MDM vendor Purisma just announced something which seems to me a useful idea, and then got carried away in the marketing. MDM is a fairly broad landscape, and certainly trying to fix a company’s MDM problems is a major exercise involving not just clever software but also business processes and data quality. This may all seem too much for some customers, and so a smart move is to try to reduce things to manageable proportions by tackiling some more “bite sized” issues. One good example of this is dealing with Dun & Bradstreet data. Dun & Bradstreet is a company who provide information on credit risk, and as a by-product of this have the most robust set of company data around. Hence if you want to know who owns who, Dun & Bradstreet has a pretty definitive set of data, updated on a regular basis. Companies wanting to tackle procurement quickly find that managing their supplier data on a consistent basis is a recurring headache, so standardising around Dun & Bradstreet codes for companies is a good way to get a grip on who their suppliers really are. However, keeping things up to date when the new D&B data comes out is an issue.

Purisma have bundled up their MDM application with pre-built Dun & Bradstreet data capabilities, thus creating an application of MDM that is widely applicable and can create a foot in the door for their broader MDM capabilities. This is an astute move and one I am surprised that other MDM vendors have been so slow to pick up on. Picking off niche but meaningful business problems like this one is a way of bringing the benefits of MDM software to customers and creating a bridgehead within accounts that can be broadened without having to a sell a gigantic enterprise-wide MDM project. For me it is a pity that they have chosen to hype this by calling the application an “appliance”. I have written previously about the use of this term, which was cleverly introduced by Netezza to describe their data warehouse hardware/software solutiion. By using a term that once associates with a toaster or a fridge it conjures up in the mind something that can just be plugged in and immediately works, yet this is hardly the case with a data warehouse, from Netezza or anyone else. However it is at least correct that it involves a piece of hardware. To label an MDM application a “software appliance” is stretching the term ever thinner in my view. Tech companies seem unable to resist latching on to whatever term seems to be trendy, and this is an opportunistic label. The day that an enterprise can plug in a data-related application as easily as a toaster is the day that an awful lot of consultants will be out of business, and that will not be soon.

Anyway, this is a distraction from what I otherwise think is a clever move from Purisma, which has emerged under the leadership of Pete Daffern, an impressive character who used to work for Vitria and has done an excellent job of raising Purisma’s profile. Bringing MDM applications down to manageable business problems has to be a good idea, and I would expect others to follow.

Just in case you were in any doubt that the BI software industry is going through a relatively healthy phase, you may like to ponder the latest USD 46M purchase by Microstrategy. A niche technology company perhaps? Nope - a new private jet (a Bombardier Global Express XRS to be precise) for CEO Michael Saylor. This was reported recently in, amongst others, the Washington post:

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/04/AR2007020401106.html

Saylor has always been a charismatic but eccentric character e.g.:

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A2889-2002Jan5

but even so. This is a company that in December 2006 had USD 79M in cash (past tense). Its 2006 revenues were USD 313M (up from around USD 269M in 2005) and profits of nearly USD 71M (unaudited). This makes it an unusually profitable enterprise software company. However just what the board of directors were thinking when approving this particular purchase can only be a matter of speculation. Even though Saylor has a large stake in the company surely this is the kind of thing that boards of directors of public companies are supposed to be for? Perhaps it will encourage some blue sky thinking.

Still, pity their public relations manager. You have to be impressed with the creativity here: the plane “will facilitate more effective communication and more rapid coordination with its global employees, partners, and customer base” according to their SEC filing. Good one; this wins my “brassiest PR” prize of the week.

Although I am no longer with Kalido I do like to keep up with events there, and the developer’s party for Kalido MDM 8.3 was last night in London. This release, announced on February 20th, started shipping this week and is a major version. Effectively it is “version 3″ for MDM. The MDM vendor landscape is pretty confused, with every rinky dink data quality tool now claiming itself to be an “MDM product”, presumably in the hope that someone might actually buy their product if it has a catchy label. Mostly these claims are Powerpoint-deep only, but with 56 vendors now reckoning they play as “MDM” tools the potential for confusion is high.

