Andy on Enterprise Software

Opening the pricing box

October 5, 2006

The open source movement is creeping into BI in various guises, as pointed out by Jacqueline Ernigh.  However, while Linux is undoubtedly taking a lot of market share from proprietary UNIX variants, it is less clear of progress higher up the stack. The article mentions a number of organisation that provide some form of open source reporting tools e.g. Pentaho, Greenplum and Jaspersoft, and indeed there are others still. However it is by no means clear what penetration these are really getting.  It was noticeable that one of the two customer examples reported merely had a database running on Linux, but had yet to deploy open source reporting tools. 

The article unfortunately loses credibility when it cites an example of the savings to be made: “At pricing of $1,000 per user seat, for example, a company with 16,000 employees would need to pay $160,000 for a full-fledged BI deployment, Everett hypothesized.”  Hmm.  It is some time since I did my mathematics degree but I am thinking that 16,000 * 1,000 = 16,000,000 i.e. 16 million dollars, not $160,000.  Even if you are kind and assume that a major discount could be obtained for such a large deployment, even an unlikely 90% discount to list would still get you USD 1.6 million.  I doubt that Dan Everett at the entirely respectable research company Ventana would really have made such a dramatic numerical blunder, so perhaps it was a journalistic error.  Such carelessness does make one wonder about the accuracy of rest of the article, which is a pity since it is discussing an interesting trend.  

I still have yet to really come across significant deployments of open source reporting tools in production applications, but presumably they will catch on to a certain extend, just as MySQL is making steady inroads into the database market.  Perhaps the most significant point at this stage is not made by the article though.  The very existence of open source reporting tools puts pricing pressure on the established BI vendors.  Procurement people doing large deals with BI vendors will treat the open source BI movement as manna from heaven, since they have a stick to beat down the price of reporting tools from the major vendors.  Anyone about to engage in a major BI deployment or negotiation would be well advised to look carefully at these tools, if only as weapons in the armoury against pushy software salesmen.  This is further bad news for the BI vendors, who have enough to worry about with the push of Microsoft into their space and the general saturation of the market. In this case even a handful of customer deployments will suffice to send a shiver down the spine of the major vendors.