Will new low cost pricing models deliver the promise of “pervasive BI”?

Vendors and analysts have talked about “pervasive BI” for a long time now. In truth it has not happened. Core BI licences from large vendors such as Business Objects, Cognos, and Hyperion have remained stubbornly flat. Revenue growth in 2006 came from incremental acquisition revenues; and vendors’ growing revenues from Performance Management software, professional services, and integration software and services (e.g. data quality, MDM). Hardly “pervasive BI”.

“Commoditisation” is often mentioned in the same breath as “pervasive BI”. This has not happened either. Commoditisation is when a market is mature, i.e. 50%+ penetrated, leaving the market to the ‘late majority’ that comprises of conservative and skeptic customers. Attributes of a commoditised market are: low prices and margins, standardized and universally accepted product categories, low levels of promotion, and mass distribution. In commodity markets vendors cut R&D and marketing costs to the bone, offer lower prices to open up untapped markets, and still make a profit.

Does this sound like the BI market to you? I suspect not. I asked the ‘state of BI market development’ question during my presentation to 125 battle-hardened BI executives at the Information Age BI conference last month. Some thought the market was at the inception stage, some thought it was in growth, and some thought it was in maturity. This reflects the confused messaging from the vendors. For example, Business Objects and Hyperion have promised their investors to increase margins. In a mature market, vendors should do the opposite—reduce margins and increase sales volumes and overall profits.

This week LogiXML announced a subscription pricing model for its Logi 8 BI Platform. This is a step in the right direction. A single CPU version costs $14,995 per year, and a multiple CPU subscription costs $29,995 per year. Both options offer unlimited users (subject to server constraints) and maintenance support. The Logi 8 BI Platform includes ad hoc and OLAP reporting, BI data services including data warehousing, managed reporting including dashboards, Analysis Grid (query), and enhanced security.

For quite a while I have been saying that $20,000 to $30,000 should be the target entry level BI Total Cost of Ownership (TCO) price range. Currently the bar is set at approximately twice this at around $50,000. At $20,000 new customers can trial a BI software product without losing their shirts if it all goes pear-shaped. This price level lowers customers’ perceived risk.

What I like about LogiXML’s pricing model is its “whole product” dimension i.e. no “buts”. It is a complete solution including software product, implementation, and maintenance for the price on the tin, and is immediately available for download off the Internet. This is what a commodity really looks like. I must say in the defence of Microsoft and Oracle that they also web-publish their BI prices, however, their pricing mechanism is not straight forward and requires explanation and manual intervention, which to some degree defeats the purpose.

OK, the Logi 8 BI Platform is more of a reporting platform, rather than a fully-fledged BI platform like Cognos 8 or Business Objects XI, but this simple and complete pricing model radically increases BI product accessibility for SMBs and mid-market companies. Given this is where suppliers are now in mortal combat (see Let the battle for the mid-market commence) it will be interesting to see how other BI vendors respond. If they do, as I suspect they will, then commoditisation and pervasive BI might really start to happen.