One useful way of distinguishing things is to think about whether the tool is primarily about operational data or analytical data. A CDI hub (like Oracle’s) is very much about taking customer data from various sources, rationalising it and spitting it out to other operational systems. Performance and the ability to deal with high volume are important here, as you are in an operational world.

Products like Kalido MDM instead worry about master data for analytical purposes, and indeed can co-exist happily with hubs. Kalido MDM assumes that there is no one single, clean, authoritative source for master data (which is the case in just about every company) and provides workflow capability for assessing the master data sources and allowing business users to view, verify update and improve master data in a controlled way, ending up with “golden copy” master data at the enterprise level. Ambitious customers can link the master data repository that results back to operational systems via EAI tools if they wish, driving master data changes back to the operational systems. Even customers religiously committed to SAP or Oracle will have to deal with master data that is from other sources, whether that be legacy systems or indeed external data from their business partners. This is where Kalido MDM can play an effective role.

In 8 Release 3 there were three major areas of improvement. The workflow capability in Kalido MDM was significantly enhanced, allowing greater customer flexibility in configuring workflow. Indeed this greater flexibility has been taken further with (finally) a complete API to the MDM product, which allows customers to slot in business-specific funcionality if they wish e.g. as a web service. New reporting tables allow customers who don’t have Kalido’s data warehouse product to better query the master data repository.

The second major improvement has been in user interface, which was always something of a weakness in KALIDO MDM. In this release over 100 customer suggestions for user interface improvements have been implemented, and from what I have heard the beta customers have been very pleased with these changes.

Finally the new release has major scale and performance improvements. Of course performance is a slippery thing, but functions such as loading and validating data and the user interface itself have speeded up by an average of two to five times (in some cases more, in some cases less) while the underlying product is capable of realistically handling five times the volume of the previous release.

These enhancements should be welcome news to existing customers like Unilever, BP, GAFRI, Labatt and Nationwide Insurance. It is never easy being a pioneer, and early customers inevitably encounter issues with early software. However from what I can tell this version of MDM really starts to deliver on the early promise (KALIDO MDM has been around since 2003), and should allow Kalido to better tackle the increasing number of MDM competitors who have recently come to the market.

Consolidation in the BI space continues as Oracle snaps up Hyperion for USD 3.3 billion (Hyperion had USD 486M of cash, so effectively the deal is USD 2.8 billion). Hyperion’s year end is June and to year end 2006 its revenues were 765M (which was 9% up over 2005). Hence this is a fairly healthy valuation of about 3.7 times trailing revenues.

The acquisition of Hyperion’s dominant financial consolidation software and excellent Essbase OLAP technology makese sense for Oracle, whose large and aggressive sales channel will be able to exploit Hyperion’s strong technology. What is less clear is what happens to Brio. Brio never quite made it up into the same league as Business Objects and Cognos, and given that Oracle already has various reporting software of varying quality it is unclear whether Oracle will really exploit Brio or just let it quietly shuffle off to that crowded house in the sky for acquired BI software. Certainly Brio customers need to carefully think about their options.

At least this puts an end to the rumour that Oracle was going to buy Business Objects. Or does it?

To go with Business Objects’ excellent Q4 results, Microstrategy also reported good figures, suggesting that the BI industry is in generally good shape. Revenue was USD 92.6M, up 20% over last year. Just USD 36.6M of this was license revenue, but this was 17% up on last year.

There was very healthy USD 32M operating margin, which means an operating margin of 34%. Other measures were also healthy e.g. days sales outstanding of just 54, and cash flow from operations of USD 26M. Admittedly this is down a little as expenses have risen by 22% year over year, but all the same this is a healthy business.

These results are all the more significant because Microstrategy has been in rather a flat phase for some time, with licence growth almost flat since early 2005. This perky set of results will be all the more welcome for its staff and shareholders given this background.

