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Vendor Rating: Business Objects
27 January 2003
Howard Dresner

Document Type:  Research Note
Note Number:  VDR-19-1048
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Business Objects is expanding to provide an end-to-end business intelligence solution. Although its core product line has wide acceptance in the industry, its forays into new areas face challenges.


Business Objects Overall Rating: Positive

What You Need to Know

Business Objects' solid management team, financial standing and marketing initiatives warrant an overall rating of "positive." Although its strategies regarding BusinessObjects Data Integrator (extraction, transformation and loading) and BusinessObjects Analytics (packaged applications) have not been proved, Business Objects serves as a key supplier of enterprise business intelligence suites and should make it onto most enterprises' suite selection short lists. The classic BusinessObjects client (and related products) is well-received by customers; we rate it a "strong positive." WebIntelligence v.2.7 has some shortcomings that potential customers should consider; we rate it as "promising."

Business Objects
Headquarters: San Jose, CA, San Jose, CA
Web Location: http://www.businessobjects.com; http://www.businessobjects.com

Analyst Comments

Although Business Objects has challenges in its European field organization and with its Web-based product line, it is a viable and appealing vendor of enterprise BI suites. Its prospects in the areas of ETL and packaged applications are less clear.

Detailed Rating

Initiative Rating
Corporate Viability  
     Strategy Promising
     Financial Strong Positive
     Marketing Strong Positive
     Organization Strong Positive
Product/Services/
Technologies
 
     Product/Service Promising
          BusinessObjects Strong Positive
          WebIntelligence Promising
          BusinessObjects Application Foundation Promising
          BusinessObjects Analytics Promising
          BusinessObjects Data Integrator (as a generic ETL tool) Caution
     Technology Promising
     Pricing Promising
Customer Service/
Product Support
 
     Sales/Distribution Positive
     Support Services Promising

Corporate Viability

Business Objects is a healthy software company. With continued revenue growth and profitability, Business Objects has served as a business intelligence (BI) bellwether for years. Recently, it has experienced some field execution problems in its European operations. In 3Q02, although total revenue increased, Business Objects posted a slight decline in software licenses. In contrast, its maintenance business improved due to its customer advocacy program, offsetting the decline in license revenue. The company is profitable and has a substantial reserve of cash.

In early 2002, a new manager was hired for its software engineering group. With a renewed emphasis on the management of the development process, Business Objects' next-generation products will be available in 1H03 (0.7 probability), reflecting a relatively long release cycle.

Business Objects has stated that "analytical applications" (a fundamentally different business model from technology solutions) are strategic to its future. Packaged applications, which is a growing business, represent only approximately 7 percent of Business Objects' revenue today. Although somewhat of a gamble, this focus on analytics will require Business Objects to transition from its current model of technology solutions to application solutions. Inevitably and similar to other BI tool vendors, as applications become a larger percentage of overall revenue, Business Objects will find it challenging to successfully balance both businesses.

During the past several years, Business Objects has made several acquisitions that have been fairly complementary, unlike those of other vendors. These acquisitions include Next Action Technology (Set Analyzer), OLAP@Work, Blue Edge Software and, most recently, Acta Technology. Acta was the largest acquisition (185 employees and an estimated $20 million in revenue in 2001). Although the Acta organization appears to have been quickly absorbed, we believe that it will cause distractions for Business Objects management and its sales organization in 2003.

We believe that despite these challenges, Business Objects is well-managed, with a solid senior management team, good marketing and a competent sales organization.

Products/Services/Technologies

BusinessObjects and WebIntelligence

As a supplier of enterprise BI suites, Business Objects offers a functionality-rich portfolio of products. This is Business Objects' core business and represents almost all license and maintenance revenue.

The company's traditional Windows client, BusinessObjects, is highly usable, with seamless integrated components for ad hoc query, reporting and simple online analytical processing analysis. This is a two-tier, client/server model, with most aspects of functionality running on the desktop.

