GLG News by Sid Adelman

Implications: The agreement gives additional credibility to Informatica's products. SAP's use of Informatica's products greatly rounds out SAP's BI capabilities.

Analysis: Oracle's one-stop-shop for its ERP, its database, its data warehouse and business intelligence made it a desirable choice for organizations looking to miniize their number of vendors and have a single vendor they could come to for support. With SAP incorporating most of the robust capabilities of Informatica into their data warehouse delivery, the Oracle suite is not as compelling.

Implications: This could have a significant impact on Teradata's install base. This could have a significant impact on Teradata's growth within existing customers. This is major as the data in most data warehouses of growing dramatically.

Analysis: Teradata is far too entenched at Wal Mart for them to displace the Teradata data warehouse activity which being so actively used.

Randy Mott was the old CIO at Wal Mart and has the connections to be able to get a toehold in Wal Mart.

It's possible that many of the new applications and possibly stand alone applications will be implemented with HP's Neoview but they would not be part of the Wal Mart enterprise data warehouse.

Implications: Most large and medium size organizations have a business intelligence and a data warehouse capability. This can mean the difference in how well an organization markets to its customers, how it monitors its suppliers, how it supports its employees, and how it controls its costs. Being able to properly analyze data including data mining and predictive analytics can help set a corporation's strategic direction, keep it from making the big mistakes, and can help uncover problems before they become unmanageable and very costly.

Analysis: Data is an asset but few corporations make effective use of their data.

Analysts (those that analyze corporations) should understand how well these corporations make use of their data and how well they are using business intelligence and data warehouse. They should inquire into the organization's measurement of the benefits derived.

Implications: Oracle has acquired 31 companies in the last two years. Will the customers of these acquistions stay with Oracle? Some customers are unhappy with the new relationship, the pricing, and the support. Customers are concerned that Oracle will somehow try to force them into more Oracle centric products and force them into using the Oracle database management system. For example, Oracle will not be supporting DB2 on PeopleSoft as well as it supports the Oracle DBMS on PeopleSoft.

Analysis: CA had the reputation for buying companies, cutting costs in development and support and cashing the maintenance checks. Some customers are concerned that this will also be Oracle's plan for certain of the acquired products.

Because of the major costs of maintaining duplicate products Oracle will have to decide which products to stabilize (that means no new development and very little support, and no support for new versions). Rather than wait to see what happens, customers may decide to not even consider buying acquired products. Those that are running the acquired products may be looking at an exit strategy.

Implications: Data Warehouse (DW) data requirements are tripling every three years.

DW appliances are more cost effective than solutions from Oracle, DB2 (IBM), or Teradata.
 
DW appliances will take business away from Oracle, DB2 (IBM) and Teradata (NCR).

Analysis: DW appliance vendors, Netezza, DATAllegro and Sun (in partnership with Greenplum) offer good performance at a much reduced cost of ownership.

DW appliances are more appropriate to single solutions such as market basket analysis than to enterprise data warehouses that run mixed workloads.

Applications that could not be cost justified on Teradata, Oracle, or DB2 are being considered for implementation on the DW appliances.

Implications: Oracle now has a more complete suite of business intelligence products.

There will be an impact on the pure-play BI vendors including Business Objects, Cognos, and Microstrategy.

Existing Hyperion customers will be concerned.

Analysis: Oracle's purchase of Hyperion means that Oracle has rounded out its suite of business intelligence (BI) products with a strong multidimensional product (Essbase) and a powerful financial analysis capability. The Oracle BI suite will be easier to sell to customers looking to limit their number of vendors. We are seeing this vendor limitation initiate becoming more important. The enhanced suite will hurt Business Objects, Cognos, Microstrategy, and Informatica.

Oracle's ability to integrate the Hyperion products and the Hyperion workforce will cause concern for Hyperion customers. While Oracle will continue to cash the maintenance and support checks, it's not clear if they will continue to enhance the Hyperion products. Layoffs and voluntary resignations will have an impact on new development and support and support has never been Oracle's strong point.

No customer looks forward to converting to a new tool, especially if the new tool provides little new usable function. Customers will be wondering if they will be asked to convert to an Oracle alternative. If they have to convert, they may choose to move to one of the pure-play alternatives such as Business Objects, Cognos, or Microstrategy.

Implications: Green is in right now and organizations are looking for opportunities to enhance their green credentials but are looking for ways to improve their profits as well

The electricity to run computers, including cooling and other related requirements, uses significant amounts of electricity. Energy efficiency will reduce costs and look green and sustainable.

Hardware consolidation can significantly reduce electricity usage. This consolidation will have an impact on both hardware and software vendors.

Analysis: The number of computers has grown dramatically in the last decade. This has increased the expenses related to hardware and software acquisition and has also greatly increased the energy costs to run those machines.

Organizations are looking to cut their energy costs and are starting to focus on hardware consolidation to lower those costs. This could result in fewer machines and less software revenue for the companies such as Microsoft, Oracle, and IBM that supply the operating systems and the database management systems that run on those machines.

Hardware vendors such as Intel, AMD, and Sun are working to make their products more energy efficient and their sales teams will be touting those capabilities for the cost savings and for the green PR associated with energy efficiency.

Implications:  Oracle has all the categories of BI products necessary for a data warehouse implementation.

