Disparate TCO Found in Business Intelligence Software

Similar types of business intelligence (BI) software purchased from different vendors can have surprisingly different levels of total-cost-of-ownership (TCO), found Ventana Research after completing a six-month examination of five vendors in the space.

BI software gauges such metrics as the purchasing patterns of those involved in a business process. Many research firms have been taking increased interest in the potential of the applications, particularly following a spate of acquisitions and product launches and upgrades in the last few months. IDC pegs the market to skyrocket to $4.5 billion by 2007, while Gartner has said that BI suites and reporting functionality will converge in a single category by year’s end.

At a time when trimming the dollars spent on IT infrastructure and applications, vendors have been looking for ways to help their customers strike a delicate balance between a lower TCO, all the while raising return-on-investment. TCO typically gauges the total cost of hardware, software and personnel.

The study, covering vendors Cognos , MicroStrategy , Information Builders , Actuate and Informatica , revealed that proper assessment of TCO could save an organization from $92,000 to $329,000 for a 1,000-user implementation and $129,000 to $1,600,000 for a 10,000-user implementation.

Eric Rogge, vice president & research director for BI, said the study found significant cost variances among BI vendors for similar business use case scenarios. But, Rogge told internetnews.com, companies are not realizing the cost difference in BI solutions because they primarily focus on feature and functionality and don’t properly consider TCO as an evaluation criteria.

“Organizations that do not consider TCO as an evaluation metric could be throwing away millions without knowing it,” Rogge said. This is troubling in a time when the economy remains soft, Rogge said.

As the report’s author, Rogge relied on a comparative benchmark that quantifies, by type of business and end-user, the total costs for software, hardware and personnel from preparation through operation over a three-year period in 12 different real-world business case scenarios for 1,000- and 10,000-user deployments.

For example, in the application field of dashboards for 10,000 users, Actuate had the lowest TCO, approximately $1.6 million less than the highest TCO. For ad-hoc multi-dimensional OLAP for 10,000 users, Cognos had the lowest TCO, posting a figure that was $764,000 less than the highest TCO. In ad-hoc relational OLAP for 10,000 users, Informatica had the lowest TCO, approximately $1.2 million less than the highest TCO.

Rogge said the study surveyed 364 business managers and found that 81 percent claimed TCO to be an important or very important consideration for their IT management projects, noting that the “do more with less” mantra is still going strong in enterprises.

The study also called out vendors who do not provide independent proof of low TCO. Ventana said BI vendors as a rule declare low TCO, but don’t get it proven by an independent audit.

“We advise our clients to ask vendors that claim low TCO but did not choose to participate in this audit, to provide independent and objective proof of their low TCO claims,” said Ventana Research President Mark Smith.

Ventana Research, who will approach additional vendors for participation in the study, is launching a TCO Audit service for organizations that want to assess existing or new BI or performance management systems and projects.

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