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IBMs Vision for Analytics in the Midmarket: gaining deeper business insight

I recently attended an IBM analyst meeting focused on solutions for the midmarket.  What caught my attention was the focus on analytics as an important and growing revenue opportunity for IBM.  In fact, IBM mentioned during the meeting that 70 percent of midsized firms are looking for analytics solutions.  It is clear from this meeting that IBM wants to bring a comprehensive set of analytical tools to the midsize companies.  Unlike some of IBM’s packaging, analytics tools are being packaged specifically for the midmarket so that they can be more consumable and affordable.

Analytics is fast becoming a high priority for companies as a result of the explosion in the variety, velocity, and volume of data with a potential impact on business decision-making. Much of this data is unstructured, such as the text included in customer service records, customer sentiment data in social media, or streams of data from instrumented devices.  Making good business decisions  often requires analysis across multiple sources and types of data.  Companies often have independent systems designed to manage business processes ranging from order/inventory to point of sales, marketing research, and customer relationship management. The challenge for many of these companies is that answering the most urgent questions about the business requires analysis across all of these independent systems. Even a small company with a few hundred employees may have a dozen systems are are disconnected and keep the company from having a full picture of the business.

Therefore, it is not surprising that some midsize companies are finding they can benefit from business analytics solutions. Yet, while some midsize companies are finding ways to get the answers they want using analytics, the word needs to spread to other companies still struggling with manual spreadsheet analysis that doesn’t go deep enough.

IBM is going to market through its business partners that typically support midsize companies with a variety of solutions. These business partners are being asked by their clients in the midmarket to help them implement technology solutions that will enable them to make smarter business decisions. They want to find new ways to deeper their understanding of customer expectations and priorities. For example, a midsize retailer might be trying to figure out why certain products are returned while others sell well.  The analytics market offers huge opportunity for IBM and its partners.

The approach IBM is taking with analytics for the mid-market is to offer its partners a pre-configuration of hardware and software into a single system at a price point  that is both affordable for midsized companies, but also has enough of a margin to make it attractive to a partner channel.

However, the challenge for partners is to change the traditional way they have gone to market.  Many partners that have built successful businesses by specializing in hardware sales or a specific category of software such as IBM  Rational find that they need to meet a broader set of client requirements.  They now need to both learn the new analytics products and be ready to sell and implement solutions differently.  Selling analytics to the mid market requires much more than a technical sell. Partners need to have a thorough understanding of the business context in which the analytics will be used to help customer visualize the potential business value.

One of IBM’s offerings that partners should be looking at is  the IBM Smart Analytics System 5710, which is a database appliance for business intelligence and data analytics targeted at the SMB market. The IBM Smart Analytics System 5710 is based on IBM System x, runs Linux, and includes InfoSphere Warehouse Departmental Edition and Cognos 10 Business Intelligence Reporting and Query.  The system is designed to enable partners to get their clients up and running very quickly a broad set of  analytics and business intelligence capabilities. I expect that you will see a lot more of this type of packaging from IBM with collaboration from its solution business partners.

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Cashing in on the Cloud

I am welcoming my business partner, Judith Hurwitz as a contributor on my blog.  The following is her observations about the partner ecosystem in the cloud.

Judith Hurwitz

I have been spending quite a bit of time these days at Cloud Computing events. Some of these events, like the Cloud Camps are wonderful opportunities for customers, vendors, consulted, and interested parties to exchange ideas in a very interactive format. If you haven’t been to one I strongly recommend them.  Dave Nielsen who is one of the founders of the Cloud Camp concept has done a great job not just jump starting these events but participating in most of them around the world.  In addition, Marcia Kaufman and I have been conducting a number of half and full day Introduction to Cloud Computing seminars in different cities.  What has been the most interesting observation from my view is that customers are no longer sitting on the side lines with their arms crossed. Customers are ready and eager to jump into to this new computing paradigm.  Often they are urged on by business leaders who instinctively see the value in turning computing into a scalable utility.  So, for the first time, there is a clear sense that there may well be money to be made.

