Sourcing Preferences in Business Intelligence, 2011
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1 G Sourcing Preferences in Business Intelligence, 2011 Published: 26 October 2011 Analyst(s): Dan Sommer Since 2008, Gartner has surveyed business intelligence (BI) users annually to learn their experiences with BI platforms. The surveys show a move away from sourcing all BI and analytics capability from one vendor. The trend is in line with the proliferation of buying centers in the market, technological disruptors, and an awakening that one tool doesn't fit all use cases. Key Findings Over the past five years, there has been a shift in preference to sourcing from multiple best-ofbreed vendors. Respondents who have a mix of business and IT responsibility are more likely to go for a multisourcing approach to BI tools. Larger organizations are more likely to have a multivendor sourcing approach. Centralized BI programs are more likely to have a single-vendor sourcing strategy. Respondents seem to be more successful in linking BI to decision making when having a multivendor sourcing strategy. Recommendations Even if you establish an enterprise BI standard, plan for information management infrastructure, governance policies and processes that can support a portfolio of tools as business requirements evolve. Standardize items that bring economies of scale and synergies, while departmentalizing those aspects in which differentiation and time to value matter more.
2 Analysis The BI market is in a state of flux, and sourcing behaviors are changing. Gartner has observed for several years that while IT continues to standardize around stack components and holds the majority of the budget, line-of-business spending is where much of the growth in software budgets lies. Previous research has found that line-of-business purchasers buy a variety of tools/ applications according to what fills their need best, regardless of brand (see "Market Trends: Market Trends: Business Intelligence, Worldwide, "). The trend toward more buying centers is leading to procurement coming closer to the needs. But the dichotomy in sourcing, unless managed properly, may lead to challenges in information governance disconnections. This note attempts to examine sourcing attitudes, exploring survey data gathered at the Business Intelligence Summit (see Note 1). Have Sourcing Preferences Changed? Having asked the same question for several years, with the exception of 2010, we examined the results over time to detect attitudinal changes. Figure 1 examines the results for the following question: "If currently using or planning to use in the next 12 months, which type of vendor does your organization prefer to purchase BI software from?" Page 2 of 14 Gartner, Inc. G
3 Figure 1. Which Type of Vendor Does Your Organization Prefer to Purchase BI Software From? Percentage of Respondents The same vendor from which we purchase database, data warehouse, data integration, application server or other infrastructure The same vendor from which we purchase enterprise applications such as ERP, CRM or SCM A single vendor that focuses only on BI software A vendor that provides both infrastructure and application software Multiple vendors that each provide best-of-breed technology No preference Source: Gartner (October 2011) A few trends can be gleaned from the time series chart. There has been a significant bump-up in respondents preferring to buy from multiple vendors of best-of-breed technology, with close to half of respondents choosing this option. With the exception of 2009, the trendline is pointing up for this choice. Single-vendor sourcing is changing. Sourcing from a vendor that provides both infrastructure and application software has steadily dropped in popularity over time. Stack-centric buying seems to rather focus on buying from: (a) the same vendor from which the respondent's organization buys database, data warehouse, data integration, application server or other infrastructure; or (b) the same vendor from which the respondent's organization buys enterprise applications, such as ERP, CRM and supply chain management (SCM). Hence, stack centricity is with applications or Gartner, Inc. G Page 3 of 14
4 infrastructure, not both. This reflects reality in that very few organizations have their entire software portfolio (outside of BI) standardized around one brand only. Even as large vendors are broadening their stacks, Gartner doesn't expect this behavior to change in the near or medium term. Another choice that has steadily decreased in popularity is sourcing from a single vendor that focuses only on BI software. This underlines the tough position in which the BI platform specialists find themselves, where improved technical capabilities, channel focus and stack-selling are helping the megavendors win market share, while small niche vendors are grabbing business unit attention. Increasingly, independent BI players have to coexist with stack vendors and smaller vendors. Note 2 lists the rationales by which respondents explained their preferences. How Does Role Impact Sourcing? Table 1 shows how different user roles responded, divided into IT, business and a hybrid between the two. Page 4 of 14 Gartner, Inc. G
