Professional Documents
Culture Documents
Rustam Aliyev
ii
Acknowledgements.
I would like to thank Ms. Maria Berghotlz for her tremendous support and
assistance in the preparation of this thesis. In addition, special thanks are due to
Mr. George Hodosi, whose comments were very important. I also thank Mr. Johan
Dahlin and Mr. Fatih Poyraz for their invaluable input.
iii
Table of Contents
1 INTRODUCTION ..............................................................................................................................1
iv
5 ANALYSIS AND DISCUSSION................................................................................................... 25
6 CONCLUSION ................................................................................................................................. 30
7 BIBLIOGRAPHY ............................................................................................................................ 33
v
List of Figures
List of Tables
vi
1 Introduction
1.1 Background
Information is considered the most valuable asset of any organization regardless of
the size of that organization. Every operation that organizations perform generates
lots of raw data. For instance, a simple sale of any product could generate huge
amounts of data, like date of sale, price, discount, customer name, address, other
demographic details like age, gender, which sales representative sold the product,
when the product was manufactured, raw materials, supplier information, and so
on. This raw data has to be converted into useful information for the decision
makers in order to improve performance of the organization. Considering the fact
that there are numbers of different business processes within any organization,
there is a definite need of a sophisticated information system. Secondly, the
availability of the right information on the right time to the right person is another
most challenging goal for any organization.
1
Data Sources Data Storage Data Analysis Results
Data
Internal Visualisation
Data OLAP,
Data
Queries,
Marts
EIS, DSS Decision
External Data Support
Data Warehouse
Data
Data Mining Knowledge
Personal Marts
Metadata and its
Data
Management
Figure 1.1. Business Intelligence data lifecycle, adopted from (Turban, et al. 2006, 410)
Another recent trend in the BI area has been observed in the adoption of open
source software. In the past few years a number of open source players have
entered the BI market. With the success of open source business models, many
commercial organisations have elaborated strategies to capitalize on them (Lerner
and Tirole 2000). A very recent research conducted by Ventana (Ventana 2006)
shows that 83% of organizations are considering, are in the process of deploying,
or have already implemented an open source BI solution.
2
1.3 Nature of Small Enterprises
According to the European Commission (EC) definition (EC 2003) small business
are defined as an enterprises employing less than 50 people and having less than
€10M annual turnover or annual balance sheet total. At the same time, small
enterprises represent 98% of all enterprises in the EU and employ 40-65% of the
workers in the private sector of the Member States (EC 2007). Consequently, small
enterprises can be considered as economically and socially important players in
the EU countries.
Another EC report (EC 2006) states that only about 10% of small firms used
specific ICT (Information and Communications Technology) solutions for
marketing, sales and procurement compared with 20% of medium-sized and
almost 30% of large firms. The same report says: “SMEs (Small and Medium
Enterprises) still suffer from limited understanding of ICTs and their potential,
limited budget for ICT investments and difficulty in recruiting ICT professionals”.
Even though the majority of small businesses use ICT solutions daily, this usage
usually engage mainly internet and email access. Very few small enterprises use
computers in decision support roles (Gibson and Arnott 2003).
Now, on one hand, we have a large number of small businesses who cannot afford
implementation of expensive BI solutions from industry leaders. On the other
hand, these BI industry giants cannot offer entry level solutions without changing
their business models.
3
modern business intelligence, the power gap will only continue to widen. If the
power differential between large and small businesses persists to enlarge, small
businesses will find it increasingly difficult to compete in a modern economy with
resulting significant social and economic destabilization”.
This research project also used the most common qualitative research method
employed in information systems research, the case study. An experimental setup
4
of a chosen OS BI within a real small enterprise was used to provide
complementary information to answer research questions 1, 2 and 3 of section 1.5.
1.7 Limitations
We already mentioned that a Business Intelligence implementation is a very time
consuming initiative and includes many steps of data analysis and design. Thus,
due to lack of time and resources the experimental setup provided in this paper
has been limited to only one business process of one small enterprise.
Medium and even large enterprises could also benefit from OS BI. However, we did
not include these types of enterprises in the scope of our research.
5
2 Extended background
2.1 Open Source Software
Open Source Software (OSS) is primarily defined as software which is freely
redistributable and includes the source code (Varner 1999). This is vastly different
from the mainstream software industry where source code is highly guarded and
programs are only distributed in their binary, non-modifiable format. The
development process of OSS also differs as it involves large number of software
developers at many different locations and organizations sharing code to develop
and refine software programs.
