Benefits and Perils of Buying Into the

Megavendor Stack
Business Intelligence Summit
April 12-14, 2010
Mandalay Bay Resort & Casino
Las Vegas, NV
Rita Sallam
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Benefits and Perils of Buying Into the Megavendor Stack
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Rita Sallam
BI8_108, 4/10
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the
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Benefits and Perils of Buying Into the Megavendor Stack
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Benefits and Perils of Buying Into the Megavendor Stack
By stack vendor, we mean primarily the "megavendors" Oracle, SAP, IBMCognos and Microsoft which have either By stack vendor, we mean primarily the megavendors Oracle, SAP, IBM Cognos and Microsoft which have either
developed or, in many cases, acquired a broad spectrum of enterprise applications and data management infrastructure
capabilities and offer the promise of doing the integration across the stack, bundling and a one-stop shop.
Infrastructure: Of all the layers of the infrastructure, portal integration is the most important to the BI platform. However, it is
unlikely this will be a gating factor in vendor selection. No doubt, stack vendors will make their portal work better out of thebox
with their chosen BI platform. This differentiation, out of the box functionality, could be eclipsed with a modest amount of
customization. This customization could be lessened if each vendor's support of the J SR168 portal integration standard was
consistent.
Data Integration: Clearlytherearesomeadvantagesof atightlycoupledBI platformanddataintegrationlayer includingdata Data Integration: Clearly there are some advantages of a tightly coupled BI platform and data integration layer, including data
lineage and impact analysis. However, increasingly, vendors will be compelled to provide this level of functionality universallyfor
all products not just the ones they sell.
Applications: Corporate performance management capabilities are the most closely aligned with the BI platform market. This is the
area in which we see the greatest synergy particularly the melding of "planning" as a general-purpose BI platform capability
but all stack vendors, except for IBM Cognos, also have enterprise applications.
BPM/BAM: Business process management has great potential to integrate the functionality of BPM with BI platform capabilities.
This is the area in which the "better together" stack story has the greatest promise. However, it is only the Type A customers that are
mat reeno ghtostart embeddingBI intotheb sinessprocess So integrationbet eentheset oareas ill appeal toas bset of the
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mature enough to start embedding BI into the business process. So, integration between these two areas will appeal to a subset of the
market at least for the next two to three years.
Benefits and Perils of Buying Into the Megavendor Stack
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intended Gartner audience or other authorized recipients. This presentation maycontain information that is confidential,
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Benefits and Perils of Buying Into the Megavendor Stack
Inthewakeof significant consolidationintheBI platformmarket themajor stackvendors IBM Microsoft In the wake of significant consolidation in the BI platform market, the major stack vendors, IBM, Microsoft,
Oracle and SAP, now offer the full spectrum of BI platforms enterprise applications in the case of Oracle,
SAP and Microsoft, as well as most pieces of the middleware and information management infrastructure.
These vendors are offering attractive bundling and pricing, the promise of handling the integration of the stack
for you, and "one throat to choke." But what is hype, and what is reality? This presentation explores the
benefits and perils of buying into the stack value proposition and how to protect against the downside of
vendor lock-in.
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intended Gartner audience or other authorized recipients. This presentation maycontain information that is confidential,
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issues Key Issues
In this presentation, we will discuss four key issues. First we will analyze trends that are accelerating stack-
centric buying and also the trends that are dampening this momentum. We will explore whether or not stack
vendors are indeed better than pure plays on a number of important dimensions, such as integration, product
functionality, ease of use, support and economics. Next we will explore the conditions whereby either a
megavendor or pure play-vendor might be better for your company. Finally, if you decide that buying into the
stackisthebest approachfor your company thelast keyissuewill discusshowtoprotect against someof the stack is the best approach for your company, the last key issue will discuss how to protect against some of the
risks of buying into the stack.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: What trends are accelerating stack-centric buying? Key Issue: What trends are accelerating stack-centric buying?
At the dawn of BI, most users would have defined BI as operational reporting. However, over time, organizations apply
analytics beyond measurement to a broader set of analytic use cases and end users. It has grown into a broad set of tools
and technologies that enable organizations to get data out of their transaction and other information sources, optimize that
data for analysis, and make analytical capabilities available to analysts and information consumers either using BI tools to
build reports, dashboards and ad hoc and interactive analysis or by embedding analytic capabilities into analytic and
business process applications. Delivering on the full spectrum of BI, analytics and performance management requires a
b d f l l d h l i h db d h 13 bili i f h BI l f i l di broader set of complementary tools and technologies that extend beyond the 13 capabilities of the BI platform, including
search, ETL, data federation, metadata management, portal, BAM, BPM, collaboration and content management.
