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CIOs have been taking new tacks to data-warehousing initiatives--using standard interfaces, including Web services--to provide a common link to ERP, inventory management, supply-chain apps and CRM systems, among others. Those efforts involve significant programming efforts, often tying legacy systems and bringing client-server systems to these new Web-based reporting systems.

Meanwhile, the market for BI and analytic tools, itself, is going through a shakeout. Two recently announced mergers--Business Objects' deal to buy Crystal Decisions for $820 million, and Hyperion Software's subsequent bid to buy Brio for $142 million--underscore the need for key players to broaden their product offerings to include full analytic, query and reporting functionalities. Reliance on the channel will also be paramount.

"Our partners can do two things," says Ron Zambonini, CEO of Cognos, the largest supplier of analytic tools and rival of Business Objects and Hyperion. "First of all, they can help companies identify what's important, and second, they can purvey the application out of the box. Certain applications are standard, but partners can build. Because time to market is important...I think that's where the partner can fit in."

Market Overview
Overall, the market for BI and analytic software has been long fragmented with numerous niche players. "We think that fragmentation has hurt the market," says Dave Kellogg, Business Objects' senior vice president of marketing.

Nevertheless, sales of BI tools are expected to grow to $4 billion this year, up from $3.8 billion last year, according to IDC. While that translates to 5 percent growth, the opportunity for solution providers could be much greater, suppliers of BI products say. That's because a growing number say they are expanding their dependence on the channel.

For example, Ottawa, Ontario-based Cognos, which this month will roll out its long-awaited ReportNet software, is looking to expand its reliance on solution providers during the next several years. Currently, solution providers account for 30 percent of Cognos' sales, but Zambonini says he's gunning to get that number up to 40 percent.

The release of ReportNet, which is J2EE-based and supports Web services standards, such as XML and SOAP, is better suited to solution providers than products like Impromptu because the new tool is more customizable. In fact, analysts and solution providers alike say ReportNet raises the bar on query and reporting because it has Web-based administration and standards-based interfaces, and requires far less programming than rival offerings.

"Thanks to technology like XML and Web [services], this product is very embeddable," Zambonini says. "I think it will really help us help our VAR channels better than we did before."

Of note, while the understanding with Cognos is that it will sell directly to large enterprises and allow solution providers to target midmarket customers, it's not free of channel conflict, says Matt Reedy, CEO of IntelliSolve Group, a Cognos partner.

"They do work with us, but they step over the line in the interest of making their quotas," Reedy says.

"I, for one, would like to see them push a little more business our way."

For its part, Cognos says that's coming. The company recently beefed up its partner program by adding two new levels of partnerships--Consulting Partners and Technology Partners--aimed at providing more focused services surrounding CRM. The new program will include training, centralized partner support, marketing, tools and an improved extranet. The goal, Cognos says, is to lower costs of selling and expanded business opportunities.

"I think that was the piece that was missing before," Reedy says. "I think this new initiative will allow for partners like us who really want to make the most of our revenue with services, augmenting them with some product sales. I'll still have to see the proof in the pudding on this, but if Cognos follows through, this will definitely help build their partner channel."

Put To the Test
Cognos is also looking to add partners with expertise in key vertical industries as well as some large global integrators. So far, it has signed on Accenture and Deloitte Consulting. In addition, existing partners are bullish about ReportNet. From what he has heard, Reedy says ReportNet's architecture may offer more opportunity to link to solutions his company builds, and he would like to test it in the near future.

One Cognos partner that has tested ReportNet is Saddle Brook, N.J.-based Sky Solutions. Vice president Gary Shiller says the product is appealing because reporting functions can be added to customized apps with little or no programming.

"As far as new products, it's probably the most exciting new product we've seen in years," he says, noting he can build reporting capabilities into applications "without generating any code."

The appeal of ReportNet is that it integrates both production and end-user reporting and is well-suited to Web-based environments, including extranets, says Meta Group analyst Dave Folger. "ReportNet looks like a really great product; it's right on from the standpoint of what the market needs," Folger says.

An August report by Merrill Lynch analyst Ed Maguire maintains the release of ReportNet promises accelerated sales for Cognos, while noting how the Business Objects and Hyperion acquisitions could actually benefit Cognos. Among other things, those mergers are likely to create confusion among customers and existing channel partners, particularly among Crystal partners. Crystal has always been considered much more channel-friendly than Business Objects.

But Business Objects' Kellogg says his company is committed to extending its channel presence. "We're hoping we will improve," he says.

Nevertheless, these moves will lead to a realignment of partnerships. Until the mergers were announced in late July, Hyperion had bundled Crystal tools with its Essbase analytic server. Now that Crystal is being acquired by a rival and Hyperion is acquiring Brio, many Crystal partners are looking to establish new relationships.

"Firms like ours are being courted by all the BI vendors, and we want to be treated well by the vendors with whom we choose to work," Reedy says.

While some observers say it was Hyperion that wanted to buy Crystal but failed when it was outbid by Business Objects, John Pierson, Hyperion's vice president of worldwide channel sales, says the features in Brio's reporting tools are much less complex than Crystal's.

"Right now, the query and reporting tools have become shelfware in organizations," he says. "One of the reasons we looked at Brio was their ease of use."

Hyperion announced an immediate OEM relationship with Brio, pending the closing of the deal.