Analytical Apps ExpandAnalytical Apps Expand

New offerings hit market, but do buyers care?

information Staff, Contributor

February 8, 2002

2 Min Read
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Cognos Inc. and Business Objects SA are adding on to their analytical application options. Although vendors see analytical apps as the next big thing in business intelligence, it's not clear just how much demand there is for them and whether IT departments will buy them.

Packaged analytical applications extract data from operational enterprise resource planning and customer-relationship management software for pre-defined data-analysis tasks such as evaluating supply-chain efficiency or product profitability. In addition to Cognos and Business Objects, Informatica, PeopleSoft, and SAS Institute are in the market.

On average, IT pays for 69% of business-intelligence initiatives and 78% of enterprise reporting tool purchases, according to a recent Giga Information Group study. Individual business departments pay for the rest. But IT funds only 51% of analytical-application projects, the study found. That's because while most business-intelligence projects cost less than $100,000, analytical application suites generally have price tags from $250,000 to $500,000, says Keith Gile, a Giga senior industry analyst.

"IT sees $100,000 as something of a threshold for business intelligence," he says. "The problem is that the value of analytical applications has to be proven to both the end users and IT." That makes it tough for vendors to sell, even though the applications provide a lot of value, Gile says. Nevertheless, analytical applications can provide a lot of value to business. "The need is great, but the demand isn't," he says.

One executive who understands that is Keith Neely, VP of IT at sporting goods maker Mizuno USA Inc. in Norcross, Ga., which uses a sales and distribution analysis tool from Cognos to analyze data from its J.D. Edwards & Co. WorldSoftware sales applications. Neely convinced the company's business managers of the value of the tools, something he learned at an earlier job. "Analysis was really nonexistent in this company," he says. "I had to do the big selling job."

Business Objects said last week that it's shipping new supply-chain analytical applications for analyzing procurement, inventory management, and customer-delivery data, and a new revenue cycle analytical application for improving revenue-cycle planning. The software brings to eight the number of modules in Business Objects' analytical suite. Pricing starts at $95,000 per module for Windows NT and $142,000 per module for Unix. Later this quarter, Cognos plans to ship a new version of its analytical apps, including sales, accounting, inventory, and procurement analysis tools, that work with Oracle's E-Business Suite.

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