The Science of Business Intelligence

By Dennis Callaghan  |  Posted 2004-11-22

The Science of Business Intelligence

Bernard Liautaud has led business intelligence software developer Business Objects S.A. since its inception in 1990. Liautaud sat down with eWEEK Senior Writer Dennis Callaghan at the DCI Business Intelligence and Data Warehousing Conference in Boston in late September to discuss a number of topics, including the continued integration of Crystal Decisions Inc., which Business Objects acquired in a monumental deal last year, BI platform standardization, business performance management, patent disputes, the Oracle Corp.-PeopleSoft Inc. deal and the future of BI as information services.

Business intelligence software vendors seem to be doing better than enterprise application software vendors in this economy. What trends in the industry are driving growth for Business Objects?

Overall, the business intelligence space has done well, primarily because I think theres been a natural evolution of companies wanting to get more out of their information systems. … Companies are saying, "OK, we now have put SAP in place, weve put PeopleSoft in place, what did we get? We get automated transactions. We still dont have a unified view of the enterprise." So theres clearly a push towards that.

The other thing is companies have invested in business intelligence in the past several years. So its not brand-new. They have invested in having little pockets of BI here and there in their organizations. So theyre looking at this and saying, "We need now to have a BI strategy across the enterprise. Its a way to get that single version of the truth that were looking for. Its a way also to reduce our total cost of ownership. And, therefore, we want to standardize on one solution."

So we see a big push towards standardization. A number of companies also want to reduce the number of suppliers that they have in general. So I think theres a natural tendency to move toward the leaders in the categories in a time like that.

Is there any particular area of your business thats driving growth right now?

The new drivers for us are performance management and data integration. Data integration is the core of what we do underneath the main BI platform. Performance management and analytic applications are new drivers that weve had now for a couple of years. But its driven by the need of companies to have more dashboards, scorecards, metrics management and to move to a higher sort of strategic business intelligence implementation, as opposed to just putting in place a reporting infrastructure. Now its: "How can I drive my business performance using these new forms of business intelligence—scorecards, metrics, goals setting and so on." Thats the fastest driver of our growth.

Of course, one thing thats had the biggest impact on Business Objects is the Crystal acquisition, which has basically enabled us to double our size. In 03, we were around a $450 million run rate; this year, well be on a $900 million run rate. And that enabled us to take a clear No. 1 position in the space.

Click here to read more about Business Objects purchase of Crystal Decisions.

Isnt it true that most of your customers still have mixed business intelligence environments—using different vendors for different BI applications?

I think a number of them have. We have a very large customer base—we have 26,000 customers. And still a number of them have mixed platforms.

Can you point to any numbers that show a trend toward your customers standardizing on Business Objects technology?

If you looked at the last quarter, we had 33 deals that we would qualify as standardization, which was the highest number that weve ever had. We also tracked a number of larger transactions, transactions over $1 million in license. We had eight in Q2, which was higher than weve ever had, and its been growing progressively. So I think were starting to see larger transactions and metrics for standardization are going up.

Next page: The Oracle-PeopleSoft effect.

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How has Oracles takeover bid for PeopleSoft affected your business?

Well, not much really. These are different decisions right now. … We have a strong relationship with Oracle and PeopleSoft. PeopleSoft has integrated Crystal as their new reporting engine. But also theyve declared Business Objects as their BI partner of choice. But we do the same thing with Oracle. Also, SAP embeds Crystal and Business Objects. So we have very strong partners, and whats important for us right now is to maintain that neutrality and continue to work with everyone. So far, it doesnt seem to have really affected our business.

So it sounds like youre saying that even though you have a close relationship with PeopleSoft, it wouldnt make much of a difference since you work pretty closely with Oracle as well?

We do work very closely with Oracle today. So I think the relationship would stay and it would be strengthened. They know they can rely on us on both the Oracle side and the PeopleSoft side. So we wouldnt have to compete against another partner that would have a better partnership. When Oracle works with a partner in BI, they work with us because were the only one who is building integration with Oracle 9i to the level weve done. Were very complementary to what they do. We dont compete against their applications, we dont compete against their core database offering—whereas Cognos does—so thats why they prefer working with us.

