Retailers had weak sales in December - AP Newswire Jan. 10, 2008

Today AP Newswire released an article which supports my 1/2/08 post about the economy and holiday retail sales.

"Many merchants who reported sales figures Thursday failed to meet already lowered sales projections, making this the weakest holiday season since 2002. Their performance led a string of stores to reduce earnings outlooks for the fourth quarter."

Here's a link to the article:

http://news.yahoo.com/s/ap/20080110/ap_on_bi_ge/retail_sales;_ylt=AuL7PSbZ9fVMg5apxkBGdPqb.HQA

Goldman Sachs Expects Recession

Looks like Goldman Sachs agrees with the prediction that I posted on January 2nd.

Today they released a statement saying that they expect the U.S. economy to drop into recession this year, prompting the Federal Reserve to slash benchmark lending rates to 2.5 percent by the third quarter.

You can read the release here:

http://news.yahoo.com/s/nm/20080109/bs_nm/usa_economy_goldman_dc_2

New Year's Predictions

Happy New Year to all!

With everyone back to work after holiday celebrations, it’s time to start thinking about what’s ahead in 2008. To help, I’ve put together a few predictions.

The Economy: In my opinion, the “Big Kahuna” of predictions has to do with the economy. I may not be an economist, but I’ve been around long enough to know the signs of recession when I see them. A quick look in the local (US) newspaper tells part of the story: numerous housing foreclosures and auctions. I haven’t seen that since 1992. In addition, rumors a of a weak holiday retail season abound. Coupled with the current and unfolding lending crisis, a dismal Q4 earnings report could seal it. If I’m right, this means that 2008 budgets will be flat to down – especially for IT. The rest of my predictions are either caused by or accelerated by this prediction.

Market consolidation: As everyone is already aware, 2007 was a year of massive consolidation for BI and EPM software vendors. Although Hyperion, Business Objects and Cognos are gone, the fun’s not over yet. As the big guys feel even more pressure to boost revenues and profits, I believe they’ll gobble up any remaining, above-average software vendors of size (> $100M USD).

Leveraging Existing Investments: With a combination of lower budgets and real urgency to improve business performance, I expect many organizations to try and get more value from software and systems they already own. This would be especially good news for systems integrators – especially those with deep expertise in key vertical and functional areas. So, I would anticipate consultancies become even busier than in 2007 and for a whole new crop to emerge in 2008. Caveat Emptor!

Rise of the Business Buyer: I don’t want to give Nick Carr (Does IT Matter? Information Technology and the Corrosion of Competitive Advantage - Harvard Business School Press) too much credit, but many IT Departments have become alienated from the business and less relevant than they could or should have been. An exclusive focus upon the largest software solution providers doesn’t help. In defense of IT, much of this may not be their fault and they may find themselves in an impossible situation. Nevertheless, emerging software vendors and consultants have caught on to the trend and are focusing selling efforts on business management – with the promise of implementing business solutions faster than IT can. Of course, these vendors may eventually have to deal with IT, but will avoid it (if at all possible) until business management is “on board”.

New Approaches Map to the Emerging Market: On-demand, open source and software appliances have been around for a few years and have experienced varying rates of adoption and success. However, with the above forces changing the shape of the market in 2008 – these options - offering lower cost and fast deployment - become vastly more appealing – especially to business users! Expect to see lots more of each at the expense of traditional software offerings.

What do you think?

The big winners??

Here's another thought related to the recent market consolidation: Systems integrators could be the big winners.

My logic: As the big enterprise software companies add to their portfolios by gobbling up pure-play vendors, they also dramatically increase product and platform complexity. So, while it might be easier (in some sense) to have a single supplier of software, implementation difficulty and cost will grow. User organizations lacking sufficient skills will heavily leverage SIs (even more than today) as they strive to quickly deliver quality applications to meet pressing business requirements.

Using basic micro-economic principals: the price of consulting will rise as supply is already constrained. Until supply catches up with demand, the SIs could be rolling in dough - with margins rivaling software products.

What do you think?

The ruckus about consolidation

I think most folks are keenly aware of the dramatic consolidation that has taken place in the BI market during 2007. In fact, there are only a handful of significant pure-play vendors left standing. these include: Actuate, Informatica, Information Builders, Microstrategy, SAS and SPSS.

When I was at Gartner, I observed ongoing consolidation in the market and viewed it as somewhat healthy - sort of a "pruning" of the "dead wood". From the 1990s and through 2005, most of those acquisitions were of smaller companies, not ones with revenues of $800M - $1.2B and market caps in excess of $3B.

The stage for this consolidation was set quite some time ago as the pure-play market matured and three dominant and sizable leaders emerged: Business Objects, Cognos and Hyperion. As other enterprise software markets cooled (e.g., ERP), BI and PM offered higher growth rates and margins. And, with all three of these in relatively good financial condition, any acquisition could be readily made accretive. So it came down to a question of when it would occur and who would be first. At Hyperion there was always a sense that once one fell, all would fall.

So what happens next? Well, I think we're in the midst of a fundamental paradigm shift where the rules are about to change and its not limited to BI or PM.

More on that later...

Welcome!

Greetings and welcome to this new blog.

For those that don't know me, I've been in the Business Intelligence (BI) industry since 1989, when I coined the term "Business Intelligence" - defining it as "end user access to and analysis of data". I spent 13 years at Gartner, an industry advisory firm, where I was a Research Fellow and the lead analyst for BI. Then in 2005, I left and joined Hyperion as its Chief Strategy Officer. When Oracle acquired in May of 2007, I turned down their offer and became an independent industry resource, forming my own company, Dresner Advisory Services, LLC.

This forum is not intended to be limited to BI, but all related areas, including performance management. It is also not intended to be limited to vendors, products and software - but all issues which assist or hinder organizations in getting value from BI and performance management.

So once again, welcome. I look forward to hearing from you!

Howard Dresner