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Five Steps to Effective SOA Governance

I will be presenting a session titled “Five Steps to Effective SOA Governance” in BrightTALK’s online SOA Governance Summit on Thursday, February 25. The summit includes five webcasts on different aspects of industry best practices for SOA Governance. This summit is sponsored in association with the ITGRC Forum. Please join me for the live session by clicking on this link or check out the webcast online at BrightTALK at a later date.

While I was at the IBM Pulse2010 Conference for Integrated Service Management this week, I spoke with several IBM executives about governance issues. I’ve had SOA Governance on my mind because I was preparing for this webcast and found many opportunities at Pulse2010 to discuss governance as it relates to SOA, cloud, security, and business outcomes.

While there are many layers of complexity around governance, here is one basic truth that we discussed.  There are two types of governance  that can impact your business. One is the governance you need to do to keep out of jail – or at least out of trouble with government and industry regulators – and the second is the governance you want to do to ensure that your company has the flexibility to grow and innovate.  This is an important distinction.  You can establish tightly regulated governance policies with a goal of  passing your required audits, but without the right level of governance around business process issues you can’t anticipate change and find opportunities in unexpected challenges.

If you are hoping to obtain better business outcomes ( and who isn’t?) you will need to work hard at improving business and IT collaboration. Implementing a Service Oriented Architecture helps an organization to align IT with business goals and to succeed in rapidly changing business environments. In order for you to achieve these benefits of SOA, you will need to implement a governance model. SOA governance is critical for achieving business value from your SOA initiative by ensuring the reusability of business services.

What is SOA Governance? It helps define a methodology for creating, managing, and safeguarding your movement to SOA. It also supports the management of business rules in a standardized way across the business.

How do you create effective SOA Governance for your organization? It is important to fit your governance model to your SOA. You need to start small and grow.

Here are five key steps to effective SOA Governance.

  1. Approach executive management with a justification for SOA governance.
  2. Create a comprehensive plan to create the right business services with executive support.
  3. Establish process for organizational change since managing change is as important as creating SOA services.
  4. Balance risk with oversight to find a proper balance for SOA governance.
  5. Plan for the lifecycle of business services.

SOA Governance is all about finding the right balance for your organization. You need to create the right set of business services at the right level of granularity to support the business. If your services are too narrow and technically defined, then they may not have the right meaning for the business. In order to achieve business success with SOA, you need to implement a SOA governance model that ensures business service reuse and business value.

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The battle to grab customers in a down market

I attended the HP Analyst Meeting in Boston a few weeks ago and had several discussions with the business intelligence (BI) group. It is clear to me that HP is struggling to try to figure out the best way to sell in this type of down market. Obviously, this isn’t easy for anyone.  HP’s approach to solving this problem for its BI, data warehousing, and analytics solutions was to create a BI solutions group consisting of consulting (based on the 2006 Knightsbridge acquisition) and technology (Neoview, an integrated hardware and software platform for enterprise data warehousing).  One of the best articulations of the approach HP has adopted came from a discussion by a sales executive who is on the front lines of trying to convince customers to part with cash. What struck me was the coordinated effort that was necessary to sell to a large global organization with huge data management challenges.  This got me thinking about what it takes to sell in a very tough market.

To be successful, this sales person went all out. The Neoview product team and BI consultants all pulled to together to provide the right solution for the customer. Over the course of about ten weeks they conducted at least 100 interviews with the company to build strategy, roadmaps, and ROI estimates. The  team worked with the customer to create a master plan that showed how HP could help the company with its goal of transforming its business.

The HP sales team leveraged many different resources to make sure they had an excellent understanding of the customer’s needs and that the company understood how HP could help. HP made sure to get executive sponsors in key leadership positions at the customer organization. They also brought in some of HP’s top thought leaders and made sure that happy customers were available to discuss their experiences. In addition, HP leveraged its partner network (including Ab Initio, SAS, and SAP Business Objects) to provide a complete solution.