While the attention of businesses to the phenomenon of OSS has been recent, the
basic behaviours are much older in their origins. According to Lerner and Tirole
(2000), the tradition of sharing and cooperation in software development began in
early 1960s mainly with cooperative development efforts of the UNIX operating
system where programmers in different organizations shared source code. The
General Public License (GPL) was a noticeable innovation introduced by the Free
Software Foundation (FSF) in response to intellectual property right enforcements
by commercial companies in 80s. Users had to agree to make the source code freely
available and not to impose licensing restrictions on others, in exchange for being able
to use and modify GPL software. The widespread diffusion of Internet access in the
early 1990s led to a dramatic acceleration of open source activity. As we will
mention below, interactions between commercial companies and the open source
community also became commonplace in the 1990s. These interactions created
demand to bundle the cooperatively developed software with proprietary code
and led to adoption of more flexible licenses. The licenses under which OSS is
released today vary greatly, but two points that we mentioned in the beginning
(freely redistributable and available source code) remain consistent. Some of these
licenses and their characteristics are shown in table 2.1.
In the past years growing interest has brought large market diffusion and capital
investment to open source software. A number of open source products, such as
the Apache web server, dominate in their product category, while major
corporations, including Hewlett Packard, IBM, Sun and Microsoft have lunched
own open source projects (Lerner and Tirole 2000).
6
Code Can code be used Can project that Must Source Provides
License
protected by in Closed uses code, be Code be for
Type
copyright? Source Project? sold? released? patents?
Public Domain No Yes Yes No No
BSD/MIT Yes Yes Yes No No
GPL (v2) Yes No No Yes No
LGPL Yes Yes Yes Yes No
MPL/CDDL Yes Yes Yes Yes Yes
CPL/EPL Yes Yes Yes Yes Yes
Table 2.1. Comparing Open Source Software License Types (Corbett and Ward 2006)
However, OSS has its own disadvantages. The same survey of IT executives shows
that 52 percent mentioned a lack of vendor support as open source’s primary
weakness. To fill this gap, major vendors such as Dell, HP, IBM, Oracle and Sun
recently have announced in various ways that they would begin supporting open
source products (Koch 2003).
Organizations often use traditional (non-IT specific) methods like Net Present
Value (NPV), Return on Investment (ROI), and Activity Based Costing (ABC) for IT
investment evaluation (Turban, et al. 2006, 561-564). Nevertheless, some
researchers argue that traditional evaluation techniques are not suitable for
evaluating projects with significant strategic benefits such as BI projects (Irani and
Love 2001).
7
The most straightforward method for evaluation of intangible benefits is to make
rough estimates of monetary values for all intangible benefits. However, putting
monetary value on the IT investment is not an easy task (Turban, et al. 2006, 561-
564).
Additionally, in the past years the focus of industries has shifted from cost
reduction alone to maximizing both: IT benefits and business benefits (Shields and
Bharucha 2003). Growing demand for benefit measurement tools and complexity
of calculation methods has resulted in a wide range of IT specific investment
evaluation frameworks. Some of these specific frameworks and their summaries
are shown in table 2.2.
Economic Added Value (EVA) Stern & Accurate measure of post-tax return. Uses
Stewart retrospective analysis which is not suitable for prior
estimation of returns in IT.
Total Value of Ownership (TVO) Gartner Comprehensive view of costs and benefits.
Total Economic Impact (TEI) Giga Comprehensive view of costs, benefits and risks.
Rapid Economic Justification Microsoft Cost-benefit analysis, multiple stakeholder view and
risk assessment.
Business Value Index Intel Cost-benefit analysis, multiple stakeholder view and
risk assessment.
8
3 Valuing BI Systems
In order to compare different BI suites, comparison grounds should be defined
first. In this chapter, criteria for comparison have been defined using a divisive
(“top-down”) approach. We start from the most important, top business criterion –
the value of the BI solution brought to the enterprise. Then we continue by
dividing business value into smaller criteria categories until we reach the level
where it is possible to compare BI systems. We will consider this level reached
when it is possible to measure criteria.
Executives are constantly evaluating the cost versus the benefit of different
business decisions. A typical question is: “Which initiative will yield the greatest
benefit to the organization?” Organisations often use cost-benefit analysis
approaches which compare the total value of the benefits with the associated costs
(Turban, et al. 2006, 561).
Net
Gross Benefit
Benefits
Figure 3.1. Calculating Net Benefits, adopted from PENG model (Dahlgren 1997)
The effect on profit (net benefit) consists of gross benefits minus costs of
Information System (Dahlgren 1997) (figure 3.1). Thus, in order to calculate net
benefits and prove its profitability we need first to calculate costs and gross
benefits of a BI system. In the next two sections we are choosing comparison
grounds for costs and total benefits.
In our case, summing up the initial and maintenance costs does not provide an
entirely accurate total cost for BI initiatives since it includes other costs such as
user trainings which span all over a BI lifecycle. Therefore, a method known as
Total Cost of Ownership (TCO) is used. This technique was introduced by the
9
Gartner Group in late 1980s and used to calculate more accurate IS costs. Besides
initial and maintenance costs, TCO includes costs associated with technical
support, administration, and training (Pearlson and Saunders 2006, 256).
