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Surviving a Vendor Consolidation
With the ongoing trend of acquisition, mergers and consolidation among vendors in the Business Intelligence space, there are four key lessons that can be learned from the last round of mergers. These are: Don't Panic; Understand Your Risk; Have a Contingency Plan; and Keep an Eye Out For Your Staff. This approach will help any organization to navigate the inevitable change that comes with vendor consolidation.THOSE WHO IGNORE HISTORY
In 2002 and 2003, the BI and Corporate Performance Management (CPM) vendor landscape saw drastic consolidation: Hyperion acquired Brio; Business Objects acquired Crystal (and eventually SRC); and Cognos acquired Adaytum. Concurrently Oracle, Microsoft and SAP were scaling their BI offerings through acquisition and organic growth. This increase in momentum also brought speculation of further consolidation. But as the acquisition spree paused, customers were forced to figure out a roadmap for their client base. If you were a customer or partner of any of these merged companies, your BI/CPM strategy and platform had to be revisited at the very least. If your organization owned multiple BI/CPM tools, the complexity of your platform strategy was compounded. Given the latest large acquisitions (Hyperion, ProClarity, Sunopsis etc.) in the BI space, now would be a good time to review the lessons learned from the last round in 2002-2003.
1. DON'T PANIC
This may seem obvious, but in 2002-2003 many customers were caught off guard by the rapidity of the acquisitions and made knee-jerk decisions. Ironically, much of this was fueled by the software vendor and partner community, as customers were bombarded with "fast migration" offers to another BI/CPM tool. Many customers took a stock speculation approach to consolidation, in which doubts about the future led them to abandon a vendor sooner rather than later. The flaw in this approach is the difference in velocity of change. In round one (2002-2003), the vendors merging were well established with large installed base of customers, maintenance contracts, partner networks and strategic vendor alliances. It takes a fair amount of time to integrate merging companies and keeping existing customers on board is critical during this transition time. Learning from round one, the time to impact on the existing products is counted in months or years, so do not panic. Nothing drastic is happening in short term, so plan a measured response.
2. UNDERSTAND YOUR RISK
Even where there is no rush to change vendors, you still may get a phone call from the executive office like a colleague of ours did: "I just read in the Wall Street Journal that XYZ is getting purchased by ABC. I am really not keen on ABC as a partner. Should we re-define our BI roadmap?" The second part of the conversation was an awkward silence. This leads to lesson number two, which is about understanding risk. Most organizations have investments in one or more BI/CPM tools such as Cognos or Business Objects along with enterprise software products from Oracle, Microsoft or SAP. With a broad installed base and complex interplay between BI tools, many senior managers like our colleague would be at a loss to answer the question around exposure.
In this case, the best strategy is proactive risk assessment. Even if you believe your prime BI/CPM vendors are not ripe for consolidation, you should quantify current risk exposure. For each BI/CPM tool there are hard costs such as maintenance license contracts, software amortization, hardware operating costs to support BI tools, staff and consulting costs to support BI solutions and internal service level commitments. There are also soft costs such as tool training investment, workflow efficiencies and recruiting/retention policies. Tracking risk exposure into a quantifiable dollar cost is the best way to understand communicate risk exposure.
3. HAVE A CONTINGENCY PLAN
With exposure understood, a contingency plan to replace the tools at risk can go a long way to address executive management concerns. The contingency plan should compare the cost of maintaining the current environment (including any planned upgrades) against migrating to a new tool/platform. These costs can be quantified using metrics such as number of reports/dashboards, number of cubes, number of servers, number of users, etc. The complexity of your model should be based on the level of precision required in assembling the estimate, but at most should take 12 weeks. Once a contingency plan is in place, it should be revisited at least quarterly, a practice that should require days, not weeks.
4. KEEP AN EYE OUT FOR YOUR STAFF
Most architects, designers and developers of BI/CPM systems are used to a set of familiar tools; these same staff members are typically engaged in assembling contingency plans. They are aware of market movements, and would likely ask you why you need to know the number of reports, or if the business is thinking about abandoning their preferred tool. What they really want to know is, "If you get rid of this tool how will that affect me?" Open communication about risk and contingency plans will head off the doubts that will distract the staff you need to manage your risk. The reality is that in round one of BI consolidation, setting aside some initial panic, most organizations stuck with their BI/CPM vendor for the short, if not long term. So, helping management with risk and contingency plans may actually help prove whether keeping the current environment is the right business and technology decision and keep critical staff focused on business problems rather than the future of their favorite tool.
SUMMARY
Round one of the BI/CPM vendors in 2002-2003 gave us a number of lessons: Don't Panic, Understand your Risk, Have a Contingency Plan, Keep an Eye Out For Your Staff. If or when the next round comes, using these lessons will not only help you with the overall management of the BI/CPM function, but it will also help you keep the communications open between business and IT.
Nadeem Mumtaz has over 20 years experience in IT, with the last 12 years focused on business-driven business intelligence and data warehousing solutions. He is a senior manager at BusinessEdge Solutions and can be reached at nmumtaz@businessedge.com.
Anthony Politano has more than 20 years of experience in IT and is the author of Chief Performance Officer. Read his blog at www.tonyfromjersey.com.
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