Neoview was a good fit for the customer’s data management challenges. Problems with inconsistent customer information and disconnected IT systems were so hard to manage that it was becoming impossible for IT to adequately support the business. This customer’s top priorities were to regain control of its existing analytics data store and revamp enterprise customer intelligence and enterprise risk management. They liked the way Neoview was built. It is based on HP’s NonStop engineering expertise that has been used for over 30 years in industries such as financial services (stock exchanges) and telecommunication (switching) where the management of vast amounts of data is essential. Neoview is designed to support hundreds of terabytes of data and over one thousand processors. The customer also had some concerns about issues like getting its team up to speed on the product. HP stepped up to meet their concern by offering training and help with Neoview’s operation to ensure a smooth transition..

As I stepped back from this discussion, it occurred to me that successful technology sales in this type of complex market is incredibly challenging. It is simply not enough to make an announcement and hope for the best. On the one hand,  the ingredients for a successful sale  sound pretty simple – you need to understand the customer’s pain and provide the right solution at the right price. Easy? Try telling that to a team that just implemented a full-scale, coordinated sales push, made all the right moves, and beat out formidable competitors to win the sale. It’s not so easy, particularly with a complicated IT solution in a market where  the business demands fast and cost effective results.And, if it takes such a coordinated effort to win one sale, how realistic is it to expect to sustain these efforts over the long term?

There are three main requirements for selling IT products and solutions in today’s market:

Get the basics right.You need to provide good technology at the right price. Your marketing plan needs to be based on clear and concise messages and your sales team needs to be able to articulate  those messages in a way  that is just right for your customer. This sounds like a good plan in any market. The difference today is that you can’t count on some of the sales that might previously have been considered “low-hanging fruit”. For example, assume you are preparing a proof-of-concept for a prospective customer and several of this company’s developers know you and your product from their work at other companies. Although it is helpful to have strong supporters of your product on the prospect’s IT team, their support can not overcome a product or solution that doesn’t solve real business problems. Today, the business is demanding more from IT – more business value, more trusted data, more control over costs, and more control over project time lines.

Understand your customer’s needs. You need to understand your customer’s challenges and expectations in order to make sure your product/solution is a good fit One of the most common mistakes that software product marketing teams make when preparing marketing materials is to focus on the outstanding and differentiating features of their product from a product-centric instead of a customer-centric point of view. You need to understand what problem you are solving for your customer and how your solution will solve this problem faster-cheaper-or with more flexibility for future changes than your competitors products. An understand of customer needs should happen at two levels. First, it helps to look at customers in a vertical market so your solution and  marketing strategy account for industry specific complexities and challenges. Second, you need to understand the requirements of the prospect at hand -within the context of its industry as well as unique situations such as a recent acquisition or internal changes that may impact their sales decision.

Develop a coordinated and well organized approach. The difference between a good sales effort and a great one is in the way internal teams and business partners collaborate to put knowledge about customer needs and product/solution capabilities together to find the right fit for the customer. For many software vendors, the services or consulting team (internal team or external partnership) has a large role to play to help close the deal. For example, regulatory requirements in industries such as  health care and financial services industries are continuing to change making significant demands on IT environments for companies in these industries. Although, you may have a great solution for handling vast amounts of data and improving data security and governance, you may not have the opportunity to prove it to your prospect without a coordinated sales effort. By bringing your product and sales teams together with a consulting team with deep experience in the regulatory and data requirements for health care and financial services you will be better equipped to show the business value of your solution.

As you try to finalize your deal, it often comes down to very similar issues across different types of customers.  They are all looking for quick, inexpensive fixes to hard problems! The reality is that there are no easy solutions to closing deals in this economy. Understanding what the customer needs is hard, but  what is even harder is making all of this scalable.


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What happens when your BI vendor gets acquired?

With all of the acquisitions happening in the business intelligence space, customers are in a state of confusion. What do all of these changes mean — both short term and long term? In my view, it is best to take a pragmatic approach to this changing market landscape. This acquisition spree in BI is impacting as many as 80,000 customers who use business intelligence software from Hyperion, Business Objects, or Cognos. What should customers be asking their vendors about the future directions of their products? All three BI vendors have either just been acquired or are soon to be acquired by three large IT companies – Oracle, SAP, and IBM, respectively. Is it business as usual or do the IT managers need to alter their business relationships and plans for business intelligence implementations now that a wave of consolidation is underway?

