The New Adventures Of Old Business Intelligence

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For solution providers, the business intelligence (BI) market is anything but dull these days. Opportunities abound: Implementing BI systems is high on many customers' IT priority lists, especially in the wide-open SMB market, and spending for BI-related software, hardware and services is expected to jump nearly 9 percent this year.

But with continued vendor consolidation--Oracle's $3.3 billion buyout of Hyperion Solutions is just the latest example--and creeping commoditization of basic query and reporting products, the BI industry is undergoing some serious changes. Solution providers have some careful navigating to do.

"Like everyone else, we're looking to see where the market is going," says John Nilsen, sales vice president at 1Answer Solutions, an Englewood, Colo.-based business intelligence solution provider that resells Hyperion's BI products. As far back as a year ago, long before the Oracle-Hyperion deal, 1Answer began exploring options for expansion, such as working with open-source BI software.

Spending for BI and performance management systems, including software, hardware, labor (internal and external) and integration services, is expected to reach $23.8 billion this year, AMR Research predicts. That's up nearly 9 percent from 2006. That breaks down to $6.6 billion for BI tools, $5.5 billion for dashboards and business scorecard applications, $4.3 billion for analytical system infrastructures, $4.1 billion for planning and forecasting software, and $3.4 billion for analytical applications.

A greater share of that spending is within small and midsize businesses. Until recently, major suppliers of BI software, including Business Objects, Cognos and Hyperion, focused much of their sales efforts on Fortune 2000 companies. But there are only just so many "power users" in big corporations, so vendors are turning to the SMB market where only 20 percent to 40 percent of businesses have adopted BI tools. And midmarket BI sales are growing at more than 12 percent, says Todd Rowe, vice president of Business Objects' worldwide midmarket business.

And what better way to reach those SMB customers than through resellers and solution providers? Channel partners have the vertical-industry and business-process expertise needed to integrate vendor BI platforms with business applications and back-end data sources, and the ability to develop the reports, dashboards, key performance metrics and analytical applications that BI platforms require.

"BI will remain an art rather than a science for the foreseeable future," says Forrester Research analyst Boris Evelson. "You can't implement a successful, useful, actionable BI solution 'out-of-the-box.' No matter what tool or technology one uses, BI is always about the right design, architecture, best practices and customization--the realm of [systems integrators] and VARs."

NEXT: The biggest demand driver for BI technology.