Reading between the performance management lines

I recently wrote about Business Object’s acquisition of Cartesis. In that article I suggested that the performance management market was consolidating and that OutlookSoft was the next likely target. I also suggested that SAP was a likely acquirer. I then received an email from a senior executive at OutlookSoft saying that this was “an interesting analysis” and that he enjoyed the article very much. Should I have taken this as a hint? Should I have rushed out and bought shares in OutlookSoft (leaving aside the fact that it isn’t/wasn’t a public company)? Perhaps not—still it’s nice to be proved right.

On the other hand the performance management market is now boring. I don’t mean it’s boring for those companies that need the capabilities of performance management but that, from an analyst’s perspective, the most interesting markets are where there are lots of small players doing innovative things—and there aren’t any left in the performance management space. However, that doesn’t mean that there aren’t some interesting things that one can learn from this further acquisition.

The first thing is with respect specifically to SAP and OutlookSoft. The latter is purely a Microsoft-based solution and SAP already has performance management capabilities within its ERP stack. So, is this good news for either OutlookSoft or SAP users? Well, if the two products are going to be fully integrated it will clearly take a while; or OutlookSoft could just disappear as, for example, Callixa did when it was bought by SAP. Time will tell but in the short term this should make the market easier for the likes of Cognos and Business Objects as uncertainty about the future for OutlookSoft puts off potential purchasers.

On a further note, SAP and Microsoft recently announced further integration between the SAP environment and Microsoft Office and now SAP acquires a purely Microsoft based product. Hmm, this looks suspicious but I regard one interesting fact as simply that, and two as a co-incidence, it is only when you get three that you start to have a trend—therefore look out for number three.

Another thought is that performance management is consolidating but there are no obvious signs of consolidation in the business intelligence market. This suggests that, despite its longevity, the BI market is nowhere near as mature as the performance management market: there are still lots of small companies doing interesting things. Indeed, the BI market is in a transition phase.

An interesting way to look at the BI market is to consider it in terms of the ‘long tail’. Put simply, this is the argument that when you first release a product such as a Pink Floyd album (let’s say) then you get lots of initial sales and then sales tail off. But that tail can last for many years and although the rate of sales is slow the length of the tail means that the long tail sales can actually exceed the initial surge of sales. Now, apply this to the BI market. What the BI vendors (and data warehouses for that matter) have been doing historically is to address the initial surge (the business analysts, data miners and so forth, who spend a lot of time with BI) but now they need to address the needs of ordinary business people (sometimes called the ‘democratisation’ of BI) who only occasionally want to run queries. The question is: how do they do that? I am not convinced that the answer is clear yet: there are user interface issues, access issues, visualisation issues and scalability issues to mention just a few.

Anyway, that leads me back to the question of acquisition. The big mover in the BI world right now is H-P. The company is setting its stall out as a BI player but the truth is that it doesn’t have a BI offering per se: infrastructure, yes, but not BI itself. So, who might it buy? Cognos and Business Objects are the obvious targets barring a decision to retire and sell up by the founders of SAS, Information Builders or MicroStrategy. But Business Objects is French and has a different culture so my guess would be Cognos. Alternatively (or as well) H-P might move in the direction of more infrastructure, in which case Informatica would be an obvious target.