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Our
moment of glory
The
Sunday New York Times had an article
on data analytics on May 20. It's not often we
see our industry covered in the mainstream press.
See my blog post on it at Analytics
goes Mainstream.
Other
recent Data Doghouse
posts include:
Also,
see my note about our
inaugural TWDI Boston Chapter meeting. We're
looking forward to the next meeting this summer.
Rick
Sherman, Athena IT Solutions
Business
Intelligence Appliances: Disruptive Technology
or Distractions?
Data
warehousing (DW) appliances aren't the only hardware
appliances shaking up the industry. New on the
scene are business intelligence (BI) appliances,
which also have the potential to change the status
quo.
In
Data
warehousing tools: Are they market breakers?
I wrote about the dramatic changes DW appliances
could have on the market by:
- Displacing
existing DW database and server combinations.
- Expanding the overall DW market.
- Forcing existing vendors to react in terms
of how the hardware and software are bundled
and priced.
Since
that article was published, there have been two
big changes in the marketplace: renewed competitive
pressures and the emergence of business intelligence
(BI) appliances.
Renewed
Competitive Pressures
First,
the high-end DW appliance market has seen renewed
competitive pressures:
- Netezza
and DATAllegro have increased their list of
customers and have legitimized the appliance
market for data warehousing. Their combination
of commodity hardware, open source software
and a little "special sauce" (proprietary
enhancements) have yielded solid results for
their customers.
- NCR
has announced that Teradata will be spun off
as its own company. Although Teradata has been
run increasingly independently over the last
few years, going public enables it to potentially
become more aggressive and expand its solutions
portfolio. After its spin-off perhaps it will
become more active in the mergers and acquisitions
market as an avenue to expand its solutions.
- HP
has revealed its response to Teradata's offering
with its own HP Neoview platform and services.
By leveraging its hardware, software and professional
services, along with their size, HP hopes to
become the preferred DW appliance offering compared
to its much smaller rivals.
But
will DW appliances expand the overall enterprise
DW market? Probably not. Here are a couple of
reasons why:
- The
DW appliances listed above target the high-end
of the DW market where almost every major corporation
has already built at least one Enterprise Data
Warehouse (EDW). Therefore, there does not appear
to be a lot of new EDWs being created. However,
everyone is expanding the depth, breadth and
frequency of the data being loaded into their
EDW. It would appear then that the high-end
DW is really a zero-sum game -- meaning for
every new DW appliance there has to be an existing
DW vendor displaced. But will Teradata and HP
Neoview steal major accounts away from Oracle,
IBM and Microsoft? Probably not. It's too costly
a migration unless the price is quite low, which
leads us to the probable result of these developments:
downward pressure on pricing and more intense
competition (definitely good for the market).
-
DW appliances are working against the trend
of standardizing on hardware and software. This
is especially prevalent at large corporations.
DW appliances provide a hardware and software
bundle that probably is not a corporation’s
standard. In particular, the HP and Teradata
DW appliance offer their own unique database
– not one of the Big Three (Oracle, IBM
or Microsoft) upon which most corporations have
standardized. DW appliances will get stiff resistance
from the database-side of a corporation.
Another
new entrant in the DW appliance market is Dataupia
Corp. One of the key differences with this appliance
is that you are able to continue to use your database
standard. Not being forced to another database
will at least reduce some of the resistance that
these DW appliances will face at many corporations.
Don’t
shoot the messenger. I believe DW appliances offer
a lot of value to potential customers. But that
does not necessarily translate into a huge market,
and it is highly unlikely that they will be market
breakers.
The
Appearance of BI Appliances
The
second and bigger change in the marketplace is
the appearance of BI appliances. Whereas DW appliances
have to compete with established data warehouses
and database vendors, BI appliances do not face
the same competition.
Most
people would initially disagree with this statement.
After all, there are many BI implementations across
large corporations today, and there are several
large established BI vendors. But bear in mind
that there are important differences between the
DW and BI markets. Corporations have many implementations
with different BI vendors rather than one standard
database. Most importantly, BI is not really pervasive
throughout most corporations today. Because of
cost, complexity and dueling products, most business
users are either not using BI at all or are using
data
shadow systems (spreadsheets) to perform their
reporting and analysis. This creates a great market
opportunity (or void) for the BI appliances to
fill.
Cognos
(via their Celequest acquisition) and LucidEra
are two of the BI appliances vendors in the market
today. These vendors offer commodity hardware,
some open source software and some proprietary
software that improve performance and ease of
use. BI appliances come in pre-configured packages
offering ease of installation, simplified operations
and anticipated easier maintenance. Using commodity
hardware and open source software allows these
vendors to aggressively price their offerings
and lower the total cost of ownership (TCO).
SaaS
Moves In
Another
market-disruptive move that the BI appliance vendors
are making is embracing Software as a Service
(SaaS), also called On Demand software, as a solution
offering. SaaS further lowers the TCO for customers
as well as ease of use. Business Objects has been
offering Crystal as a SaaS offering and has recently
announced its intention to offer its complete
product line as an On Demand offering, in addition
to continue to sell its products as the traditional
ON Premise offerings.
BI
appliances will not likely displace existing BI
vendors. Companies will not drop their existing
BI implementations or their BI expertise associated
with the major BI vendors. However, the business
intelligence tool may be a great replacement for
the many data shadow systems that business groups
have built throughout these large companies. TDWI
published a report in 2004, titled In
Search of a Single Version of Truth: Strategies
for Consolidating Analytic Silos, using data
from a survey from that year that revealed that
a typical Fortune 1000 company had almost 30 data
shadow systems!
In
addition, in the SMB (small to medium-sized business)
market, where IT resources are limited and budgets
constrained, BI appliances, especially through
a SaaS-based offering, may be very appealing.
By
replacing data
shadow systems and offering a solution for
tight budgets, BI appliances and On Demand BI
offerings may actually expand the overall BI market.
At a minimum, they will create downward pricing
pressure and help us recognize that by simplifying
BI implementations we can help foster the overall
growth of the BI marketplace and may move us closer
to the elusive pervasive BI that has been the
holy grail of our industry.
What
are your thoughts about this? Feel free
to submit
your comments here.
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