BOB & Crystal… BI Consolidation Begins

Last week’s $820 million acquisition announcement of Crystal Decisions by Business Objects prompted some analyst firms to point towards new directions and even more consolidation in the business intelligence (BI) sector.

The BI industry as a whole is highly fragmented with companies paying for a standalone platform, modifying one from a partner or inventing their own tools for decision support, query and reporting, online analytical processing statistical analysis, forecasting, and data mining.

Now that Business Objects wants Crystal Decisioins under its wing, analysts say the two companies will complete the first option to best BI pure plays such as Actuate, Cognos, Hyperion and MicroStrategy while competing with top-tier players like Microsoft , Oracle and SAP .

Bottom line say analysts; expect to see further mergers and acquisitions as companies with smaller suites or point products respond to competitive pressure.

“A lot of the smaller shops have gone away and there isn’t a lot of new startups in the BI space for the moment,” Ventana Research vice president and Research Director Eric Rogge told

Rogge’s thinking is that many end user organizations have BI and other enterprise resource planning (ERP) systems that have helped companies weather the consolidation of the last few years, but now upper management is looking at a derivative called Performance Management may be the way to go.

“Performance Management is slightly different than ERP or BI in that it is more broad and more about optimizing the systems you have,” Rogge said. “Crystal Decisions had it and that is why Business Objects is buying it.”

Analysts with Deutsche Bank Securities also see more BI consolidation on the horizon.

“Inevitably the large application vendors such as SAP, Oracle. PeopleSoft and Siebel playing a significant BI role through analytic application offerings. Microsoft,
Oracle and IBM as database vendors will continue to intensify their efforts to play a broadened role in BI delivery,” Deutsche Bank analyst Brian Skiba said in a briefing to investors.

Skiba and team also note that both companies’ positions is becoming increasingly competitive with the forthcoming introduction of Microsoft’s SQL Server Reporting Services product in 2004 (currently in beta).

“We believe Business Objects’ acquisition of Crystal is a highly strategic move that makes the company a stronger competitor in the business intelligence market, particularly in the highly competitive North American,” Skiba said.

Ironically, Microsoft is currently a significant partner to Crystal Decisions. Ventana says Business Objects is sure to review OEM relationships held by Crystal with Hyperion, Microsoft and SAP.

The next year and a half will be critical for Business Objects. The company said it will merge the R&D teams of the two companies but its integration roadmap is a work in progress. That means a significant release combining technologies is somewhere between 12-18 months away.

Complicating issues will be getting everyone on the same page. No mean feat considering the companies have development, marketing and sales teams in Paris, San Jose, California and Vancouver, British Columbia.

And while the integrated Business Objects/Crystal product suite is sure to be a major force, Rogge says don’t expect the competition to sit idly by.

“Customers may balk at a two-product strategy from Business Objects and Crystal if integrated products such as Actuate 7, ReportNet and WebFOCUS 5 are found to be acceptable,” Rogge said. “Also later this year, MicroStrategy will introduce a new product extending MicroStrategy 7i into the reporting market. This leaves Informatica with their new BI tool, PowerAnalyzer, to decide how they answer to this level of requirements for reporting.”

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