Customer concerns about the re-alignment in the business intelligence area tend to fall into three categories: impact on legacy environments, impact on future buying decisions, and technical innovation. Management issues will vary with how business intelligence software has been deployed at their companies and how well integrated this software has been with other information management software.

Legacy environments. Many companies tend to use BI tools for traditional management reporting. In general, they like to stick with what they know and what their users are trained to use. Therefore, they want to be assured that they can continue using the familiar reporting tools in the same way. While most managers assume that once an acquisition is complete, there will be new operating efficiencies. What they don’t always know is whether those efficiencies will translate to savings. They also would like to understand how the company might benefit from the fact that a larger company with more resources has bought the company they have been dealing with. How will my company benefit from the acquisition? Will there be any changes in the sales and service teams? What about pricing issues and planned upgrades?

Typically, it will take a while before changes are evident. For example, if you are getting good value from your use of Crystal Reports—the Business Objects’ reporting solution designed to support business modeling, analysis, and decision making – it really may not matter to you which company purchased Business Objects.

Ironically, some of the most important issues that might emerge happen when customers merge with each other. For example, one company might have standardized on Cognos for its analysis and reporting while the company being acquired uses Business Objects as a standard. Since large enterprises rely on business intelligence software to gain insight into production, sales, revenue, or other data across divisions and subsidiaries, too many tools may make decision making more difficult.

It is interesting that these acquisitions are hitting the market at the same time that companies are trying to move from a departmental view of data to an enterprise perspective. A unified and standardized approach to information management across the enterprise is becoming a top priority. Companies that have accumulated many different BI vendor software may use this time of change to re-evaluate a BI strategy.

Typically companies are used to managing multiple software components from multiple vendors. The expectation is that the consolidation of two or more of a single vendor will lead to benefits resulting from the tighter integration of the products. This is often the best outcome in terms of support, training, and management. However, this is typically a multi-year effort by the vendors building a unified portfolio based on acquired software. As businesses move from a traditional siloed single purpose data warehouse to information integration and analytics, having one vendor to call is often a welcome change as companies try to simplify the management of its infrastructure.

Impact on Future Buying Decisions

The situation may be a little different if a customer is in the middle of a proof of concept (POC) for a project designed to develop a single view of a company’s customer base. How will the recent acquisitions in the business intelligence market impact how businesses to move forward?

Consider the example of a large bank that had recently made a significant acquisition. The bank wanted to understand its most profitable customers across the newly merged company. Customer history and sales data was retained in a siloed manner by line of business and there was no integration between the data for the two companies. This company used Cognos for many of their executive level reports, but now management had raised concerns about data quality.

In order to develop a single view of customer they needed to look for incompatibilities and inconsistencies in the disparate data sources. These data sources needed to be integrated and IT needed to assure the business that the information was accurate, complete, and trust worthy. The bank selected Informatica to provide the software needed to help with the integration and to improve the quality of its data.

Informatica has a comprehensive solution for data integration and data quality. In addition, just a few months ago Informatica and Cognos announced an expansion of their strategic relationship. This partnership fit well into the CIO’s priority to consolidate all the many disconnected vendors in use in IT and to ensure that the integrations between different applications are as tightly integrated as possible. Now, suddenly Cognos is part of IBM and a direct competitor to Informatica. What should the CIO do? Certainly IBM is committed to supporting all of Cognos’ existing partnerships. You should not have to change your plans because of the acquisition, however there are questions to ask about how things will change in the future.

Innovation

All the BI vendors mentioned above have well-established partner relationships with emerging information management software companies. There has been a lot of customer support for the creation of tighter integrations between the information management infrastructure and the business intelligence layer. Companies have recognized that the reporting structure becomes meaningless if the supporting data cannot be trusted.

The partnerships have been important because much of the important innovation comes from small emerging companies. Partnerships with major players makes it easier for the company to leverage innovation with lower risk. The established players can provide the integration with the analytics and reporting technology. As companies attempt to unlock much of the data that has been previously unreachable at the enterprise level, it will become much more important to have a unified approach to information quality, information integration, and business intelligence. Market consolidation will help ensure that innovation is better utilized in a predictable manner.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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