Business Objects Uses VARs To Court Midmarket

Business intelligence software developer Business Objects is expanding its push into the midmarket, and the vendor's counting on its channel partners for help.

The company has unveiled Crystal Decisions, Standard Edition, a line-of-business intelligence tool that targets midsize companies (defined by Business Objects as businesses with sales of up to $1 billion and 2,500 or fewer employees). Whose job will it be to provide professional services to those midsize players? The Business Objects network of 2,300 channel partners.

According to market-research firm IDC, the worldwide BI software market is valued at $5.9 billion. Business Objects estimates that midsize companies make up 35 percent, or $2.1 billion of that space.

And there's more good news. While many large companies have implemented BI software already, a slew of sales opportunities remain in the SMB market, says Todd Rowe, vice president of worldwide midmarket business at Business Objects. He estimates that sales in the midmarket BI sector are growing at a clip of 12.5 percent annually, vs. 9.8 percent for BI sales overall.

Business Objects, with locations worldwide, sells a number of BI, enterprise information management, and planning and budgeting applications to large customers. The new product, Crystal Decisions, is a single integrated package that's affordable and easy to deploy. The product includes reporting, ad hoc query and analysis, and dashboard tools.

Rowe insists that the midmarket package, geared at companies that typically have small IT budgets and fewer technical resources than their enterprise brethren, isn't a "dumbed-down" version of Business Objects' enterprise-class software. But it does have fewer configuration options (five, vs. 20 for the flagship product, 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 Preferred Strategies, a Soquel, Calif.-based company that integrates Business Objects software with ERP applications from JD Edwards and other vendors.

"I think it's the right product positioned for the entry-level customer," says Bob Vander Woude, sales and marketing vice president at Preferred. He notes that small and midsize companies are very price-sensitive and it's hard to get a foot in the door of customers when you're selling a product that costs six figures. "We're going to get a lot more accounts that we can grow."

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.

Under a shift in Business Objects' partner-engagement model, solution providers will now be the primary vehicles for delivering professional services to midmarket customers. In addition, VARs will be able to generate revenue through software licensing by co-selling Business Objects software, and through education, support and maintenance.

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

While Business Objects will sell Crystal Decisions directly to named accounts, sales representatives will earn the same commission if they make a sale through a VAR, thus avoiding channel conflict. Vander Woude says his company has always worked well with Business Objects' sales organizations and has never encountered 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 says he expects that number to increase with the midmarket initiative, although he wouldn't disclose further details.