Monday, October 01, 2007

Commoditization of Business Intelligence

I received an email from Seth Grimes, a very familiar voice in the BI community, with an interesting question -- Do you now see BI as a commodity market?

He was referring to an earlier post about my open source BI project OpenI, where I'd mentioned:

The state of business intelligence software market has been very much controlled by a few big players. The situation is very similar to how the J2EE application server market was before JBoss, or how database server market used to be before MySQL and Postgres emerged as serious alternatives, or how OS market was before Linux. Pretty soon we will talk about the BI platform market in the same manner, because open source and open standards are driving the commoditization of BI as we speak. It is just a matter of time.

That was a few years ago. So, I asked myself -- well, how do I feel now? Have I learned anything?

The question is a tough one -- something I've always grappled with. Ultimately, it depends on what do we mean by "business intelligence". If we go by the current big commercial players' definition -- then BI is more about a software tool providing capabilities around data warehousing/ETL, OLAP, analytical modeling, and visualization. So by that account, I'd definitely stick to my original thoughts and say it's a commodity market.

However, a more relevant question might be -- does having these capabilities make a business intelligent? In reality, what I've seen is that it comes down to an analyst (or group of analysts) who (a) know how to work a "BI" tool, and (b) have some fundamental expertise in the business domain they are analyzing. So, the "BI" tool is more about facilitating the job of an analyst or a general business user. You could argue that by making performance metrics, etc. more easily accessible to a business user, the BI tool is helping them make more effective decisions, but it is making a big assumption that the user knows how relevant the performance metrics are for the business.

In the end, my take on this is that, the most effective BI tools are domain-centric, i.e. they embody some inherent knowledge about a particular business domain -- so, not only they are extremely efficient and accurate about compiling all the performance metrics and making them available, they also "understand" the applicability of those metrics and can almost act like expert systems in guiding crucial decisions. This, I don't think is a commodity market. It needs to be grounded into specific industry domains to be effective.

Would love to hear your thoughts.


Bhupendra said...

While I dont believe in Open source but I agree with you in your second point. BI is certainly not only about software, but it is about using the Analytics output. I always see good people as higher priority to better product.


Sandeep Giri said...

Thanks for your feedback.

I hope by "open source" you meant open source BI, not open source in general.

I think ultimately good products should help "good people" (in terms of domain knowledge) get better. That happens when the product has some inherent knowledge about that the "good people" are trying to achieve. In terms of BI -- this is about:

a. data -- enabling the consolidation of all relevant data sources
b. KPI's -- helping build/discover the key metrics of business performance
c. actionability -- assisting the knowledge worker through a decision making process AND also in executing the decision

The last point (c) is actually key - because it puts the onus on BI tools for not just providing insights, but help take action. In terms of software, that means being able to integrate with systems that take action. Open source may have an advantage here because it enables relatively easier integration, but it's more about open architecture (web services, standards, etc.) than just publishing source code in public domain.

Datasmith said...

Fantastic sandeep, i think you covered it well......... i mean The question Is BI the way it is supposed to be?
in My view, BI tools would help a functional unit get insights about standard business hassles or questions, as i beleive business is dynamic, so is the need for constant changes in the Decision Support Mechanism Which heavily depends on whether the analyst is able to understand the need of the hour & manipluate the BI tools to deliver to that objsective very blog is all abt this now....

Monty said...

I chanced upon to view your blog and found it very interesting. Great ... Keep it up!