costs are best kept at a minimum to keep your profit margins as high as possible. Suppose you acquired a few companies that have exactly the same business model as your own. You wouldn’t care about software alignment, integration and other stupid things would you? It just means you have to spend less before the customer buys either product.

Spending insane amounts of money on acquiring your customer is a nice strategy … as long as it works. If it stops working because someone undercuts you substantially, there is no way out.

The speed at which Pentaho and other open source companies are innovating tells me that there is soon going to be a tipping point when the size of the castle walls are not going to matter anymore. The business proposition of open source is just too good. It’s a win-win for both the customer AND for the professional open source companies.

Until next time,

Matt

3 comments

  • Right Matt !

    You know like me the figures of the study about R&D investment of BO & Cognos over the last 5 years : they simply do not invest anymore at the level they could have invested. And when there is no more innovation, this is an open door for newcomers ! It was time for BO to make money, in 2 or 3 years, it will be too late ! Open Source is just a question of time now : There is no return back, once you try it, you keep it ! I still don’t understand why a company like Cognos has not yet been bought by Oracle or IBM …

    And we all know that when a commercial company buy another one, the bought product is in danger : software is done by developers, not by financial arrangement. Once the company is sold, majority of products are not moving anymore, then disappear over a short period of time.

    Situation may be the same in the OpenSource area : when a project is not moving in the right direction, or not moving anymore, it is an open door for some forks. We’ve had some recent example of this, which is not also a real problem : most important is to give users the possibility to setup Open Source platform at reasonable cost

    Regards,
    Patrick

  • Hi Matt,

    Interesting that you chose the ocean metaphor. It’s exactly the same model I used to consider open source back 2 years ago, when I understood open source at a general level but hadn’t really “lived” it from a team perspective. I saw the ocean as open source (same as you did) and the beach as the traditional market. The question for me was, “As the waves rise and the tide comes in, is there one special part of the beach that will stay dry?” My answer was “no” from what I could see, and obviously I came to Pentaho.

    I’ll have conversations with 3rd parties who have all sorts of opinions on open source BI/DW. Some say it’s already having a major impact, some say that the impact is a few years away. But for people who are skeptical, no one has ever answered my good-natured challenge to explain why the BI market (or any other market) would somehow uniquely avoid the dynamics of open source in other markets. Back to the beach – as this wave keeps rising, what’s so special about your little patch of sand that will keep it dry, and sustainably insulate it from open source? No one has ever given me a good answer. You can certainly argue why/where some markets might be more open-source-friendly than average, but how or why a certain market (content management, BI, CRM, ERP, marketing automation, visualization) is “immune” to open source is not a case that anyone has credibly made. The best I usually get is “[My Category] is too strategic, or too mission-critical for open source to really be a factor”, with no supporting points, and no admission that things like app servers and operating systems are *incredibly* mission critical in many apps today. Anyway, they’re going to sit in their little patch of sand with their umbrella (and their sand-castle) and watch the tide as it rolls in (or as we work hard to roll it in 😉 ).

    Thanks Matt.

    -Lance

  • Ryan

    I stopped using Business Objects a couple of years ago, after getting annoyed with their terrible support and bugs.

    Glad to hear that they’ve still not changed.

    As for Open Source BI – it’s a good idea but there’s still some way to go.

    Even Pentaho suffers from similar problems to the big boys – the message is very muddled and everything feels schizophrenic.

    Where Pentaho really suffers is the lack of documentation – a quick look at Amazon shows a million how-to books on SQL Server 2005’s BI features (and a fair number on BIRTs) but nothing on Pentaho or any of the sub projects.

    There should be lots of training material out there, it’s the best way to encourage use and should earn some revenue for Pentaho Corp.

    Still, Pentaho is a better platform than BI. From my experience you can achieve the same results investing 3mnths time into learning Pentaho than paying $400k+ to Business Objects on licenses for web-based reports (taken from a quote made 5 years ago!).