Stack vendors that have either acquired or developed most of the capabilities are in a better position than pure-play BI
vendors to deliver these capabilities to their respective installed bases and claim, at least in theory, to be able to handlethe
integration. As a result, we are seeing significant stack centricity, particularly in IT buying decisions. But what most
organizations are finding is that that single vendor's silos are impossible. Even in the most SAP/MSFT/Oracle-centric
shop,therewill always be a some other forms of BI and analytics (e.g., Omniture for website analytics).
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: What trends are accelerating stack centric buying? Key Issue: What trends are accelerating stack-centric buying?
Building or acquiring and integrating the broad portfolio of related BI and PM capabilities is a key basis of
competition and differentiator for stack vendors that is influencing stack-centric buying decisions. Since this
strategy has been successful for megavendors (in 2008, megavendors constituted 83% of BI platform market
growth), particularly when selling into their installed bases, we expect that megavendors will continue to fill in
and sell optimized integration with expanding elements of their respective applications and technology stacks.
Pure-playvendorswill continuetopositioninteroperabilityandpartneringtoprovideexpandedelementsof the Pureplay vendors will continue to position interoperability and partnering to provide expanded elements of the
stack. However, no one vendor can do all of these functions well across the board, and even if you go with a
stack vendor to meet many of these requirements, there will likely always be a portfolio of vendors in your
infrastructure that meet needs not well-addressed by the stack vendors.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: What trends are accelerating stack centric buying? Key Issue: What trends are accelerating stack-centric buying?
Competition and consolidation have benefited megavendors that have been successfully selling into IT with
the promise of a one-stop shop, platform for standardization leading to a reduction in tools, combined with
initial discounts and bundling and, importantly, the promise of an integrated stack. However, taking some
lessons from David's play book, pure plays are attempting to change the rules of the game and competing on
terms less favorable to stack vendors to dampen their momentum. In 2009, business users continued to buy
nonstacksolutionsevenwhenastackstandardwasinplacebecausethosesolutionsdeliveredalternative easy- nonstack solutions even when a stack standard was in place because those solutions delivered alternative, easy
to-use and deploy architectures, alternative business models, and a strong customer focus. Their success posed
a significant challenge to stack vendors and caused most of them to respond with development of imitation
products.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
Overall, pure-play and internally developed BI platforms are more integrated than those offered by acquisition-
led megavendors. Although less-integrated overall than pure-play platforms, megavendors' platforms generally
provide better out-of-the box connections with complementary BI capabilities or other components of the
stack, such as those for search, planning, budgeting, predictive analytics, master data management (MDM),
collaboration, portals and data integration. Pure-play and self-contained platforms tend to have more-
integratedadministrationandinfrastructurecapabilitiesandprovideamore-integratedsemantic layer than integrated administration and infrastructure capabilities and provide a moreintegrated semantic layer than
those of megavendors, but they are typically less able to support enterprise requirements and have less-
integrated and less-capable data lineage and impact analysis.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
This slide shows the aggregated product functionality scores and ease-of-use scores for vendors that
participated in the 2010 BI Platform Magic Quadrant Customer Survey. The cross-hair lines show the survey
average for both metrics. No single vendor is the best in all functional categories, but each has its own sweet
spots. Although QlikView had the highest overall composite product score, MicroStrategy was the only vendor
to score above average in 11 of the 13 categories. Microsoft is the only megavendor to score above average on
bothfunctionalityandeaseof use Manypure-playvendorsareclearlysatisfyingthefunctional andease-of- both functionality and ease of use. Many pureplay vendors are clearly satisfying the functional and easeof
use needs of their users. Increasingly, business users in stack-centric organizations are buying self-contained BI
pure plays, such as QlikView, Tableau and Board, to meet their ease-of-use and additional functionality needs.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
This slide shows the rates of satisfaction with the functionality of vendors' products against the products'
breadth of use, that is, how many of the 13 capabilities the average customer uses. (The dotted lines show the
survey average for both metrics.) The survey data found no correlation between breadth of product use and
size of vendor. Some large vendors (including megavendors) have narrower product use than some smaller
pure plays. For example, customers of IBM Cognos, Information Builders, Microsoft, MicroStrategy and SAP
usefewer of thesevendors' capabilitiesthanaverage whilecustomersof J aspersoft Oracle QlikViewand use fewer of these vendors capabilities than average, while customers of J aspersoft, Oracle, QlikView and
LogiXML use more of their capabilities than average. This result suggests that the ease of use and deployment
of the self-contained, departmental BI platforms (such as QlikView, Tibco Spotfire, Tableau and Board) may
