Saturday, July 12, 2008

The future of Innovation in Business Intelligence

Dear readers,

Historically the best times for innovation have been times of great conflict: World Wide War 1 & 2, Cold War, etc. The same can be said of Business Intelligence, it is during times of economic deceleration that we are start seeing more innovations in the field as the companies try to get any competitive advantage they can over their competition.
The last time we saw something similar was during the 2001 recession, now almost seven years later, we are again in uncertain times for the global economy with oil prices climbing, the dollar falling and inflation pressures at all time high. While in 2001 we saw a strong paradigm shift from text based report to graphical dashboards, the wind today is blowing in a different direction. 2008 presents a climate that favors mergers, as companies try relentlessly to reduce costs. The BI industry has not been immune to this trend as we have been big fish eat the smaller (and sometimes more juicy) fish.
So, what’s does this mean? Are we in the proper time to see innovations? Or are the entrepreneurial companies under economic pressure cashing out and selling to the big software players?
The answer (as always) is two fold: yes, we are seeing a trend where the smaller (and more innovative) companies are being acquired by big software conglomerates that are trying to make a profit, but also we are seeing a major shift from BI Reporting and Analysis into Actionable Insights.
While it is certainly true that when a big company acquires a smaller vendor, they shift resources from innovation into integration with the bigger platform, we are also seeing an investment (primarily from system integrators) to wire the BI applications into the organizational core processes by making it easier to act on the information provided. (E.g. A CPG company was able analyze the results of a product introduction campaign in almost real time, but it took more than two weeks to make this information actionable by correlating it to how the product was priced for each market. By enabling the flow of the information between the BI platform and pricing systems, changes can be made in days, as they bypass the traditional interdepartmental communication barriers.)
Most of these solutions are sold in bundles, including services and software, giving the companies a true solution to a business problem, rather than just technical pieces. However be aware of the big software vendors that include out-the-shelf software (that btw was just recently acquired from another company) with their consulting services at a much reduced price. This practice channels most of the revenue away from product development and into their services department; effectively reducing even more the resources spent in research and development to incorporate new features in the BI platform.
In summary, these are times of great change for the BI industry and as such present unique opportunities for innovation and mindset changes. What happens next? That, my readers is up to us and decisions we make.

Noe Gutierrez