It was the 2011 Business Analytics Forum in Moscow, Russia last week. Dmitry Lisogor, director of business solutions for SAP CIS kicked things off and introduced the sponsors, including long-term BusinessObjects partner Tern Group

Alys Woodward of IDC gave a talk on Pervasive BI, with an excellent presentation on “Making your Business Analytics Pervasive”

IDC ran a pervasive BI study in 2008 questioning 1141 organizations worldwide, and then performed regression analysis on the responses in order to identify what causes Pervasive BI.

The chart above shows the results – across the top are the things that are most closely associated with successful, pervasive Business Intelligence, such as the number of users, number of different subject areas, etc. On the left hand side are the factors that can influence those different factors of pervasiveness. When there is a yellow square, it indicates that there was a statistically valid correlation between the two variables. For example, if you want to increase the percentage of power users in your organization, then training and design quality have an influence, but better BI governance makes little difference.

Alys discussed the impact of each of the five most influential factors on pervasive BI, and how companies can use them to improve their enterprise business analytics. The most interesting for me was “Design Quality”, with the excellent graphic below that sums up the potential pitfalls – and suggested correctives – for the major causes of BI project failure (a subject dear to my heart!).

One piece of advice from Alys that rang very true: “make sure that your project has a branded name such as ‘Magellan’, not something generic like ‘the data warehouse project’” Why? Because if and when it ends in failure, you can simple restart it with another name: “Oh, yes, the ‘Magellan’ project – that was our steep learning curve… but now we have ‘Loadstar’… let me tell you more…”

Here’s the conclusion of Alys’ presentation – the six things organizations should be trying to promote, and the five areas for IT to work on. The color indicates how easy it is for an IT group to get started on their own (e.g. data governance is important, but requires the input of different groups across the organization as a whole, and is not something that IT can do alone, unlike investing in, say, subject-oriented analytic training).

Next, Sergei Gnedenko, head of integration and development for Lukoil-Inform gave a presentation explaining his team’s experience of using SAP Business Intelligence products to meet the challenges of Lukoil, including an integrated Tax Planning and Administration system designed to improve overall data quality, check the tax calculations made by the authorities, reduce the risks of fines and penalties, and reduce the amount of staff needed for the process.

The project relied heavily on SAP BusinessObjects Data Services to integrate the data into a data warehouse:

“In addition to long-used and successful products like SAP Business Intelligence (Business Warehouse, Business Objects), the project used Business Objects Data Integrator, included in the package Data Services, for the first time. The product was successfully tested, well integrated into the overall architecture and we plan to use it other projects.”

Sergei explained how they are moving forward with their overall analytic maturity, and looking to increase usage by expanding BusinessObjects BI to mobile devices like the iPad (picture).

Next Mihail Terehov, the head of analytical reporting for the fast-growing mobile 4G internet provider Yota gave a talk entitled “Internet access with built-in BI”. He explained that in a company initially scrambling to keep up with subscriber growth, there was a primarily a need for operational analytics, such as determining the causes of network traffic incidents, so they used a fast, simple data model close to the source of the data. Over time however, there was a need to provide answers to deeper analytic questions, and so the company has been developing a roadmap for a more advanced data model.

After running several pilot programs, SAP BusinessObjects was the chosen product. Yota has worked hard on providing easy-to-understand, user-friendly views of the data through a BI portal. They also provided training for business users, which substantially increased usage and reduced the number of reports created through alternate systems. Most usage is still about operational BI and predefined reports, but things are changing over time, and the system has already proved itself essential to the business – if reports aren’t ready by 8am, it’s considered a tragedy!

Mihail gave a concrete example of how the technology is being used for comprehensive network analysis, with technical, marketing, and financial indicators. If the current base stations are underused, the company can create very targeted marketing plans designed to increase subscribers in those areas, and if they are overloaded, the data is directed to the engineering department, to retune the antennas, or increase the number of stations.

My keynote presentation was on the Big Leap Forward. You can download a version (in Russian!) either as an Adobe pdf or the original Microsoft PowerPoint version.

The afternoon was packed with detailed technical breakout sessions, and the demonstration / sponsor area of the event was packed at lunchtime and during the afternoon break…

For more pictures of the event, please visit my SAP Business Analytics Forum set of photos on Flickr

I often mention in my presentations that “120% of us don’t understand statistics” – and here’s the proof: somebody marked my presentation as 7 out of 5 for content and style:

(many thanks, whoever you are!)

IDC are running a series of Business Intelligence sessions across central and eastern Europe on the following dates:

Sofia September 16, 2010 | Kiev September 23, 2010 | Prague October 19, 2010
Zagreb October 21, 2010 | Almaty October 21, 2010 | Belgrade October 26, 2010
Ljubljana October 28, 2010 | Bratislava November 09, 2010 | Budapest November 11, 2010
Moscow November 18, 2010 | Athens November 19, 2010 | Warsaw November 23, 2010
Istanbul December 02, 2010 | Bucharest December 07, 2010 | Nicosia December 10, 2010
Ankara December 15, 2010

I have the pleasure of being a keynote speaker for several of these.

