|
|
Posted by YellowFin Announcements on 10/10/07 12:02
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.
Navigation:
[Reply to this message]
|