encourage broader use. Moreover, trends of enterprises standardizing on BI vendors and sourcing from the
software stack vendors often do not trump functional needs when business users decide which products to buy.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
Although Microsoft and Oracle are two megavendors that have earned above-average scores for both
perception of support and software quality, SAP and IBM are far below average, as both are still dealing with
postacquisition transitions in sales and support, as well as new product releases. The overall effect is that
megavendors, on average, have lower support and software quality ratings than pure-play vendors; the large
pure-play vendors, MicroStrategy and Information Builders, have scored particularly well on both measures,
reflectingwell-integrated nativelygrownplatformsandstrong less-disruptedsupport organizations It is reflecting well integrated, natively grown platforms and strong, less disrupted support organizations. It is
notable that J aspersoft, an open-source vendor dependent on its quality of support for its revenue, has a higher
perception of support than any megavendor.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
The pattern of customer sales experience is similar to their experiences with customer support and software
quality. Although Microsoft and Oracle earned above-average sales experience scores, SAP and IBM are far
below average, making the megavendor average below that of pure plays this is likely due to
postacquisition territory alignments, pricing and business practice changes.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
This chart shows an aggregated overall BI platform success score, made up of product functionality, support,
quality, perception of success, and performance versus customer's assessment of their view of the vendor's
future as better or worse versus last year. Interestingly, despite the industry consolidation and speculation that
it would be a matter of time before pure-play vendors disappeared from the market, many pure-play vendors
are above the average for both metrics. Although the megavendors are split, both Oracle and Microsoft have
above-averagescoresfor BI successandviewof future The2010MagicQuadrant surveyresultsare aboveaverage scores for BI success and view of future. The 2010 Magic Quadrant survey results are
consistent and show that despite lower megavendor success scores, particularly for SAP and IBM, customers
have a high view of their megavendors' future.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
Stack vendors make a lot of promises to their installed bases regarding the economics of going with a stack
vendor and many of these promises have economic benefit. Of all the claims, the packaged analytic
applications can be most significant, if the packaged content is a good match with requirements. Survey data
also shows there are administration cost-benefits for larger deployments. But at what price? And are these
benefits offset by challenges down the road from vendor lock-in? Although megavendors have large product
portfoliosandavisionfor integration thecurrent realityof integrationusuallylagsbehindinmanycases portfolios and a vision for integration, the current reality of integration usually lags behind in many cases.
Also, going exclusively with a stack vendor for BI can force compromises in time to value and ease of use and
limit end-user flexibility. These last three points often result in higher costs, because, if business users do not
get what they need from their stack vendor, they will buy their own solutions.
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Benefits and Perils of Buying Into the Megavendor Stack
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Benefits and Perils of Buying Into the Megavendor Stack
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: Does stack = better? Key Issue: Does stack = better?
All the stack vendors' customers report lower administration and support FTEs per 1,000 users these
vendors also have the largest deployments both in terms of users, so economies of scale and central
management can be a explanation for the results. Confirming its low-cost value proposition, MicroStrategy
customers report the lowest absolute number of admins as well as the lowest per 1,000 users and per 1,000 GB.
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Benefits and Perils of Buying Into the Megavendor Stack
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Benefits and Perils of Buying Into the Megavendor Stack
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: How can you protect against the perils of buying into the stack? Key Issue: How can you protect against the perils of buying into the stack?
A vendor is not a BI strategy, so before entering into vendor selection, work with executive sponsors and
business users to define a BI strategy. This is often best done in a BICC. Although stack vendors may
ultimately be the right choice for your organization, don't blindly buy into the stack without a rigorous
evaluation of functional fit and integration requirements and TCO versus alternatives.
Each vendor has different functional sweet spots and levels of BI platform, stack integration and TCO profiles.
Use Gartner's Magic Quadrant, SWOT and Critical Capabilities research and analyst inquiries to help with this
analysis Packagedcontent canbeahugecost andtime-to-valuesaver but beforecommittingtothisapproach analysis. Packaged content can be a huge cost and time-to-value saver, but before committing to this approach,
conduct careful due diligence on the packaged content to determine fit with requirements and the degree of
customization needed. Extensive customization of packaged content significantly degrades the cost and time-
value proposition.
