Gartner's Take on BI Cost of Ownership - InformationWeek

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4/20/2010
12:05 PM
Doug Henschen
Doug Henschen
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Gartner's Take on BI Cost of Ownership

The five-year cost of a typical, 500-seat BI deployment ranges from about $150,000 for an open-source system to just over $1 million for the full suite from SAP BusinessObjects, IBM Cognos or Oracle. So does this research from Gartner change your mind about the type of BI vendor you would choose?

The five-year cost of a typical, 500-seat BI deployment ranges from about $150,000 for an open-source system to just over $1 million for the full suite from SAP BusinessObjects, IBM Cognos or Oracle. In between these two extremes are Microsoft, pure-play BI vendors ($522,000 to $674,000) and software-as-a-service (SaaS) BI vendors ($582,000). So does this research from Gartner change your mind about the BI vendor you would choose?The stats above are all on the slide below, which was presented at last week's Gartner BI Summit by Research Director Rita Sallam. In her presentation on "Benefits and Perils of Buying into the Megavendor Stack," Sallam offered good dos-and-don'ts advice on buying and contract negotiation, much of which I share in this article. She also talked about total cost of ownership and the importance of focusing on the three- to five-year picture.

Garner TCO table

As you can see on in the last column on the right, Gartner took Microsoft out of the "megavendor" equation because it has a very different cost proposition than SAP, IBM and Oracle. Technically, Microsoft BI is free, because it's bundled with enterprise-grade licensing of SQL Server, SharePoint and Office, but we all know there is no free lunch. Those who have committed to Microsoft BI know they now must wait on a bunch of larger IT decisions -- Windows 7, SharePoint 2010, Office 2010 -- before they can unlock the latest BI functionality. I'll have more to say about that over the next few weeks as these products are launched.

Gartner broke the pure-play crowd into two camps. That makes sense given that some have complete portfolios while others focus on "self-contained" areas of analysis.

The cost figures for the open-source alternatives speak for themselves. Why would you not want to spend so little? You'd think this advantage would translate into armies of loyal customers, but Gartner says they haven't ranked the likes of Jaspersoft and Pentaho on their BI Magic Quadrant because they haven't managed to score interviews with at least 30 customers. Actuate is ranked on the Quadrant, positioned in last place among the 15 vendors listed. The absence of the other two major open source players is odd given that both companies say they have thousands of paying customers for their commercial support services.

The other camp that seemed to get short shrift during Sallam's presentation was SaaS-based BI vendors. At one point she said they have only a tiny foothold in the market, which doesn't see to jibe with the 200,000 subscribers claimed by SAP for its BusinessObjects BI OnDemand service alone. Sallam also encouraged people to look at the five-year TCO figures for SaaS, emphasizing that at that point, you still don't own the software. My thought, on hearing that comment, was that a lot of buyers of conventional software are probably looking at major upgrades or replacement projects after five years.

Maybe I've talked to too many SaaS-BI and performance management customers in recent years -- Oco customer Welch's, PivotLink customers Shaklee and Rosignol North America, Adaptive Planning customer Vicor and Host Anlytics customer Elkay Manufacturing -- and have lost a bit of perspective. But low cost, fast deployment and always-up-to-date software all seem like good ideas to me.

This reasearch may get people to take a fresh look at BI alternatives, but investments and buying habits are so entrenched that you just won't see tectonic shifts. The market is more like a supertanker with a too-small rudder. Eventually the course will change, however, and for my money, the next direction will be toward more SaaS offerings, cloud services and hybrid scenarios.The five-year cost of a typical, 500-seat BI deployment ranges from about $150,000 for an open-source system to just over $1 million for the full suite from SAP BusinessObjects, IBM Cognos or Oracle. So does this research from Gartner change your mind about the type of BI vendor you would choose?

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