Arent you seeing more direct competition from enterprise application vendors such as SAP AG and Siebel Systems Inc.? Siebel announced its entry into the BI space about this time a year ago.

I think were seeing a little more from these vendors. Siebel clearly has an offering tied to their CRM offering. They play the integration and the vertical stack, so we see them in their installed base but not outside at all. I think initially Siebel had an intent to be broader than their installed base, but it has not worked out. I think companies either are going to take an integrated offering from the application or theyre going to take a pure-play to cover the whole enterprise. But we see them a little bit in their installed base. SAP [is] the same, although they dont really have an offering yet. Currently, they partner with Business Objects, so when a company gets [SAP Business Warehouse], they get the Crystal offering as part of it. So theres much more partnership with SAP than competition at this point. But definitely the big question going forward is whos going to lead in business intelligence? Independent players like Business Objects or vertically integrated companies like Siebel? I believe PeopleSoft has found the right strategy, which is they embed BI as part of their offering, but instead of recreating the tool, they embed the platform from the leader.

Actuate Corp. is pushing a shared Eclipse-based framework that all the vendors in the space could use as a foundation on which to build query and reporting technology. Does Business Objects support that?

Were not yet part of Eclipse the same way Actuate is. But I would say the open-source initiative is something were watching very closely right now. Crystal is the reporting engine that is the most widely used right now. So, obviously, in a world that opens up to an even larger number of developers, thats something that is potentially appealing to us. We have not announced anything, but thats something were definitely looking into. I am a board member of a company called MySQL, which is the leader in open source database, so I know this business quite well. It has a lot of potential for changing the way the software industry works in the future.

So do you think open source will be a reality for business intelligence down the road, and if so how soon will we see that?

I dont think its going to be a reality for all software everywhere, but I think it will play a role. I think whats important is to really think through the strategy around this initiative. I think Actuate, in my opinion, had more of a knee-jerk reaction in trying to create a new position for themselves in a world that has become much harder with larger companies. Actuates revenue now license-wise is really a fraction of the leaders in the space. So it gets tougher. I think its something where you will see companies like ours make some moves, but they will be calculated moves in the future.

Next page: Patent disputes.

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Business Objects has been on both ends of the patent disputes in the BI space. Isnt that bad for the industry when companies have these intellectual property disputes and start suing each other?

I think in the end, patents are about protecting innovation, not preventing innovation. I think that has been the core of innovation in the U.S. for a long time. So I dont think its bad for the industry. What I would say is the way its done is not very efficient. The way patents are being filed is somewhat random. The way theyre being reviewed is somewhat random. The way the cases are being tried … this whole process, the execution of the mechanics of the process is not very efficient, I would say. But I think the principle of patents is still a very good principle.

What did you think of Hyperion Solutions Corp.s move to get more into the business intelligence space when they had been talking so much about business performance management before? It seems many companies are going back and forth in emphasizing business intelligence over business performance management, and vice versa.

A number of companies have been changing their positioning about what they want to do depending on whats hot at the moment. Hyperion at its core is a financial application company, a company that does planning, budgeting and consolidation. Thats what theyre good at, thats what their core competency has been. I think that what theyve seen is that they needed to have more reporting as part of their offering. So they bought Brio because they wanted to have more ownership of that piece. I dont believe they have a way to become a BI vendor per se. BI has become a big industry where the investment required in order to have a credible offering is significant. At Business Objects we have close to 1,200 developers in the space.

Click here to read more about Hyperions BI offerings.

Also, I think one of the reasons why Hyperion got into that space is because Cognos [Inc.] went into their space. Cognos was a pure-play BI vendor and decided to go into CPM. They did it by acquiring a budgeting company, Adaytum; now they just acquired a consolidation company, Frango, in Sweden. So suddenly they compete there, and their advantage over Hyperion is that they also have reporting.

