Running a successful business intelligence (BI) consultancy takes more than just technological expertise. As with many enterprise IT projects, BI combines technology and business. And because BI projects are often sizeable and consist largely of lucrative services, you may find more vendor competition than in other kinds of deployments. In this article, we'll show you how to maximize your profits and take your fair share of the deal. We'll also talk about how business intelligence projects may be affected by the economic slowdown.
No two vendors' channel programs are alike, so make sure to take them into consideration as you research potential business intelligence vendors. Many BI vendors prefer to work on joint ventures, in which they split service work with their VARs. For instance, Cognos used to work almost exclusively in joint ventures, said Gary Shiller, vice president at Sky Solutions LLC in Hasbrouck Heights, N.J. But that changed after IBM bought Cognos, he said; IBM is more channel-friendly, so Cognos projects now bring better opportunities for VARs, Shiller said.
Vendors also tend to be cyclical with their treatment of the channel, said John Onder, a partner at Chicago Business Intelligence Group (CBIG). A vendor may start out very channel-friendly but then build out its service branch and start competing more with value-added resellers (VARs), he said, only to cut its services and return to its core software development during tougher times. Regardless of your BI vendor's leanings, you should always sign a letter of understanding before starting a project. This document will outline who is responsible for which services and will help reduce misunderstandings and friction later down the line.
As a VAR, your main expertise -- and the one area that's probably hardest for vendors to penetrate -- is in knowing your customer's industry- and company-specific needs. A big part of BI consulting involves knowing your customer's specific business requirements and how to create the relevant key performance indicators (KPIs) and extract, transform and load (ETL) operations for the client's database.
Although vendors are good at training customers on their products, you can do better if you round out training sessions with best practices and methodologies that pertain to your client specifically. As Onder put it, VARs can show clients not just what the tools do, but how to really use them.
Being a vendor-neutral BI consultant
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One way to avoid BI vendor conflict is to become as vendor-neutral as possible by shifting all of your energy from reselling to consulting. CBIG, which takes this approach, is able to focus on more architectural problems. Although it still maintains a team of developers and is certified with the major business intelligence vendors, CBIG takes a higher-level consulting approach that lets it work on what Onder called more interesting projects. It also solves the vendor conflict problem fairly simply: CBIG mostly works with vendors that are channel-friendly, because companies that don't want channel involvement for a given project simply don't refer it to them.
Of course, even with this kind of approach, you'll still have to maintain some level of a relationship with vendors. Although CBIG doesn't technically favor one BI vendor more than another in general, it will give a vendor preference if the vendor refers a client. Clients understand and appreciate that relationship, Onder said; most customers will give the referring vendor a nod anyway, unless it doesn't make any sense to use its software.
Being a vendor-specific BI consultant
Aligning yourself with a specific vendor does have its advantages, though. VARs with closer ties to a given vendor may get more referrals, especially on the kinds of big projects that vendors don't want to give away completely. If you take this approach, consider specialization as a way to distinguish yourself from your peers -- and the vendor's own service branch. Being highly specialized means that you have less competition, and thus a stronger bargaining position when you and the vendor draft a letter of understanding, Shiller said.
Specialization takes two forms, Shiller said. At an industry level, understanding a sector very well lets you home in on a client's specific needs very quickly. Since you'll already have worked with companies that came from similar starting points and needed similar results, you'll have a good sense of the path, and likely hurdles, your client is about to face. The second way to differentiate yourself is to become an expert on specific tools within your vendor's BI suite.
Weathering the economic slowdown
At this point, there's not much question that the macroeconomic situation is going to affect IT buying in some way. But Shiller and Onder were both confident that BI specifically will remain strong in the near term. While some companies may cut back on BI investments, others are coming to the conclusion that they can't afford not to have the kind of information BI gives, Shiller said. BI isn't recession-proof, but in tough times, it's one of the projects that floats up the priority list as others get cut, he said.
On the other hand, the kind of work you do may become more strategic and less developmental, as companies look to save money by having their internal staff take on more of the project, Shiller said. This is where specialization or a more high-level, architectural approach could come in handy. Those are the kinds of skills that are expensive and time-consuming to build in-house, so it'll still be cheaper for your client to hire you to do them.
Business intelligence is also expanding in scope, which means that companies will be looking to improve on existing deployments even in tough times, Onder said. Instead of just collecting structured data, BI tools are increasingly scanning the enterprise for related unstructured and semi-structured information, like Word documents, spreadsheets and emails. Some companies are even starting to bring in external data from the Internet, Onder said. For instance, a manager who wants to see how a product is being perceived may want to complement the company's internally conducted surveys with ratings and user feedback from the Web.
In the longer term, business intelligence is likely to stay strong, both as a technology and as a consulting opportunity. Data warehouses are only getting bigger and harder to manage, and at the core, BI is all about navigating that data. As long as there are still mergers and legacy systems that need to be brought into the fold, business intelligence will require not just the software that vendors bring, but the down-and-dirty footwork and specific expertise that only VARs and consultants can provide.
In some ways, the economic slowdown may be its own silver lining for BI in the financial industry. The very problems that brought down banks will probably end up spawning more regulations, and that means executives will need even more sophisticated ways of looking at and reporting data, Onder said.