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It changed the rules in operating systems (Linux), dominates the market for Web servers (Apache), and has won tens of millions of Websurfers to its cause (Firefox).
Can the open-source software model do the same in business intelligence? A handful of open-source companies, some with serious venture capital behind them, say yes. They are taking on BI's dominant players--Business Objects, Cognos, Hyperion, and Oracle--on the simple premise that those companies charge too much for annual software licenses.
The upstarts' primary pitch to customers: We've done away with the usual high-cost sales and marketing machines, so you save big bucks without sacrificing much, if anything, in the way of functionality. Development and testing, meanwhile, get handled largely by customers themselves. Business models vary, but an open-source company will typically offer at least a basic version of its software for production use at no charge, and customers, if they so choose, pay a yearly fee for support services and perhaps for a beefed-up version of the code.
JasperSoft, known until recently as Panscopic, provides a set of reporting tools designed to be embedded within homegrown or commercially developed enterprise applications, in much the same way that Business Objects' Crystal Reports product is used. Because the JasperSoft code costs virtually nothing to employ, and because it's rooted in Java, JasperSoft reckons it will have great appeal to corporations as they strive to get rich BI reporting into the hands of thousands of frontline employees. The company says its software, originally developed by a four-person team in Romania, has achieved around 10,000 installations worldwide and can save companies as much as $100,000 more than competing products. It recently raised an $8 million third round of venture money from investors, including Partech International, an early backer of Business Objects.
Greenplum is working the database angle, commercializing a 12-year-old open-source project called PostgreSQL. Its focus is online analytic processing, the core software in data warehouses and data marts. By running on clusters of cheap Linux servers, Greenplum's code enables customers to work with, say, one terabyte of data for between $15,000 and $150,000, versus the nearly $1 million that NCR's Teradata unit charges for a comparable solution.
Perhaps the most ambitious BI-focused start-up is Pentaho Corp., which has set out to create a full suite of software that would enable users to both monitor and control business processes and performance from dashboards. Pentaho doesn't expect to design all this from scratch but to harness other opensource projects wherever that makes sense--which is the opensource way. Pentaho's management team has worked together in BI for 15 years at Cognos, Hyperion, Oracle, and SAS Institute.
How vulnerable are BI's incumbents? Not terribly, as even the start-ups admit. "Nobody's going to go out of business because of open source," says Richard Daley, CEO and co-founder of Pentaho and a veteran of the BI market. "Hyperion and the others have revenue streams that will last a long time. But we'll be able to divert lots of dollars that go for new projects and additional features." Already, Business Objects has responded by offering some of its own software to the open-source community.
Eric Rogge, an analyst at Ventana Research, a performance-management research and advisory-services firm, says the true appeal of open source has been misunderstood. "The interesting thing for customers is not the low cost, it's that they can try before they buy," he says. For that reason, open-source companies typically target IT staff, while the big players in BI make their case to C-level executives in finance and operations. Says Rogge, "Open-source software will find a good niche, but will it take over? Unlikely."
In the near term, open source's main effect will be to alter the ecology and economics of BI development activities by providing low-cost alternatives for certain building blocks. But given the technology's continuing success at the foundational levels, experts say no one should discount its eventual ability to move "up the stack" to the applications level.
COPYRIGHT 2005 CFO Publishing Corp.
COPYRIGHT 2006 Gale Group
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