Business Objects Enlists VARs For Midmarket Push

Business Objects on Monday unveiled a line of BI tools designed for midsize companies, defined by the vendor as businesses with sales of up to $1 billion and 2,500 or fewer employees. Business Objects also announced that it is leaving the job of providing professional services to midsize customers to its network of 2,300 channel partners.

Market research firm IDC puts the worldwide BI software market at $5.9 billion, and Business Objects estimates that 35 percent of that -- or about $2.1 billion -- comes from midsize companies. But while many large companies have implemented BI software, there are still a lot of sales opportunities in the SMB space, says Todd Rowe, Business Objects' vice president of worldwide midmarket business. He estimates that the midsize BI market is growing at 12.5 percent compared to 9.8 percent for BI sales overall.

Business Objects sells a number of BI, enterprise information management, and planning and budgeting applications to large customers. The new product for midsize companies, which typically have small IT budgets and fewer technical resources, is a single integrated package the vendor says is affordable and easy to deploy. Monday the company debuted Business Objects Crystal Decisions, Standard Edition with reporting, ad hoc query and analysis, and dashboard tools.

Rowe insists the midmarket package isn't a "dumbed-down" version of Business Objects' enterprise-class software. But it has fewer configuration options (five vs. 20 for the flagship BusinessObjects XI) and will not run on Unix. Pricing in North America starts at $20,000 for five concurrent users on a single Windows or Linux server.

The relatively low price is a key selling point for solution providers such as Bob Vander Woude, sales and marketing vice president at Preferred Strategies, a Soquel, Calif.-based company that integrates Business Objects software with ERP applications from J.D. Edwards and other vendors.

"I think it's the right product positioned for the entry-level customer," he says, noting that it's tough to get a sales foot in customers' doors with products sporting six-figure price tags. With Business Objects' new offering, "I think we're going to get a lot more accounts that we can grow," Vander Woude says.

By mid-2007 Business Objects plans to offer a Professional Edition of the midmarket package with data-integration capabilities. A Premium Edition, due in the second half of the year, will add performance management functionality, including scorecards and advanced metrics, to the mix. All three editions are based on the same code base as BusinessObjects XI software.

Under the shift in Business Objects' partner engagement model, channel partners will now be the primary vehicles for delivering professional services to midmarket customers. The vendor says that represents a significant expansion of service opportunities for solution providers. That's in addition to the opportunity to generate revenue through software license margins by co-selling Business Objects software, as well as through training and education (either their own services or reselling those provided by Business Objects), and maintenance and support services.

Business Objects is also working with solution providers to develop software templates, reports, and data connectors around Business Objects Crystal Decisions for specific business processes and vertical industries. Business Objects may resell some of those partner-developed products, paying royalties in the process.

While Business Objects will directly sell Business Objects Crystal Decisions to named accounts, sales representatives will earn the same commission if they make a sale through a VAR, thus avoiding channel conflict. Business Objects also will operate a deal registry for channel partners. Today about 50 percent of all Business Objects' sales are generated through the channel; Rowe expects that number to increase with the midmarket initiative.