Cognos Inc.'s successful bid for rival Adaytum Inc. last December (see "Adaytum: An Addendum," below) is just one indication that the business-intelligence (BI) software market is heating up. Analysts expect further consolidation as software firms battle in a large ($11 billion, according to IDC Corp.) but slow-growing market.
While the companies that make core BI software fight it out, a host of developments in related areas also promise to improve customers' ability to crunch through vast stores of data and make smarter business decisions. One reason BI and data warehousing can be so costly is that companies are continually adding to the stores of information they need to process, thus driving up total storage costs even as cost-per-unit declines. One answer may be application data management (ADM), a method for enforcing data-growth and -retention policies by moving unused data off of production databases while still providing access to it through whatever applications require it. This software traffic cop differs from traditional archiving methods because it is application-specific and works across distributed environments. Consulting group Gartner predicts a 64 percent compound annual growth rate for ADM software through 2006.
While ADM allows companies to make the most of the hardware they've got, a case can also be made for new gear. Consider Netezza Corp., a highly touted start-up that recently rolled out its first tera-scale data "appliance," a combination of hardware, software, and storage designed specifically to tackle BI. Combining servers, storage, and database into a single unit, the Netezza Performance Server line is billed as providing 10 to 20 times the speed of conventional processing at half the cost.
The Netezza server doesn't replace BI software, but sits underneath it to provide a horsepower boost. Steve Duplessie, founder of consulting firm Enterprise Storage Group, says the product is a breakthrough, with the potential to radically change how companies approach analytics. By shifting BI processing to a special-purpose system, companies can avoid overloading current infrastructure with what is often a very demanding form of processing. They can also, Netezza argues, spend far less time preparing data to be analyzed and more time actually analyzing it. Netezza's 8000 line of appliances is priced from $622,000.
Netezza, in effect, provides a ready-to-use data warehouse, which may appeal to companies that have resisted the large investments that traditional data warehouses require. Kalido Ltd., a relatively new entrant in the data warehouse space (it was spun off from Royal Dutch/Shell Group of Cos. two years ago), will soon offer new options. With the company's current product, the Kalido Dynamic Information Warehouse (DIW), customers will be offered the option of buying interfaces only to specific BI systems that they need.
More notable is a new Kalido product dubbed "reference data management." Reference or "master" data is the term for information that changes, as opposed to transactional information, which doesn't. The two most common forms are customer and product data. Both can bedevil analytics because they may be referred to differently in different parts of a company, and often reside across a number of systems. The Kalido reference data management engine can peer into all those systems and produce a "golden copy" that is always the most up-to-date and reliable.
Kalido chief technology officer Cliff Longman says that "one problem with data warehouses is that they are often built for one purpose, and prove inflexible as needs change." Kalido, which thus far has won most of its business among large multinationals has yet to determine pricing for its reference data management engine. Its DIW product is priced from $300,000.
Application Data Management at a Glance
Source: AMR Research
- Utility: Enhanced response times when working with active data
- Potential Savings: $125,000 per terabyte after first terabyte
- Optimum Usage Scenario: Large data sets and high number of mirrored data instances
- Avoid: On new data warehouse/data mart implementations and/or small database footprints
Adaytum: An Addendum
Although merger-and-acquisition activity was light in 2002, the world of finance IT did see one notable deal initiated in late December. Cognos Inc. made a $160 million offer for Adaytum Inc. in a move intended to bolster its corporate performance management (CPM) suite of applications. Adaytum's strength in business-planning software combined with Cognos's focus on reporting, analytic, and performance-metrics applications should, analysts say, make for a broader and coherent product family.
Adaytum has been growing quickly, but at $57 million in annual revenue it is barely one-tenth of Cognos's size, and as software makers in the business-intelligence space look to offer larger arrays of BI products, Adaytum faced a challenge in keeping pace. Paul Hamerman, research director at Giga Information Group Inc., in Cambridge, Massachusetts, says the Adaytum acquisition will not only help Cognos advance its ambitions in the realm of CPM (a topic to be covered in depth in CFO IT in March) but also gain visibility among CFOs, an important development as it seeks to compete with Hyperion and the major ERP vendors.