5 Table 1. How Different User Roles Responded My role is primarily IT-focused (%) My role is a fairly even blend of business and IT (%) My role is primarily business-focused (%) Single vendor (aggregation of four response options) Multiple vendors that each provide best-ofbreed technology No preference Note: Respondents who said "my role is primarily IT-focused" were 47% of the total; respondents who said "my role is a fairly even blend of business and IT" were 40% of the total; respondents who said "my role is primarily business-focused" were 13% of the total. Source: Gartner (October 2011) Gartner, Inc. G Page 5 of 14
6 Purely IT-focused and purely business-focused roles are more inclined to buy from one of the options provided in the survey that indicated that they prefer to buy from one single vendor, compared with respondents that come from a hybrid role (i.e., "fairly even blend of business and IT"). On first reflection, it is counter to the premise put up in the introduction of this document that business units go out and buy from various vendors based on functionality. However, if their role is business-unit-focused, they will have a siloed approach to buying, satisfying the singlevendor requirement for their business function. Another business function might, therefore, buy a completely different set of tools. Whether they have visibility into what their entire corporation buys is unclear from this survey. By the same logic, IT may also be unaware of all that is being sourced on a corporatewide level. However, IT has a fairly even split between single vendor (39%) and multiple vendor (44%). Respondents with a hybrid role (a fairly even blend of business and IT) are more likely to support a sourcing strategy from multiple vendors (53%). Arguably, this would be the constituent with a more holistic knowledge/visibility of BI sourcing affairs, with visibility into both IT and the business needs. Does Size Matter? When dividing respondents between those representing companies with more than 10,000 employees and those from smaller companies, one can see in the data that very big and complex organizations are more prone to source from multiple vendors (see Table 2). This could be due to bigger and more complex projects, which are difficult to handle with only one partner. In other words, going for multiple vendors might be a function of necessity. In large organizations, corporate IT needs to coexist with departmental IT departments, sometimes with different priorities. The other difference is that more large organizations indicated the "no preference" choice. This could be intentional, i.e., respondents indicate through that response that sourcing is free and not tied to a preference for one vendor, or it could be because their organizations have not laid down rules for how BI procurement is to occur. "No preference" can therefore also be interpreted as a lessgoverned, de facto way of going for a multiple-vendor sourcing strategy. Page 6 of 14 Gartner, Inc. G
7 Table 2. Sourcing Preferences by Company Size Respondents From Organizations With Fewer Than 10,000 Employees (%) Respondents From Organizations With More Than 10,000 Employees (%) The same vendor from which we purchase database, data warehouse, data integration, application server or other infrastructure The same vendor from which we purchase enterprise applications such as ERP, CRM or SCM A single vendor that focuses only on BI software 9 5 A vendor that provides both infrastructure and application software 3 3 Multiple vendors that each provide best-of-breed technology No preference Source: Gartner (October 2011) Gartner, Inc. G Page 7 of 14
8 Does Centralization Matter? As shown in Table 3, another question we asked was, "How would you best characterize the structure of your organization's BI program?" Isolating that question, one can see that that BI programs have been shifting toward more centralization in the past two years. Today, 64% responded that they have a centralized BI program, versus only 44% two years ago. Those who responded that they have a centralized BI program today were more likely to source from one vendor, versus those that still characterized their BI programs as decentralized (33% of respondents). When sourcing is becoming more centralized, IT often gets in the driver's seat, which could impact that preference. Table 3. Sourcing Preferences by Structure of BI Program How would you best characterize the structure of your organization's BI program? Centralized (%) Decentralized (%) Multiple vendors that each provide best-of-breed technology All other sourcing preferences Note: Respondents who characterized their BI programs as centralized were 64% of the total; respondents who characterized their BI programs as decentralized were 33% of the total. Source: Gartner (October 2011) Does BI Sourcing Impact Decision Making? We also tried to gauge BI's impact to decision making, with the following question: "How would your organization's overall BI users rate the impact that BI has had on their business decisions? What degree of impact do you anticipate BI to have on your organization's overall BI users' business decisions? 1 is no impact at all, and 7 is maximum impact" The respondents overall split out as shown in Figure 2. Page 8 of 14 Gartner, Inc. G
