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Analysis: Business Intelligence Goes Mainstream

Ask solution providers about business software and most will confess it's an entirely different animal from the rest of the technology stable.

Ask solution providers about business software and most will confess it's an entirely different animal from the rest of the technology stable.

For starters, applications such as CRM, ERP, supply-chain management and, in particular, business intelligence (BI) demand sophisticated skills and business-process know-how. Add to that the need for patience in navigating a longer sales cycle than that of core IT infrastructure, and it's another language to speak: You're more likely to be making the case for this software directly to the CEO or business manager rather than a CIO or IT manager.

Is business software an investment? You bet. But the rewards of climbing to the top of the software stack--better margins, lucrative services and customization opportunities--make it well worth it. In the VARBusiness 2006 State of Technology survey for the third quarter, focused exclusively on business software, solution providers report growth potential and high levels of innovation in the business-software market, especially for CRM and BI. Half of solution providers plan to sell BI solutions in the next 18 months, for example; and 16 percent of those folks are diving into the space for the first time or expanding existing BI practices. Helping drive momentum, technology vendors such as Microsoft, Business Objects, Oracle and Sage Software have flooded the channel with friendlier wares aimed at penetrating the vast midmarket.

Of all the business-software applications, BI--with its ability to slice and dice data to gauge operational efficiency and performance--is turning out to be one of the hottest IT markets. Gartner estimates that new license revenue for BI software will reach $2.5 billion this year and climb to $3 billion by 2009. And in a poll of CIOs conducted by the analyst firm last year, BI ranked second only to security as their chief IT concern.

You don't have to tell Shiv Kumar about BI's explosive growth. The executive vice president of Edison N.J.-based ZSL (VARBusiness 500 No. 318) says compliance mandates and the desire to get a handle on business performance have customers demanding intelligence tools more than ever. And, as never before, VARs can oblige those end users now with software that's less esoteric and much simpler to deploy and integrate.

"There's been a lot of maturity and improvement in the BI tools," Kumar says. "But BI is not so mature that a customer can figure out how to do it all. This is where the solution provider steps in with the value-add."

Kumar commends Business Objects for rounding out its flagship-reporting product capabilities with a data-cleansing tool and a Web-intelligence product that ZSL is deploying in its BI solutions.

Because BI systems pull data from a variety of back-end sources--CRM applications, relational databases and ERP silos--up-front data cleansing becomes critical to enabling accurate analysis and reporting. Basically, all renderings of something such as a customer's billing address must match specifically across data sources, which is often not the case.

At solution provider ZSL, Kumar says that focusing on integration work and other services, such as building a data warehouse to take a customer's reporting capabilities to a higher level, is where the BI rubber hits the road. The solution provider has a great opportunity to educate midmarket customers in particular, he says, about the intrinsic business value of more sophisticated analytics, he explains.

"We are approaching line-of-business people who are under pressure to do more with less," Kumar says. "We show them how they can generate better reports to see where they are standing and improve operational efficiency."

NEXT: BI For the Masses

BI's popularity is driven by the simplification of the software itself. Whereas BI and all its moving parts historically have been the domain of back-room IT staff, systems analysts and other hard-core number-crunchers, it's now being positioned as a tool for everyday business users. That explains the growing popularity of executive dashboards, which give managers a real-time view of their businesses in action, or so-called "visibility" into everything from online sales figures based on product SKUs to that elusive bottleneck in the supply chain.

Microsoft has worked wonders with its SQL Reporting Services software, which partners are using to quickly build customized reporting and analytics solutions. The tool is bundled with its SQL Server Express database and is part and parcel of the flagship SQL Server 2005 release.

Solution providers describe the SQL Reporting Services tool as simple to use and craft solutions with, and give the software giant high marks for innovation in the VARBusiness State of Technology survey. Nearly one-third of respondents dubbed the company the most innovative in BI, followed by Business Objects and Oracle. Microsoft also ranked tops in CRM and accounting software.

But BI sports a raft of vendors. Last fall, Hyperion launched its new BI platform, Hyperion System 9, in a modular format aimed at midmarket customers that want to start small and scale up over time. Cognos, with its Cognos 8 BI platform, has also gone the modular route, turning the various BI components into a set of SOA services that partners can mix, match and integrate into custom solutions. Meanwhile, Hyperion, like Business Objects, has integrated back-office components and visualization tools into its platform for a more complete set of tools that VARs can use to deploy the software easily.

