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.

 

 

3 comments so far

DISCLAIMER: I work for Pentaho. :)

As far as articles go, it’s a good effort to highlight the open source revolution to the wider audience of IT folk. Not that it highlights the most significant pieces in my humble opinion.

The article and view that open source is mostly about a commoditized cheap alternative is misleading as well. In addition to being based on a value based model (ie, support and ongoing value to the company) instead of upfront capital “pushy salesmen” open source has some unique advantages. Advantages that are interesting from a business perspective.

For instance, open source, drawing from a large community of stakeholders, is inherently and almost overly obsessed with standards and integration. The projects have to be small, contained, and embeddable otherwise they’re useless to anyone else. We’ve seen some intense desire from people wanting to “bake BI” into their intranets, custom applications, ISVs, that are loving Pentaho not for price, but because it’s embeddable and is easy to use in a modern (please excuse buzz words) SOA enterprise.

Second, progress is pacing beyond what one entity could fund. People all over the world are working on translations, improvements, bug fixes, solutions, reports, features, because of their own self interest. Quick, iterative (approx 4-6 weeks) incremental builds with full tested and certifed builds (9mos) provides a level of progress unmatched by many vendors. MSFT took HOW long to build SQL 2005? :)

It’s customer (developer) driven. While much of the functionality is built by Pentaho a lot of the work is done by users/developers/requests from real people doing real things. Forget the ole feature matrix development with PM’s prioritizing based on the latest buzz words and Gartner magic quadrants. Someone feels pain, solves the pain, everyone benefits. It’s closer to true user driven development.

Open source pricing is a reflection of the a new service/support model. It’s not the most important factor; readers should note there easy to use inexpensive options (MSFT) if they’re just looking for “cheap.”

However, if you can get BOBJ to knock a few hundred thousand off their quote because you whisper the words Pentaho more power to ya! We won’t complain! If they don’t email me (ngoodman@bayontechnologies.com) and I bet Pentaho can provide a pretty compelling “value” equation.

PS – Andy, feel free to be in touch with me if you have any q’s about open source, BI, Pentaho, etc…. :)

Here is a link to an interesting open source BI demo server: http://breadboardbi.dnsalias.com/

Cheers,

Zach

Good Contribution



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