Here’s a copy of the first presentation that I gave last week in Sofia, Bulgaria – click to download the PowerPoint version (feel free to use the slides – but please give credit/point people to this blog)

IDC recently released several reports on business analytics market shares, including business intelligence and performance management:

• Worldwide Business Analytics Software 2009 – 2013 Forecast and 2008 Vendor Shares, IDC #219383, August 2009
• Worldwide Financial Performance and Strategy Management 2008 Vendor Shares: Market Consolidation Drives Domination, IDC #218656, June 2009
• Worldwide Business Intelligence Tools 2008 Vendor Shares, IDC #218598, June 2009

You’ll have to subscribe to IDC’s excellent service to get the full details, but if you look carefully through industry articles and vendor samples of the reports you can get many of the key figures and information about how IDC divides up the analytics market.

Here’s my interpretation of the big picture trends:

1. It’s a race between Oracle and SAP. IDC divides the analytics market into three main areas, all roughly the same size (there is also a fourth area, Spatial Information Analytics, but this makes up only around 3% of the overall market)

• Performance management and analytic applications (SAP #1)
• Business intelligence tools (SAP #1)
• Data warehousing platform software (Oracle #1).

Both Oracle and SAP are growing faster than the market average, implying consolidation around the market leaders (although some of the top growth figures came from some of the smaller vendors in the space).

2. Oracle’s lead is narrowing, with SAP is coming on strong… Oracle leads the overall analytics market by IDC’s definition, but Oracle’s growth has slowed since last year, while SAP’s has increased. Oracle is losing market share in its traditional area of strength (data warehousing platforms) where the #2 and #3 (IBM and Microsoft) both grew faster. SAP is growing faster than Oracle overall and in each of the three main areas.

3. …Particularly in FPSM. Thanks to the acquisition of Hyperion, Oracle has been the leader of what IDC calls the Financial Performance and Strategy Management Applications market (part of the analytic applications area) since 2006. But some key acquisitions by #2 SAP (including Pilot and Business Objects) have narrowed the gap considerably, and SAP experienced almost 3x Oracle’s growth over the last year.

Are the Numbers Accurate?

It’s human nature to assume that any set of numbers is more trustworthy than simple rankings. But just how accurate are the numbers, really?

IDC puts a lot of effort into gathering and interpreting the market share figures, and takes a lot of care to allocate the total vendor revenues among the various markets in which they participate. Despite this, there are at least three reasons that the numbers they provide are necessarily inexact.

• First, the numbers can never be more than IDC’s “educated guesses.” Companies that cover multiple market segments almost never publicly break out revenue according to IDC’s groupings, and so are not allowed to provide them selectively to IDC. IDC works with the vendors to try to ensure that there are no obvious mistakes, but there’s an incentive for vendors to try and influence the numbers in their favor (e.g. they may try to persuade IDC that some of the revenue from an area where they are a clear leader should instead be allocated to an area where they are the #2, making them the #1 in both markets).
• Second, even the vendors may only have a hazy idea of the exact revenue that comes from each area. Companies typically purchase related products from vendors in a single deal, and then haggle over the discount amounts. And a single vendor “product” may bundle elements from several different IDC categories. The allocation of the final deal amount between the different components (for example, a database, a data warehouse, some BI tools and some financial planning and budgeting tools) can vary over time, and may be different for different companies. Public companies have to respect some limits set by the SEC concerning revenue recognition, but private companies have a lot of discretion when it comes to stating their revenues (and this does not just concern the smaller vendors — SAS, the #4 vendor overall, is privately held).
• Third, different vendors sell through different channels. If a company sells directly to the final customer, the market share is the same as the revenue, but if it sells through resellers (who make a margin), the real market value of a product may be under-represented by the revenue reported by the vendor. This isn’t technically an inaccuracy, since IDC is explicitly measuring vendor revenues, but it makes it harder to interpret what the numbers actually mean.

Overall, these are marginal concerns, and the overall rankings are probably correct, but I would love to see IDC provide estimates of margins of error directly within the reports, making it easier to know whether small differences are in fact important.

Does Top Market Share Mean that the Vendor has the Best Products?

What do the market share numbers actually mean? What do they imply? What action could or should be taken based on them?

Obviously the vendors and their shareholders care about who’s selling the most (although even then share price typically depends more on profitability than overall revenue). But should anybody else?

Typically, a claim of having the top market share is used to imply that the products are the best ones available in the market (and that is why they are selling so well). But is it true?

Well, yes, they probably are – but in the same way that the #1 in the music charts represents the “best music”.

Just as the top-selling music has the broadest appeal, the leaders have the most broadly useful products. However, just as your own musical tastes might involve something more niche, it may be that a niche BI product or analytic application may be the best for any particular project (which is why there will always be small, focused vendors in the space).