Business Objects' Web/server-based product line, WebIntelligence, offers a thin-client approach to BusinessObjects, albeit with a subset of functionality. It employs a Common Object Request Broker Architecture-based, distributed architecture, which scales relatively well in a multiserver and mixed operating system environment. However, numerous customers have complained about the limited number of simultaneous users that can be adequately supported on a single Windows-based server. This has caused some customers to license additional servers to handle workloads, increasing the cost of ownership as additional servers are bought, installed and managed.

The WebIntelligence client is based on HTML and Java or ActiveX, while many competitors have moved to Dynamic HTML (DHTML) and Javascript. Business Objects' next-generation product is expected to address server engine performance and include a DHTML client.

Both product lines share a common batch server for content publishing and distribution (Broadcast Agent) and a common semantic layer. However, each has a unique document format, which makes mixed BusinessObjects and WebIntelligence environments less productive.

BusinessObjects Application Foundation

Application Foundation, which is the basis of the BusinessObjects Analytics product line, enables more-advanced analysis of data. Its five engines focus on rules, sets, predictive capabilities, metric building and statistical process control. It includes enhanced visualization, a larger library of charts (including compound charts) and enhanced, business-process-specific navigation. With WebIntelligence and Set Analyzer products at its core, Application Foundation is a useful tool that improves on the kind of analytics that customers can employ for certain applications. Although it does not fully meet Gartner's test as a "BI platform," Application Foundation raises the competitive bar for an enterprise BI suite in the areas of analytical and visualization robustness, which are not available in standard suite products.

BusinessObjects Analytics

Since July 2001, Business Objects has offered packaged analytical applications, which are horizontal and include:

For 3Q02, Business Objects' license revenue for analytical applications totaled $3.8 million ($11.8 million for the first nine months of 2002). This represents approximately 7 percent of license revenue for that period (5.5 percent in 1Q02, 7.5 percent in 2Q02). Business Objects believes that applications are strategic and critical to its long-term success. It is growing its staff to support this focus. We expect that Business Objects will continue to expand into packaged applications — organically or by acquisition.

BusinessObjects Data Integrator

In July 2002, Business Objects acquired Acta and its extraction, transformation and loading (ETL) product, ActaWorks, which was re-branded as Data Integrator. Best known for its ability to extract data from SAP R/3 systems to build custom data marts, Data Integrator primarily is intended to enhance Business Objects' application offerings. However, Business Objects likely won't exit the generic ETL market. Therefore, we expect that the company eventually will provide deep integration between Data Integrator and the rest of its portfolio. This will cause some customers to feel inhibited in their use of third-party ETL tools.

Customer Service/Product Support

Since John Olsen joined Business Objects as its chief operating office in 2002, much emphasis has been placed on "customer advocacy." This program has been enacted in the technical support group as well as the field organization. It emphasizes long-term relationships and overall customer satisfaction. We believe that Business Objects' focus on the customer has caused some improvement in overall customer satisfaction.

Related Research and Ratings

"BI Magic Quadrants: Excitement in a Flat Market"

"Business Objects/Acta Deal Best for a Customer of Both Vendors"

Rating Definition

Strong Positive Solid provider of strategic products, services or solutions.
• Customers: Continue investments.
• Potential customers: Consider this vendor a strong strategic choice.
Positive Demonstrates strength in specific areas, but is largely opportunistic.
• Customers: Continue incremental investments.
• Potential customers: Put this vendor on a short list of tactical alternatives.
Promising Shows potential in specific areas; however, initiative or vendor has not fully evolved or matured.
• Customers: Watch for a change in status and consider scenarios for short- and long-term impact.
• Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this initiative or vendor.
Caution Faces challenges in one or more areas.
• Customers: Understand challenges in relevant areas; assess short and long term benefit/risk to determine if contingency plans are needed.
• Potential customers: Note the vendor's challenges as part of due diligence.
Strong Negative Difficulty responding to problems in multiple areas.
• Customers: Exit immediately.
• Potential customers: Consider this vendor only if there are no alternatives.

This research is part of a set of related research pieces. See AV-19-2672 for an overview.