"We think the tools have become more user-friendly so that people at their desks can use them," says Mercedes Ellison, Hyperion's vice president of global partner sales. "With products being simplified, more users in an organization can leverage them. As it becomes less IT-centric, you'll see a lot of growth."

Partners, having shown creativity by taking BI tools and tailoring solutions for specific customers and verticals, are essential to the proliferation of the software, Ellison adds.

For example, Professional Innovations Inc. (PII) has devised a solution that illustrates the incredible BI opportunity. It has turned a proof-of-concept server loaded with Hyperion software and used for sales demos into a branded appliance called PIBox.

Going one step further, PII has partnered with data-warehouse appliance vendor Neteeza to bundle Hyperion System 9 with a rack unit that it resells as an integrated solution, says Brian Denker, vice president of BI at the Chicago-based services firm.

"We saw a real pickup when the economy flipped for the better in 2003, and every year since then has been a good one for us," says Denker, whose company is currently pulling in $5 million in revenue and employs 30 people.

NEXT: VARs Get Vertical

One way solution providers are getting their foot in the door with BI is by demonstrating domain expertise in specific verticals and wrapping that around a software solution. Many solution providers say this speaks directly to the need to have business-process consulting acumen to be successful in selling business intelligence.

"There's lots of interest in BI, but customers are still insisting that the justification for buying it be tied to a business deliverable," says Mike Restle, president of VersiFit Technologies in Appleton, Wis.

VersiFit believes that the vertical focus most easily makes the case for a BI sale.

To wit, the company handpicked secondary-education BI solutions as an area of specialization and is now proving that, with the right package at the right price and with the right vendor partner, everyday VARs can go up against the giants of systems integration, including IBM Global Services (VARBusiness 500 No. 1).

Milwaukee Public Schools, with more than 100,000 students, is one such major competitive win for VersiFit. The school system put out an RFP seeking a BI solution that would help pull it out of the doldrums of dismal performance, which threatened it with a takeover under the federal "No Child Left Behind Act." It came down to two bidders: VersiFit and IGS.

VersiFit has an integrated BI package specifically targeted at the K-12 market, along with a number of choice customer references. IGS, admits Restle, did a better job with its presentation to Milwaukee, but at the end of the day, a few key things put VersiFit's solution over IGS'.

The company decided to thwart IGS' brand equity by leveraging the Business Objects name in its solution. They also came to the table with a data warehouse as part of the offering, a technical element that IGS did not include, according to Restle. Last, price made a big difference.

"Our strategy is that even though K-12 is an early adopter for BI, we had to price and position our solution as if it were already entering a commodity stage," Restle explains. That has enabled the company to compete effectively against the big boys, and to do something else that BI isn't traditionally known for--a higher-volume business.

Consider this data point from VARBusiness' State of Technology survey: VARs reported equal business opportunity for BI across small, midsize and large customer segments, which demonstrates the software's flexibility in meeting varying needs.

Yet barriers to entry for BI and all business software remain an issue for solution providers. Nearly two-thirds of the surveyed VARs blamed training time and expense as the main hurdle keeping them from entering the business-software market. More than half cited pricing concerns and a general lack of expertise. The complexity of licensing also reared its ugly head.

Many of the vendors, aware of some of these barriers, have beefed up their presales technical and sales support, helping partners get into the groove of selling business software. Joint selling, too, is a major thrust, along with training.

Oracle, for one, has made training a cornerstone of its efforts to aid applications partners in the field, says Rauline Ochs, group vice president for North American channels. In the past, Oracle has stuck to partners that had business-software expertise from the get-go, but the company has now begun to recruit partners that may not have those skills. "Partners do need to invest in the training," Ochs says.

Andrew Jorgensen, a senior partner at Pinnacle Group Worldwide (VARBusiness No. 360), is all about taking the tough stuff of BI out of the customers' hands. The company has created a managed-services solution that lets users pay a monthly fixed amount with no major capital outlay for the software. Users can choose from various BI services from dashboards and score cards to planning and budgeting applications.

"It's really proven attractive to the small- and midenterprise companies," says Jorgensen, whose company gets tapped to integrate the service into a customer's existing data sources. "There's one thing driving this: a better, cheaper, faster turnkey solution."

Indeed, that could be said for all of business software today.

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