Friday, July 18, 2008

Proprietary BI - Is it really worth it?

A business looking for BI should always consider the alternatives when evaluating a Business Intelligence solution. From my experience, I have found that Open Source BI, including Pentaho Open Source Business Intelligence, offers what you would expect from a proprietary BI vendor. I can say this with much conviction and confidence because I worked for a proprietary BI vendor for 9 years, Information Builders.

In comparison to proprietary BI vendors, there are significant differences in the software tools, architecture and licensing but the resulting solutions are always very similar. We all have our dashboards, repositories, metadata, reporting and etc.

The sales process is very similar as well, except that Open Source software is free and is based on standard Open Source licensing. There aren't any Jedi Mind Tricks in the negotiation process. There usually aren't any excessive pre-sales costs in terms of customer schmoozing (golf outings & fancy dining) and travel expenses. The same prospect that is looking for a true BI solution and wants to provide value to their organization, carefully considers all the options and does not fall victim to all the marketing hub-bub. In fact he may know that in reality he or his company will be paying for that golf outing one way or another.

Just to give you a brief example of the difference between an Open Source BI solution and other proprietary BI vendors tools, I have compiled an estimate of what I have seen so far in this competitive landscape.

This is an estimate of what a small implementation of a proprietary BI Vendor's tools can cost. Notice that I used the word "tools", because that's just what you'll be getting for the absurd amount of software licensing fees you'll be charged. Business Intelligence is being sold as a commodity when it shouldn't be. Business Intelligence is in the heads of people and not the software. It takes expertise to meet the specific objectives to solve the business problem. It is this expertise that Open Source companies offer as a service to help meet those objectives.

Keep this in mind when comparing proprietary BI with Open Source BI.

The Estimated Summary:

A proprietary BI vendor’s data integration and reporting tools can cost approx $220,000(+ -) based on the below scenario. Keeping in mind that this cost is paid without an actual BI solution in place. This is just for the software licensing, that says "you" can use the software as well as 20% maintenance. (Keep in mind that this maintenance cost is rising due to many conditions, including the current enconomy.) On top of this costs which may or may not include education, you may need to tack on additional consulting or services fees. Check out this link to support my claim.

Broken Down:

For a basic 2 CPU windows machine (some vendors consider this a 1 dual core CPU)

-Data adapters -- to access data
-Reporting and Analysis Engine - to execute requests
-Certain # of users for a web based ad hoc reporting
-ETL (additional copies extra)
-Developer tools (additional copies extra)

The Myth:

We have seen that Open Source BI is becoming a name in the competitive landscape. However there are many misconceptions of Open Source software. I have actually had someone tell me, "People think that because its Open Source, its crap and Open Source will not win". This is coming from a number of uneducated individuals I would imagine. Hmm, let me see, MySQL, Linux, Apache, Tomcat, SugarCRM, Liferay, Alfresco, Openbravo to just name a few. I guess these are all crap huh?

The funny thing is, that individual failed to realize that many proprietary BI vendors include Open Source technologies in its own suite:

-Apache Tomcat Application Server
-Apache Lucene Search Engine
-Eclipse Framework

There have also been a number of announcements found on the web:

-"Proprietary BI Vendor" Elbows In With Predictive Analytics using Open Source project
-"Proprietary BI Vendor" Joins Eclipse Open Source Community
-"Proprietary BI Vendor" Data Integration leverages Open Source Eclipse Framework

To further support this, a proprietary BI vendor rep said that integrating open source search technology from the Apache Lucene project, will open up more development opportunities. "Tying into the Google Search Appliance has allowed us to deliver complete package without third-party issues," he said. "But it can get complex and expensive when searching across millions or transactions. Lucene engine's gives us more search programmability."

So how is Open Source crap, come again?

Please keep all this in mind, including the recent BI vendor consolidation. Here is where expensive software is just getting more expensive.

Along with the state of the current economy, Open Source alternatives are looking a lot more attractive. The bottom line is that they provide core and similar BI features and functionality with a higher ROI and lower TCO.

So with this knowledge in hand, you tell me, is proprietary BI really worth it? Don't get me wrong, proprietary BI may have its place. Just keep in mind that every business must take careful consideration to identify if they are that place.


danortega said...

So the really interesting play is when you combine Open Source with delivery in a SaaS model, then you get the benefits of "crowdsourcing" to improve the software, and a very cost effective delivery method. I did this at my last start-up and it worked beautifully.

vineet said...

good piece of information.....however I think the challenge is how to position open source BI correctly to the businesses. Does Open Source BI needs to be packaged differently than the proprietary ones? Is promoting it technologically the right way or business benefits needs to be hard sold?