Intelligent Enterprise

Just back from both SAP's Reporting and Analytics conference and Business Objects' Insight conference, both of which were coincidentally in Orlando, Fla., this year.

SAP only recently (as in the last six months, not only last two weeks) was added to my radar. It seemed to me that the Netweaver BI 7.0 release (June 2006) was a marked improvement over the earlier versions. As well, the number of customers telling me they had made the strategic decision to use SAP's BI platform has been on an upswing. So in planning travel schedules, it was unfortunate that both vendors had their conferences the same week but fortuitous they were in the same town.

An interesting difference between the two events: SAP's comments on the pending acquisition? Zero. Comments at the Business Objects event? A lot (see below).

SAP did acknowledge that usability has not been one of the company's strengths and that as the company moves from a transaction focus (which are repeatable tasks) to decision-making (which are more exploratory, requiring adaptability), usability will be key.

The mood from customers at the SAP conference suggested the acquisition was a "non event." Many are still on BW 3.5 and have not upgraded to Netweaver BI 7.0. Company officials estimate only 20 percent of its installed base are on the latest release, which boasts significant usability and performance improvements. However, many don't even use BW and seem content to create custom reports directly within the SAP transaction environment. Others slow to upgrade cite complexity and simply not knowing the extent their current implementations have been customized.

Jumping over to the Business Objects conference, the difference in culture was apparent. (To be fair, SAP doesn't run their user conference; it's run by third-party media group Wellesley Information Services.) Playing to the theme's conference of illumination and "let there be light," the keynote kicked off with luminary dancers. I can't say there was any such showmanship at SAP's conference.

CEO John Schwarz spoke directly about the pending acquisition, saying it will make the company stronger, faster, better and that Business Objects "will take over a significant group at SAP." (I hadn't heard this last aspect before). Schwarz openly acknowledged customer concerns and made the five following commitments to…

1. Remain true to Business Objects' vision to transform the way the world works through intelligent use of information
2. Remain open to any database and application. Period.
3. Protect existing customer investments, reiterating that the acquisition is not about cutting costs but about accelerating growth
4. Deliver the broadest BI portfolio with the easiest user experience
5. Enable end-to-end performance excellence from transactions to analytics to action.

A videotaped segment of SAP CEO Henning Kagermann communicated that "while there will be open technology transfer, they will not force Business Objects to use SAP technology."

In gauging Business Objects customer reaction, it was a story of extremes. Some who are also SAP customers were openly enthusiastic and look forward to better integration and ease of doing business with a merged company. Others who have gone through painful SAP implementations worry that Business Objects will now get harder as well and that innovation will slow. Non SAP customers did not get the same "warm and fuzzy" feeling from Kagermann that they have enjoyed from Schwarz and founder and former CEO Bernard Liautaud (now chief strategy officer).

Partners from both conferences were surprisingly optimistic, citing expected lift to the overall BI and performance management markets. I had anticipated a more negative reaction, thinking a more consolidated market left less room for niche players.

Any uncertainty is bad news for all BI vendors, not just for Business Objects or SAP. While pure play competitors Cognos and MicroStrategy as well as more broadly-focused competitors, such as SAS, Oracle, and Microsoft, may try to take advantage of uncertainty in the short-term, they too will be hurt by such uncertainty. No prospective customer wants to make sizable investments in products with an uncertain future. Despite Schwarz' commitment to "protect investments," software investments are only a very small piece of an investment that includes training, expertise and time. Even for products that will have a long life span, customers don't want to make sizable investments in products that may get relegated to second tier. Uncertainty will also affect competitive solutions, but from a different viewpoint; the question may not be "which product will get relegated?" but rather, speculation about further industry consolidation and the ability of competitors to compete against industry heavyweights.

On the BI side, the products from SAP and Business Objects are complementary and work together today. As for the "fear" that Business Objects would become only SAP-application-centric, such a shift wouldn't serve shareholders or customers, so I don't envision that playing out. BI investments, then, seem safest. Performance management products, on the other hand, have more overlap (see my earlier blog). Those considering performance management investments need to build uncertainty into their ROI projections and look closely at the estimated payback period. It would be hard for any company to justify delaying decisions for six months, particularly as it's unlikely the market will be that much clearer any time soon.

Sincerely,

Cindi Howson, Founder, BIScorecard, a Web site for in-depth BI product reviews
Author: Successful Business Intelligence: Secrets to Making BI a Killer App
Author: Business Objects XI (R2): The Complete Reference

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