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.