However, the analytics choice most organizations have to make is akin to having to choose the music that will most appeal to all of the different employees in your organization, rather than the music you personally like best. This means most organizations probably shouldn’t choose niche products, because of the value of being able to combine information across different project silos, and because people need multiple different types of access to information.

For example, a sales manager may need a dashboard to track key sales metrics, an OLAP tool for budgeting, an analysis tool for investigating the sales pipeline, and some regular HR reports about team vacation planning. And she would like the data in these reports to be consistent from one usage to another, even when the data in the reports comes from multiple different systems and platforms.

Different products from different vendors may be the “best” niche solutions for each of these needs, but forcing the sales manager to use four unrelated systems, and cope with the inevitable data differences between them, is unlikely to be the best real-life solution. And of course, it’s typically more expensive to deploy multiple solutions than different front ends from the same vendor.

It’s also worth noting that the major vendors may also provide the best niche solutions in many cases, since they typically became major vendors by having the best products in the first place, or grew through the acquisition of other best-of-breed vendors.

So one reason that vendors emphasize market share is because it’s at least somewhat correlated with product quality. Most organizations do a thorough evaluation of the tools available in the market before choosing, and the majority of transactions are extensions to existing deployments, so market share is in some ways the most extensive “customer satisfaction survey” you will ever see. And rather than just ticking boxes, companies and individuals actually have to back up these judgments with money and their reputation.

Other Advantages of Market Share

In addition, choosing a product from a larger vendor provides some tangible benefits above and beyond the quality of the products themselves:

• More support for a wider set of architectures and interfaces. There are economies of scale for supporting different platforms, and larger vendors are likely to have more resources for keeping up with the latest versions of the systems that make up your core information environment, and tighter technical relationships (such as getting earlier access to the next generation of new products). Smaller vendors are typically forced to concentrate on a particular platform or environment. This is of course fine if your environment is supported, but not if you have a complex environment, or may need to change in the future.
• Worldwide services and support. Larger vendors are more likely to be able to support your local language and support requirements. Again, this would not apply to a small vendor in your country who is working in your language, but may be a problem if you need to span geographic locations now or in the future.
• Vendor ecosystem. The success of BI projects are about more than just technology. Larger vendors typically have a more extensive network of consulting and training partners, more other companies you can talk to about using the tools, and higher availability of employees with skills in the vendor’s technology.
• Less risk. The market is undergoing consolidation, and smaller vendors are more likely to go out of business, or be acquired.

There are certainly factors that could also argue in favor of smaller vendors. For example, they may be more responsive, since you represent a larger part of their business, or more innovative, since they have a smaller installed base to maintain, and a stronger incentive to innovate in order to be able to win deals against the bigger players. And they may be more open, with less incentive to tie you to additional products in the vendor’s portfolio (but by the same token, they make be less integrated with the other tools that do you have).

On average, software markets typically consolidate around a small number of larger organizations, showing that in the long run the benefits of size outweigh the potential downsides. And the fact that purchasers don’t want to take “risks” with smaller vendors and that this “winner takes all” trend is firmly embedded in the consciousness of corporate buyers everywhere makes it even more of a self-fulfilling prophecy.

Which Vendor is the Leader?

What does “market leadership” refer to? Is the “leading” product the one with the biggest market share? Or the highest quality? Or the the highest growth? Or some combination of the above?

Clearly, the term is open to interpretation, and vendors often spend considerable effort to find a marketable leadership claim – even to the extent of trying to tailor or invent market segments in which they are the leader (for example, Arbor software essentially invented the “OLAP market” as part of their marketing plans).

Despite much cynical eye-rolling from customers, it seems clear that these claims will always be part of the marketing landscape, since most of us do indeed want to be able to say we chose the “best” or “leading” software for our organizations.

For example, Oracle places ads such as the one on the right in magazines and airports around the world, claiming leadership in Enterprise Performance Management.

But SAP insists it is the #1 in the space, based on its leading share of the analytic applications market, which includes financial planning and strategy management (IDC does not use the term EPM).

According to IDC’s figure, Oracle is not #1 in business intelligence, and probably not in operational analytics (since SAP is leader in both applications and analytic applications). So what is the basis for the claim in the ad?

Oracle provides a link to a web page that attempts to back up the assertion, and which doesn’t mention market share at all. Instead, it links to reports from analyst companies like Forrester and Gartner that use more qualitative measures of “leadership” (interestingly, SAP could probably use the same list of reports to argue it was the overall leader).

Conclusion

Overall, market share is an important criteria that should not be ignored in purchase decisions. You can absolutely have great analytics projects with tools from smaller vendors. And successful analytics is much more about people and process than it is about technology, so in theory you can succeed with any tool.

But the whole point of analytics is that it must evolve over time, and adapt quickly to any changes in your business, and integrate with other systems inside and outside your organization, and I believe this gives the advantage to the larger vendors.

Among the larger vendors, does it matter which is #1 and #2? To SAP and Oracle, yes. For everybody else, it’s just one factor to consider, along with functionality, fit with your architecture, and – of course – cost.