| Opinion on why Business Intelligence consultancies are going the way of the dinosaur [message #257768] |
Wed, 10 October 2007 05:59 |
Eclipse User |
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Originally posted by: info.yellowfin.com.au
The business intelligence market is changing rapidly. Three major forces
driven are changing the landscape. Firstly, BI software vendors are working
feverishly to bring BI to the masses making it easier for end users to
fulfil much of their reporting needs. Second, in addition some vendors are
taking ownership of larger client consulting projects to boost their own
revenue, and finely ERP vendors and consultants are looking to extend their
reach by delivering BI solutions which leverage their understanding of the
ERP deployment.
With these changes in mind BI consultants needs to re-think the way that
they do business. To adapt and survive consultants need change their current
mode of operation where:
1. Each new client is a unique consulting opportunity, little to no
value-add is transferred from one project to the next.
2. Big is still beautiful - driving the client towards long term highly
complex projects.
Instead, to compete, BI consultancies need to develop and package up their
own Intellectual Property which they can sell their clients in conjunction
with the value added services that they offer.
The BI software market is undergoing a major shift. For all the talk and
hype BI for the masses is starting to happen. BI solutions such as Yellowfin
which deliver user friendly web based reporting are making BI easy, and
analytical skill sets are increasing in organisations. Yellowfin's
collaborative technology encourages report writing by the staff that own and
know their data sets. Reports are easily shared with the non-expert user
base. The days of consultants earning revenue by writing reports are coming
to a swift end. Consultancies need to move up the food chain and add value
through true business analysis, and longer term reusable BI elements such as
data marts and data warehouses. This is where the IP crunch starts. By
changing the focus from report building to back end development the risk is
that if the entire business is built on a services model the consultancy may
erode long term revenue. How this addressed will be covered later.
If easier to use tools were not enough, then the growth of traditional
vendors clawing at the BI consultancies client and revenue base surely does
not help either. One of the trends lately for the big boys has been to
tackle their flattening software revenue is to take greater ownership of the
entire customer BI project - from software to implementation. If all the
consultant sells is their time then the value proposition for the client and
their point of differentiation is low. However, if consultancies develop
their own IP in their specialist markets they can offer their client lower
cost solutions (through a reduction of deployment time and re-usable BI
components) at higher margins and thus retain their profitability.
And now the crunch - ERP Vendors and consultancies are rapidly seeing their
revenue streams drying up as the ERP market matures. They are using their
understanding of the ERP application and their client relationships to
extend their offering to BI in an effort to boost their revenue streams.
SAP's purchase of Business Objects leaves no doubt. The mature ERP market
has to extend its reach if it is to maintain revenue growth. It is here that
we have competing skills - ERP consultants with an understanding of the
source data versus those with an understanding of how to package and deliver
it for BI. To compete with the ERP consultant the BI consultant needs to
pre-package solutions for ERP applications that leverages their BI expertise
and can be quickly customised for their clients.
To prosper as a BI consultancy the business model has to change. Focus less
on the services revenue, instead consider margins and profitability. BI
consultancies must invest in developing their own IP - such as pre-canned
report product sets that are generic to industries and technology platforms.
These must enable cookie cutting and be sold as a tangible product. IP
development creates tangible business differentiation that creates barriers
against competitors who have not invested in product development. In
addition to IP revenue clients will also procure services for customisation
and so provide two streams of revenue. Now is the time for consultancies to
decide whether to go the way of the dinosaurs or evolve and thrive with a
hybrid services/IP business offering.
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