Recognize that even if you go with a stack vendor standard, you must plan for a strong information
infrastructure that can evolve and support a portfolio of capabilities. If this is not supported, business users will
continue to buy anyway and in an unmanaged way. A well-implemented approach to information management
infrastructure, includingthequality, access, integration, deliveryandmodel designof data, providesthebest
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infrastructure, including the quality, access, integration, delivery and model design of data, provides the best
foundation for any BI strategy, but it is key when using a portfolio approach to BI.
Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: How can you protect against the perils of buying into the stack? Key Issue: How can you protect against the perils of buying into the stack?
Stack vendors often offer deep initial discounts for large purchases. There are a couple of cautions here. Don't
buy more than you need. There is no more painful check to write than for software you don't use. If you do
succumb to this temptation, do try to include shelfware provisions in your terms and conditions, although this
is generally difficult to do.
As a way to avoid doing this, buy what you need and lock in current discounts for future purchases. This is
ll ibl f i i d f i i ll 12 24 h L k i i usually possible for a certain period of time, typically 12 to 24 months. Look to cap maintenance increases,
particularly at the end of a maintenance term. Make sure that audit procedures are clearly defined in your terms
and conditions and avoid licensing terms and conditions that lead to unexpected increases in your
maintenance, such as rated CPU pricing models or hardware upgrade clauses.
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Benefits and Perils of Buying Into the Megavendor Stack
Key Issue: How can you protect against the perils of buying into the stack? Key Issue: How can you protect against the perils of buying into the stack?
Establish a framework that defines the layers and components that are to be integrated and aligned to deliver
the required portfolio. Much of the additional work involved in managing a portfolio of BI platform vendor
components will arise in managing and coordinating multiple semantic layers that is, defining the
dimensions and measures that describe the company. Build a centrally managed library of metrics to be used in
any and all BI applications. Having a set of master semantic definitions shared outside of the technology is
mandatory andthenumber of semantic layersusedshouldbekept aslowaspossible It isinevitablethat mandatory, and the number of semantic layers used should be kept as low as possible. It is inevitable that
managing a portfolio of BI applications will require more effort than that needed for a single platform for
example, in ensuring that metrics are aligned and managed on more than one semantic layer but the balance
of capabilities offered and the relevancy to the business will justify the effort incurred by ensuring a better
match to end-user needs and so greater return on their investment in BI. A BICC and an agreed organizational
BI strategy document are good and often essential mechanisms to put these common processes in place.
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Benefits and Perils of Buying Into the Megavendor Stack
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intended Gartner audience or other authorized recipients. This presentation maycontain information that is confidential,
proprietaryor otherwise legally protected, and it maynot be further copied, distributed or publicly displayed without the express
written permission of Gartner, Inc. or its affiliates. 2010 Gartner, Inc. and/or its affiliates. All rights reserved.
Benefits and Perils of Buying Into the Megavendor Stack
Recommendations Recommendations
Stack is not always better. Remember that IBM, Microsoft, Oracle and SAP are companies, not BI strategies.
Don't buy blindly into the stack; evaluate a stack BI platform against functional and integration requirements
versus alternatives. Access packaged BI content for the degree of fit with requirements. Evaluate and
assimilate new functionality by business case to avoid being seen as a blocker, rather than an enabler. Stack
vendors are aggressively pushing the "stack" purchase to IT, but business users will continue to buy
alternativesif their needsarenot met alternatives if their needs are not met.
Protect against a weak future negotiating position in initial contracts. Customer negotiating power is high
during initial acquisition; low for subsequent transactions. If cost is a key purchasing decision driver, make
sure to calculate the total cost of ownership (TCO) not just initial license fees for each alternative. Key
will be the development of a fundamental information management (IM) infrastructure to best support a
portfolio of BI tools.
Page 26
Rita Sallam
BI8_108, 4/10
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the
intended Gartner audience or other authorized recipients. This presentation maycontain information that is confidential,
proprietaryor otherwise legally protected, and it maynot be further copied, distributed or publicly displayed without the express
written permission of Gartner, Inc. or its affiliates. 2010 Gartner, Inc. and/or its affiliates. All rights reserved.
Benefits and Perils of Buying Into the Megavendor Stack
Page 27
Rita Sallam
BI8_108, 4/10
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the
intended Gartner audience or other authorized recipients. This presentation maycontain information that is confidential,
proprietaryor otherwise legally protected, and it maynot be further copied, distributed or publicly displayed without the express
written permission of Gartner, Inc. or its affiliates. 2010 Gartner, Inc. and/or its affiliates. All rights reserved.