Business Objects delivered a very solid Q4, with revenue of USD 371M up 22% from a year previously. The good news is that the increase was mainly due to license revenue, at USD 180M up 16%. The operating margin of 23.6% was the best the company has ever achieved.

The only small cloud on the horizon was that the core BI business was actually in decline in license terms. The EIM revenue was USD 23M (well done to the First Logic boys and girls), USD 30M in enterprise perfromance management, and USD 127M (down 4% year over year) in the core BI products. This apparently paradoxical result is in line with my long-standing thesis about the saturation of the BI tools market in enterprises.

There were 13 deals in excess of USD 1M (up from nine last quarter), and overall in 2006 there were 35 deals of this size, which is actually down form 46 last year. Overall growth in Q4 was geographically well spread, with Europe up 25%, Asia Pacific 26% and the Americas 19%. The results reflect some wise acqusitions, since without the EIM/First Logic revenue, and the EPM revenue (based around the acquired SRC software and to a lesser exent the ALG acqusition) things would not look so rosy. Still, this vindicates the strategy of trying to move up the food chain in BI beyond core reporting, so credit where credit is due.

FAST is the latest enterprise search company to dip its toe in the water of business intelligence, following Autonomy’s recent announcements. In the case of FAST, which is arguably the leader in enterprise search (and must surely be the leading Norwegian software company), they have done so through acquisition. They bought Corporate Radar, a small BI vendor who had some quite clever reporting technology (based around the Microsoft platform) that was quite flexible, and browser-based. On one project that I encountered at Kalido in the US, it was particularly good at building specialist financial reports e.g. gross margin “waterfall” analysis.

What is less clear to me is how “FAST Radar” as it is now known, really integrates with the FAST search engine. Superficially it is appealing to have “search” applied to BI, after all, if Google can scan the whole internet in seconds, why can I never find my monthly sales figures? However the problem in dealing with structured data is the ambiguity of metadata within corporate organisations (”which sales figures do you mean, exactly”), a problem that search technologies, clever though they are, barely scratch the surface of. Putting a very efficient index on a keyword is great for text searching, but it is less obvious to me how useful this would be in resolving ambiguous or inconsistent metadata. Hence I wonder whether the “integration” of these technologies goes much more than skin deep.

If anyone out there has practical experience of a project that uses one of these search engines combined with a BI tool or data warehouse, then please make a comment on this blog, as I am sure that your experiences will be of considerable interest to others.

HP continues with its plans for the business intelligence space with an announcement of in-house data warehouse technology:

http://www.computerworld.com:80/action/article.do?command=viewArticleBasic&articleId=9008218&intsrc=news_ts_head

with a new business unit. The offering with be based around HP’s attempt at a “data warehouse appliance”, called Neoview. This is a competitor to Teradata and Netezza, but at this stage it is hard to tell how functional this is, since it is unclear that there are any deployed customers other than HP itself.

The timing of this announcement is curious given HP’s acquisition of data warehouse consultancy Knightsbridge. Certainly data warehousing is a big market and Teradata is a tempting target - after all, most of the really big data warehouse deployments in retail, telco and retail banking use Teradata. There are lots and lots of juicy services to be provided in implementing an “appliance”, which in fact is no such thing. An appliance implies something that you just plug in, whereas data warehouse appliances are just a fast piece of hardware and a proprietary database, still requiring all the usual integration efforts, but with the added twist of non-standard database technology. Certainly plenty of business for consultants there.

However HP’s home-grown offering will not sit well with its newly acquired Knightsbridge consulting services, who made their reputation through a quite fiercely vendor-independent culture which always prided itself in choosing the best solution for the customer. People trust independent consultants to give them objective advice, since they are not (or at least they hope they are not) tied to particular vendor offerings. Presumably HP’s consultants will be pushing HP’s data warehouse solution in preference to alternatives, and so can hardly be trusted as impartial observers of the market. An analogy would be with IBM consultants, who while they may work with non-IBM software are clearly going to push IBM’s offerings given half a chance.