9 Figure 2. Impact of BI on Decisions Maximum impact No impact at all 1 Don t know Percentage of Respondents Source: Gartner (October 2011) In this context, can sourcing preferences make a difference? Here, due to the limited number of responses, one needs to cluster the choices; otherwise, the sample size is excessively spread out (see Table 4). Gartner, Inc. G Page 9 of 14
10 Table 4. Sourcing Preferences and Their Impact on Decision Making Little Impact (1-2) (%) Medium Impact (3-4) (%) High Impact (5-7) (%) Don't Know (%) Multiple vendors that each provide best-of-breed technology Single vendor choices No preference Source: Gartner (October 2011) Page 10 of 14 Gartner, Inc. G
11 As the matrix shows, those who prefer to source from multiple vendors that each provide best-ofbreed technology are more likely to think BI has a higher impact on decision making. If the data is a reflection of reality, it shows that as decision processes are out in the business units, they should have a higher degree of autonomy in choosing the tools that are right for them. This is more often achieved through having a multivendor sourcing approach. Best-of-Breed Versus Standardization Final Thought While the survey results do not directly report how many firms have standardized on a single vendor, they do indicate that over half have not, with 47% preferring multiple best-of-breed technologies, and 15% having no preference at all. The debate continues between the pros and cons of best-of-breed and single vendor, but either extreme is not good. In an ideal scenario, it should be based on business requirements, but a preference for multiple best-of-breed products may contraindicate, or at least complicate BI platform standardization efforts if too many technologies are proliferated across functions and departments. The result is a costly and challenging tangle of duplicated BI platform capabilities and inconsistent interpretations of data in different BI systems. Moving toward a standard or primary BI platform should be considered in BI "systems of record," such as enterprise reporting, online analytical processing and ad hoc query scenarios. But sourcing from multiple vendors enables the spread of more analytic use case scenarios to more users, as the market is moving from IT-pushed tools to business-focused applications. Technological change agents such as data discovery, analytic applications, and BI as a service help contribute to that shift ("shift" can mean both IT to business and reporting to analytics). Market shifts need to be embraced by combining a central BI procurement strategy with a portfolio approach. This is very complex, and a BI competency center is by far the best method of achieving this. Standardize items that bring economies of scale and synergies, while departmentalizing those aspects in which differentiation and time to value matter more. Even if you establish an enterprise BI standard, plan for an information management infrastructure and governance policies and processes that can support a portfolio of tools as business requirements evolve. Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Market Trends: Market Trends: Business Intelligence, Worldwide, " Note 1 Methodology Statement and Survey Objective In the first quarter of 2011, Gartner conducted a BI survey, reaching out to delegates attending Gartner's annual Business Intelligence Summits in Europe, the Middle East and Africa (EMEA), North America and Asia/Pacific. Delegates participating in the survey were restricted to end users, and the questions focused on the adoption and usage of BI and information infrastructure tools and technology. Vendors, IT services providers and software developers were excluded from taking the survey. Because the participants were all attendees of the BI conference, their attitudes and project plans likely reflect a higher focus on, and engagement in, BI compared with the average enterprise. Gartner, Inc. G Page 11 of 14
