by Frank Sparacino

Architecture historically not driving factor

The architecture of business intelligence (BI) products is an increasingly important topic of discussion. By "architecture," we mean whether the product has a client server (2 tier) or an Internet (3 tier) design. Historically, architecture has not been the driving factor in purchase decisions. The major query and reporting (Q&R) vendors' products were originally designed for the desktop and intended as a generic data access and data manipulation tool with limited user-interface customization and application development capabilities.

Our focus on architecture is by no means a revelation to industry insiders; it is merely meant to draw attention to a subject that, in our view, is becoming more prominent as deployment sizes grow (from the hundreds to the thousands) and end users demand comparable functionality between desktop and Web versions of BI tools. A large financial services firm to whom we recently spoke, for example, has standardized on a Q&R tool from one of the major vendors and has deployed it to approximately 3,500 users across many different business units, with plans to grow to more than 10,000 users in the coming years, the majority via the Web.

While subtle, the demands of shifting to an Internet-based architecture are not trivial. In fact, we believe they require a fundamentally different product design, which is 100% server-based and leverages Internet standards such as HTML and XML. This message is clearly being heard by vendors such as MicroStrategy, with the release of its MicroStrategy 7 product, and Informatica Corp., which has entered the front-end market and is leveraging the adoption of Java.

Public vendors at different stages of development

The major public vendors, including Brio Software, Business Objects, Cognos, and MicroStrategy, are all at different stages in this evolutionary path, and their respective product offerings are undergoing significant changes, even to the extent of a complete rewrite (MicroStrategy 7). Architectural superiority is even more of an issue for new customers as existing clients have already made a commitment and developed a level of product affinity. All of the current vendors have the benefit of a large installed base (with several thousand customers) and will likely--for better or for worse--become the default vendor as the scope of the customer project (i.e., reporting to online analytical processing to analytic applications) or deployment (i.e., desktop to intranet to extranet) expands.

Brio Software's product roadmap

For a more concrete example of the issues confronting the Q&R vendors, it is instructive to look at Brio Software's product roadmap. Brio still has a tremendous amount of work to do in moving its product offering from a group of disparate client/server tools to an integrated platform with an Internet-based architecture. From an organizational standpoint, product development was previously aligned by product line, i.e., Brio Intelligence (formerly Brio Enterprise), Brio Report, Brio Portal, Brio Inform, and Brio Impact. These separate groups have now been consolidated into a single organization. Key areas of focus within R&D include 1) a thin-client (meaning without any client plug-ins or downloadable applets) version of its product offering, 2) improved security, and 3) tighter integration. Integration is a major issue Cognos has addressed with its Series 7 product (currently in beta and scheduled for release at the end of this calendar year) and should strengthen its message of a broad-based offering.

MicroStrategy has early technological lead

In summary, the strategies of the major Q&R vendors are not decidedly different. They are focusing on providing an Internet-based business intelligence platform with greater capabilities to build custom analytic applications and, to a lesser extent, to "productize" these development efforts through prepackaged solutions. In our opinion, MicroStrategy has established an early technological lead in this new platform market. We recently spoke with a major retailer in the Midwest that has developed dozens of mission-critical applications leveraging MicroStrategy technology. Further evidence of its success can be seen by increased support from channel partners: Systems integrators and OEM relationships.

Nonetheless, execution and sales momentum will determine if the balance of power in the industry shifts away from current Q&R leader Business Objects during this market transition. With continued technological advances and an increasingly vertical and/or business process product focus, there is ample opportunity for all vendors.

About the Author

Frank Sparacino (fsparacino@firstanalysis.com) specializes in research and investment at First Analysis, an integrated, research-driven investment firm. His area of expertise is infrastructure software, with a focus on business intelligence.