If you were a truly independent consultant how would you react to a brand new data warehouse appliance with a track record only of one deployment, and that in the vendor itself? Would you immediately be pushing that as your preferred solution, or would you be counseling caution, urging customers to wait and see how the new tool settles down in the market and how early customers get on with it? If you are a Knightsbridge consultant now working for HP, what would your advice be? Would it be any different to the advice you’d have offered in December 2006 before you became part of HP?

This kind of conflict of interest is what makes thing difficult for customers when choosing consultants. It is hard to find ones who are truly independent. Of course consultants always have their own agenda, but usually this is about maximising billable hours. If they are tied to a particular solution then that is fine if you are already committed to that solution, but you will need to look elsewhere for objective advice about it.

In a logical move that I would say was overdue, Teradata finally became its own boss. It has long been nestling under the wing of NCR, but there was little obvious synergy between ATM machines and data warehouse database software, and so it seems to me eminently sensible for Teradata to stand on its own two feet. Running two quite different businesses with the same company is always a problem, as different business models lead to natural tensions as the company tries to accommodate different needs within the same corporate structure.

Teradata accounts for about USD 1.5 billion of revenue, around one third of NCR. The challenge for Teradata is growth. It has succeeded when others failed in the specialist database market, dominating the high end data warehouse market despite competing with Oracle, IBM and (to a lesser extent) Microsoft. Yet revenues have been pretty flat in the last couple of years, and there is new competition in the form of start-up Netezza, which although tiny compared to Teradata is nonetheless making steady inroads, and causing pricing pressure. Teradata has generally loyal customers though notoriously opaque pricing, which has enabled it to achieve good margins (especially on support), though its finances were never entirely clear as they were wrapped up with NCR. Splitting the company out will allow the market to value Teradata on its own merits.

Business intelligence applications typically deal with data that is already stored, often in a depressing number of places i.e. a number greater than 1. Much BI data is of its nature not real-time e.g. looking at monthly averages or trends. However at the other end of the spectrum there are some applications that are truly real-time, and not just in the sense that a marketer puts the term in a brochure.

An interesting start-up in this area is StreamBase, which specialise in genuinely real-time applications, such as trading systems but also inventory monitoring and anti-fraud applications. StreamBase provides StreamSQL, which essentially extends SQL to a real-time environment, a run-time engine as well as a graphical developer environment that allows transformation logic to be written. For example you might have a need to compare the current stock price of an equity to a competitor, and take some action e.g.”buy” if the price hits some threshold related to the competitor. Such applications would occur in memory, but StreamSQL also provides in-memory hash tables and also an embedded database in case you want to persist data (temporarily or permanently, respectively). To continue the trading example, you might want to take an action based on the stock price relative to its average over the last month, for which you would need to store some data temporarily in order to carry out the calculation.

Set up in 2003 by database luminary Mike Stonebraker (who founded Ingres and Illustra) the company has now done two venture rounds, including a series B round led by premier league VC Accel. They have over 60 employees and 50 customers, though this includes pilot customers i.e. not all these are fully paying yet. Public customers include Goldman Sachs and Bridgewater, a leading hedge fund. The company is cagey about revenues but assures me that they are growing.

StreamBase plans to provide in its product roadmap easier integration of real-time and historical data i.e. more StreamSQL enhancements, continued performance enhancements and improved ease of programmability. Two OEM agreements are already in place.

Competition is mostly in-house coding, though there are some vertical point solutions (Progress software in trading) and there is potentially some overlap with EAI tools at some point. For example, StreamBase partner with Tibco Rendezvous but there is an offering of Tibco for event processing that could potentially compete. From a marketing viewpoint the relationship to EAI and middleware tools will need to be carefully stressed as these tools themselves develop. However the company has certainly picked an attractive niche to operate in, and its high quality VC backers and experienced management will make it a credible player.