A couple of years ago, a number of the companies thought that BI was not interesting anymore, was not sexy, and therefore it was more exciting to paint this picture of CPM as the only thing that was interesting. And now theres a lot of reversal where Cognos is pushing ReportNet for reporting, which was a boring thing two years ago [but] now is very exciting. Hyperion has Brio. Whereas at Business Objects, weve stayed very focused. Were a BI company—we dont need to do anything else beyond BI. We think as part of BI, reporting is key, so thats why we acquired Crystal, but the Crystal acquisition was a double-down on BI.

But you still have a business performance management strategy as well, dont you?

Yes, but its very different than the Cognos or the Hyperion one. The problem is therere different meanings behind the same words. Our vision of performance management is that its the strong evolution of BI, where instead of using BI just to analyze the past, you use BI to drive future performance. For that, you need to align strategy to execution by putting in place systems like dashboards, scorecards, metrics, goal-setting, and so on, but always across the entire enterprise—across customers, supply chain, HR, finance, and so on—as opposed to doing budgeting and consolidation. To me, its a very different type of system. And putting that in the same category as analytic applications and dashboards/scorecards, I think is a misrepresentation of what the reality is. Cognos has plunged into that area, Hyperion was there in the first place, but to me, its very different. We believe in performance management as a key driver for BI in the future but with a very different approach than Cognos and Hyperion.

Next page: Plans for the future.

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So your approach is just less financially focused?

It is across the enterprise and its open. So if a company decides they want to use SAP for their budgeting system or they want to use Excel or they want to use any other tool, were going to enable them to have an enterprise performance management solution on top of that. We dont depend on a proprietary budgeting and consolidation tool. We can work with any. The same way we work with SAP, Siebel, Oracle, PeopleSoft, any underlying application. We view budgeting and planning as one of these applications and our platform comes on top. Whereas Cognos and Hyperion [say], "We provide you with our own proprietary financial application that includes consolidation and budgeting." But I think by doing that, they lost their soul. Cognos now is fighting a war on two fronts. On one hand, they are fighting against us in the BI market and theyre now half our size. And on the financial applications side, they are fighting against Hyperion and SAP, which are five to 10 times bigger. So I think its a difficult strategy to be No. 2 or 3 in two different markets.

While were on the subject of Cognos and Hyperion, theres been some recent transition in leadership at both companies. What are your plans at Business Objects? Will you remain CEO?

Im still here and very excited about the future. I was a founder of Business Objects 14 years ago, but its been an exciting adventure all the way. The future continues to be extremely exciting. Were moving now to be close to a billion-dollar organization, absolute leader in a space that I think continues to have lots of opportunities. There are three directions in my mind. One is these large enterprise deployments, standardization, the idea of making BI ubiquitous on every desktop. ... Second direction is one we just talked about, which is performance management across an enterprise and moving the strategic value of business intelligence to higher levels. And then the third point is the concept of information networks, which is the idea that information is even more valuable if you can share it with your customers, suppliers and partners. But instead of doing it with what I would call the first generation—which was the extranets, the BI extranets—the second generation is this concept of networks, where you combine BI technology with Web services and you offer your customers information services. So you can enable them to embed your information as part of their application through the form of a service.

I think thats going to enable companies to share information in a much more fluid way and I think its going to have a big impact in the future.

Are there any new releases of Business Objects technology on the way that will address these issues?

We have a full roadmap of products coming forward that will certainly move us faster in this particular area. A lot of these things are already available—its more new usage of our technology that were pushing with our customers. A lot more will come through the roadmap that we put together when we decided to integrate with Crystal.

Do you still rely on partnerships for predictive analytics and data mining? Do you have any new developments in that area?

Nothing that we can talk about at this point. We have data mining technologies in our application framework. So if companies want to use data mining technologies and techniques we have them in what we call Application Foundation. We have not put together a full data mining product for now, but I think what we believe is that advanced analytics is going to be important in the future to make applications more valuable. In the performance application arena—thats where its going to be important.

In terms of data mining as a tool per se, thats not something that were pursuing, but providing it as a technique that is going to be used to do predictive analytics as part of an application is something that is of very big interest to us.

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