12 The survey was completed by 189 attendees in It is also important to put the responses here in the context of the role of the respondents: 47% of respondents had a primarily IT-focused role 40% had a fairly even blend of business and IT 13% had a primarily business-focused role Note 2 What Is the Rationale for the Sourcing Approach? In an open-ended follow-up question, respondents indicated why they have their preferences. The comments in italics are the views of the survey respondents, not Gartner's take: Multiple vendors that each provide best-of-breed technology (47% of responses): "We have some legacy issues, but are focusing on one tech for any given purpose minimizing overlap." "We compare prices and functionality. If one vendor had it all we would use them." "Avoiding lock-in." "Bespoke solutions developed in-house or using contracted system integrators using best-of-breed components." "Focus on quality of solution rather than minimizing vendors." "Business alignment." "End-user needs." "Fits best in every situation." "Value for money." "In healthcare, there are too many different data sources and customers to do it all with one." "To ensure competitive bidding." "Cost versus meeting organization requirements." "Historic reasons." "Flexibility." "The best of the best." "Quicker adoption of new technological approaches." "Do not wish to rely on a single vendor." "Risk mitigation. No vendor truly delivers what they sell." "Aligns with strategic needs." "Openness." "Delivery certainty." "BI market is immature; overall integration into existing system landscape is the biggest challenge; platform providers are still unable to do this." "The variety of source systems/sources and BI systems doesn't allow a more specific approach." "Our complex architecture." "To cater for the requirements of the business users and IT support." "Historically, this was considered the best solution as we did not have integrated ERP/CRM. We are now focusing on exploiting synergies across BI, ERP and CRM." "Enterprise data warehouse requires specific performance, which is not available from all vendors." "We don't want single vendor to 'dictate' prices." "Each business area is driving its interest independently." "Maturity of products differs, and at times our users can't wait for a vendor to 'catch up.'" "We have a federated business model, which within a set of standards allows our business units to select tools that are appropriate to their needs." "Cognos is good for reporting, but users want Spotfire or QlikView for ad hoc analytics." "To leverage on specific strengths of various hardware/software/analytic solutions." "User adoption requires excellent front-end performance needs to come from the top-tier back end." "As long as the vendor product fits into our service-oriented architecture approach, we are not limited to only one vendor." The same vendor from which we purchase enterprise applications such as ERP, CRM or SCM (13% of responses): "Precanned reports and cubes, etc." "Ease of integration with the existing ERP stack. Better licensing fees and decreased total cost of ownership." "We use SAP ERP, and most of our key data resides within ERP. SAP BI tools are (theoretically) tightly integrated to enable more seamless data processing, analysis, extraction." "The illusion of lower total cost of ownership and the hope of better integration and upgradability. (I call it illusion because customer and personal experience prove different)." "To simplify data extraction from the source systems." "Consolidation of legacy." "Single vendor strategy." "Based on obtaining best value for money from purchase of Page 12 of 14 Gartner, Inc. G
13 SAP." "Ability to reduce total cost of ownership by sharing certain resources. i.e., core software skills and technical infrastructure." "Potential for future in-line analytics in business processes." "Scalability." "Cost." "Political." "Vendor management." "Continuity." The same vendor from which we purchase database, data warehouse, data integration, application server or other infrastructure (13% of responses): "We are familiar with their tools and have a good working relationship with our vendor. We have a lot of internal knowledge of their tools." "Ease of integration." "Contracts." "Fewer vendors in the house simplify architecture." "Negative experience in the past with a 'best-of-breed' policy." "We already have an enterprise license and a huge investment in them." "Usually the cost is bundled with what they provide so if it comes close to what we need and it doesn't cost more than we are paying now we tend to use it." "We currently have an outsourced IT function and have better support and pricing on many of the leading products through this relationship. We continue to look at other vendors, but this relationship factors into the decision making process." "One throat to choke." "BI direction includes/ leverages existing software investment (i.e., Microsoft BI technology stack)." "Compatibility." A single vendor that focuses only on BI software (8% of responses): "Best-of-breed, existing platform." "Historical reasons." "Focus on one product/service makes them more dedicated to making that product/service excellent." "Best solutions." "To minimize the number of supported products." "Expectation of components that work well together." "We produce our own BI software! This seemed like the most appropriate choice." Vendor that provides both infrastructure and application software (4%): "Single source of pain." "Purchase decision was made many years ago, and we have had no reason to change." "Better support model." "Cost." Gartner, Inc. G Page 13 of 14
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