It will be harder for the independents (Business Objects, Cognos, Microstrategy, Informatica, SAS) to sell against them.

Analysis: Oracle's business intelligence suite includes data modeling, the relational database management system (RDBMS), extract transform and load (ETL), business intelligence tool, analytics, financial analysis and performance.

Oracle is now is now able to market a complete suite of BI products along with their ERP and their consulting services. No other vendor has this capability. Organizations often want to purchase from a single vendor to reduce finger pointing and increase the chances that the products all work well together. This is even more so today as organizations are working hard to reduce their number of vendors.

It remains to be seen how well they are able to integrate Hyperion as well as integrate the other BI software companies they purchased in 2006, Sunopsis and Siebel. Integrating software products into a cohesive set is difficult and integrating the workforce can be even more difficult.

Implications: CEOs now realize that taking action to improve our planet can also  lower their costs.
Companies are looking for opportunities that reduce their use of energy, lower utility bills, and improve the health of their employees.
Business Intelligence (BI) can provide information to identify opportunities for cost saving and sustainability.

Analysis: Information Technology (IT) and BI will be at the forefront of efforts to improve profitability by lowering costs associated with sustainability. Any organization that does not look for these opportunities will be left behind their competition. Annual reports and web sites will give some indication of what companies are doing but analysts would be advised to ask the questions about sustainability programs and how they will affect the company's costs and bottom line.

Implications:  Taking environmental action is good for business

Companies are paying closer attention to the environment's effect on the bottom line.

Some organizations are being headed up now by executives who are more socially responsible than those we have seen in the past.

Analysis: Companies are more and more aware of the "green" opportunities as well as the potential problems of being unaware such as utility companies knowing what's in store as new regulations come along.

In addition to saving costs such as electricity, water, and disposal costs, some organizations are looking into opportunities for revenue coming from environmentally sensitive programs and services such as energy saving projects and consulting.

It's likely that Wall Street will begin assigning a higher valuation to companies that are considered "green."

Implications: The companies that have figured out how to retain profitable customers will be the survivors. Most organizations today do not do an adequate job of understanding why their customers leave. Understanding how organizations support their customers should be a key determinant of a company's value.

Analysis: Customer Relationship Management (CRM) has been around for awhile and the promise has been low customer attrition but most organizations have not achieved the the high rates of customer retention they were hoping for. The ability to retain highly profitable customers (assuming the organization can make those determinations) will make the difference between a company being highly profitable and being an also-ran.

As GLG clients evaluate companies with customers, the GLG client will want to understand churn, changes in churn rate, churn by level of customer profitability, what the company is doing to understand their customers (demographics, psychographics, channels employed, preferences - how they like to be serviced, how they like to be contacted), measures of customer loyalty, measures of customer satisfaction, the ability of customer support to have a 360 degree view of the customer including the percentage of the customer's wallet and the organization's ability to identify behaviors likely to cause a customer to close an account. GLG clients should be asking some major questions about a Customer database that has all the relevant information that allows customer service to respond appropriately, and for sales and marketing to promote the right products and services and do so in a manner that does not annoy the customer.

Implications: Tangible benefits are often required to support data warehouse budgets. Business Intelligence managers have difficulty getting credit for the benefits that come from data warehouse applications. Tight purse strings mean less revenue for the vendors including Business Objects, Cognos, Microstrategy, Oracle, IBM (DB2), Sybase, Teradata, Hyperion, Informatica and Microsoft.

Analysis: The benefits of business intelligence (BI) and data warehouse are frequently difficult to determine and then quantify. Other factors have contributed to the benefits so the contribution from BI and DW is often indeterminant. Many of these projects require cost justification (cost/benefit analysis) and getting managers to commit to solid dollar benefits (as opposed to the intangible benefits) is challenging. The hardware and software vendors that sell in this space have a more difficult time because of tight budgets and the cost justification requirement.

Implications: SAP is trying to make its installation easier. SAP would like to minimize the time and cost of the typical installation

Analysis: The typical SAP installation takes years, many dollars for the software and for the very expensive consultants who are critical to the implementation - SAP consultants are in high demand. In addition, the installing organization must dedicate key people who know the business and know how to customize SAP for that organization. SAP is not unique among ERPs in the time, cost and effort associated with any ERP implementation.

SAP with its simpler announced product might be able to target medium size organizations and large organizations that have been reluctant to make the big commitment to a full-blown ERP. This new product should also help position them to compete more effectively with Oracle.

Implications: Database growth is challenging the ability to add new applications. Oracle database administrators are finding it difficult to keep up with new storage requirements.

Analysis: The number of Oracle installations larger than one terabyte is growing because of new applications, more historical data for business intelligence, data compliance requirements, and unstructured data (text, video,...). Database administrators (DBAs) are challenged to design and administer these large databases and to provide a satisfactory level of performance including response time and support for a large number of concurrent users. These challenges will limit the number of new applications and delay projects that have been approved and budgeted.

Implications: We are seeing more and more failed IT projects. Oracle has to cover $6.9 million in costs from a failed water utility project.

Analysis: Failed IT projects cause senior management to question the ability of IT to realize the benefits that should be accruing from new computer systems and may keep major projects from being approved. The impact of this failed project will continue to hurt Oracle's reputation.