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Do the big BI vendors really understand your company?

The leading business intelligence software vendors don't do enough to cater to individual industries, but some smaller up-and-comers are stepping in to pick up the slack, an outspoken business applications expert said.

The leading business intelligence (BI) software vendors are doing their customers a disservice by not offering enough industry-specific functionality, a well-known business applications analyst said in an interview.

Joshua Greenbaum, principal analyst with Daly City, Calif.-based Enterprise Applications Consulting, said he believes that the "general-purpose" BI tools offered by Business Objects, Cognos, Oracle, SAP AG and other large vendors fall short when it comes to understanding the various requirements of individual industry "verticals" like healthcare, high tech, manufacturing and retail sales.

"What the customer really needs is BI that is very proactive [and] very deeply verticalized and understanding of the specific requirements of a particular user in a particular industry," Greenbaum said. "Having a general-purpose BI tool doesn't add enough value when the questions that need to be answered are very industry-specific."

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BI, a broad category of applications for gathering, storing and providing access to data, has become increasingly popular in recent years because the technology helps users make better business decisions through query and data analysis.

Others in the IT industry say that although BI offerings from the major players can oftentimes be customized to some extent to suit the needs of individual companies, they agree that the BI tools tend to be very "horizontal." In other words, the technology tends to be a jack of all industries, but a master of none.

Those same users add, however, that they can understand why major companies like Oracle or Business Objects may be reluctant or slow to go through the cumbersome and potentially unrewarding process of "verticalizing."

A new breed emerges

The major players' general-purpose approach to BI has helped give rise to a relatively new breed of smaller BI software vendors like Edge Dynamics and Merced Systems Inc., which specialize in individual areas or industries and combine high levels of on-site consultation and support with highly customized software, Greenbaum said.

Redwood City, Calif.-based Edge Dynamics provides hosted and on-site BI software designed to help pharmaceutical manufacturers address issues relating to sales channel control, regulatory compliance and patient safety.

"Edge is a pharmaceutical industry specialist [that] understands what a perfect order looks like, and they understand what a bad order looks like," Greenbaum said. "They help analyze the incoming order stream and separate the good from the bad and deliver not just intelligence, but operational expertise to try and fix any problems."

Merced Systems, based in Redwood Shores, Calif., provides Web-based technology that the company says is designed to turn call centers and related back-office operations into "highly data-driven operations." The company also boasts a team of call center specialists for consultation.

"[Merced Systems is] more of a horizontal play, but it's very similar in the sense that they know how the call center works," Greenbaum said. "They deliver you an application that runs a call center and makes sure it's running correctly based on deep industry knowledge."

Horizontal by design

Raymond Karrenbauer, chief IT architect for ING Worldwide and a featured keynote speaker at last week's Data Warehousing Institute (TDWI) conference in Las Vegas, said he has seen companies similar to Merced Systems and Edge Dynamics popping up in the financial services industry.

Karrenbauer said he thinks there is certainly a place for those types of firms in the grand scheme of things, and he says that ING has done business with them on occasion. At the same time, he said he understands why larger software vendors may be slow to go the vertical route.

The vertical BI business model simply isn't scalable enough to make sense for the larger players, Karrenbauer said.

"[Vertical BI vendors] may have a strong annuity but their growth potential is very limited. I mean their ceiling is going to be maxed out very quickly," he said. "If you talk about big players in the BI market making transitions into this, I think it's almost like declining versus continuing to scale their model."

Karrenbauer said that one area where he does see the large BI vendors getting vertical is in their marketing messages.

"They're creating sales channels and marketing channels to verticals but the technology is not adapting to verticals," Karrenbauer said. "They're not doing much in terms of really trying to pinpoint a particular industry."

Acquisitions could change BI landscape

Anthony Politano, a data management solutions partner and senior consultant with New Jersey-based BusinessEdge Solutions, predicts a day when large applications companies like SAP and the acquisition-happy Oracle will start buying up smaller BI vendors.

When that consolidation happens, he predicts, those large companies will have an easier time offering industry-specific expertise.

"When the pure-play BI vendors get consumed by the larger organizations, there will be no choice but to verticalize," said Politano, another featured keynote speaker at last week's TDWI conference.

Politano added that he thinks Oracle's recent purchase of CRM giant Siebel Systems Inc. could have major ramifications for the newly merged company's BI offering.

"The theme that Siebel brought forward is that there is continuity all the way from data creation to ultimate decision data consumption and all the lay points in between where [data] is created, it's stored, it's transformed and then consumed by decision support," Politano said. "Siebel looked at that type of lifecycle data, and I'm hoping that type of philosophy will become more contagious at Oracle."

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