The TCO method described above aimed to calculate overall cost of BI system for a
defined period of exploitation as a part of overall benefit calculation. These costs
are used as grounds for further comparison of BI suites.
Software licenses
Maintenance
Support
Operations Costs
Upgrades
User Trainings
10
Better identification and understanding of BI benefits can be reached through
categorisation. Knightsbridge (2005) proposes to simplify the process of
identifying benefits by separately considering the two primary categories of
benefits: revenue enhancements and cost savings. Cost savings are defined as the
difference in the costs associated with the new BI initiative versus the costs
associated with maintaining the existing information environment. Revenue
enhancements are defined as the beneficial activities that result from decisions
individuals make by using information from the BI solution.
Steve and Nancy Williams (2003) identify two another dimensions of BI benefits in
their article: “the business value of BI lies in its use within management processes
that impact operational processes that drive revenue or reduce costs, and/or in its
use within those operational processes themselves.”
Intangible
Management Process Improvement Operating Process Improvement
Identification of under-performing
product lines or products
Intangible Tangible
11
difficult to evaluate because there is usually no direct attribution. For instance,
monetary value of the benefit “identification of new business opportunities and
markets” cannot be estimated at all since we don’t know in advance whether new
markets exist or not. The bottom-right (green) square contains benefits of
operational process improvement associated with cost savings. In contrast to “red”
benefits, these benefits are easy to identify because of the ability to compare the
new BI solution to the old operational environment. Finally, bottom-left and top-
right (yellow) boxes contain intangible benefits which could be estimated through
complicated evaluation methods (e.g. improved customer satisfaction).
It could be clearly seen from figure 3.3 that 12 of 15 benefits are either completely
intangible (red square) or could only be calculated through complex evaluation
methods (yellow squares). This classification method can be used for tangibility
level identification of more specific benefits by placing them in one of the four
squares in figure 3.3.
As already mentioned, BI is a strategic tool and its primary role is the support of
business strategy and business processes. As can be seen from figure 3.3, the BI
initiative does not contribute as much in terms of being used as a process
automation (operational) tool. The four dimensions of figure 3.3 could also be used
to claim that instead of evaluating BI separately, it should be analyzed together
with the business processes it is supposed to enhance. To additionally support that
claim we would like to refer to authors Luftman and Muller (2005), who also
conclude that the benefits come not from the latest and greatest IT solution, but
from how a business modifies its practices based on its new technology. In spite of
that, BI applications still provide some level of pure operational functionality like
KPI (Key Performance Indicators) monitoring, automatic reporting and invoicing.
12
since it allows comparing of different BI suites’ benefits without assigning
monetary values.
Rajeev Rawat’s (2007) criteria for assessing Open Source BI alternative has been
adopted to define the characteristics influencing gross value. In our research some
irrelevant criteria have been eliminated, since the original list contains criteria for
complete evaluation of BI project (including business needs, risk assessment, etc.)
while we only looking for BI suite comparison grounds. Rawat’s original list of
criteria for Open Source BI alternative assessment can be found in Appendix A.
Three key criteria categories shown below have been extracted from Rawat’s list of
criteria for further BI suite comparison:
1. BI Functionalities
2. Solution Maturity
3. Price
It could be clearly seen that first and second criteria categories address benefits of
BI system, while third category – price overlaps with the costs which has been
discussed in section 3.1. Identified criteria categories are hierarchically brought
together in figure 3.4.
3.3.1 BI Functionalities
As it has been mentioned in chapter 1, BI is an umbrella term covering a set of
enterprise applications. Different commercial vendors have different
understanding of BI and what it should include. Nevertheless, there are some key
components which exist in all commercial distributions.
13
BI Functionalities
Infrastructure Integration All tools in the platform should use the same security, metadata,
administration, portal integration, object model and query engine, and
should share the same look and feel.
Reporting Reporting provides the ability to create formatted reports in different
formats (e.g. PDF, Microsoft Excel, etc.)
Dashboard Dashboard includes the ability to publish formal, web-based reports with
intuitive displays of information, including dials, gauges and traffic lights.
These displays indicate the state of the performance metric, compared with
a goal or target value.
Ad Hoc Query and Also known as self-service reporting, this capability enables users to ask
Reporting their own questions of the data, without relying on IT to create a report.
These functions imply semantic layer which operates between business
users and data sources allowing users to navigate without understanding
underlying data structure.
Spreadsheet Services In some cases, BI platforms are used as a middle tier to manage and
execute BI tasks, but office tools (particularly Microsoft Office Excel) acts
as the BI client. In these cases, it is vital that the BI vendor provides
integration with office suites.
OLAP Server Enables end users to analyze data with extremely fast query and
calculation performance, enabling a style of analysis known as "slicing and
dicing".
OLAP UI Front-end tools for the analysis known as "slicing and dicing".
Data Mining This capability enables organizations to classify categorical variables and
to estimate continuous variables using advanced mathematical techniques.
ETL ETL stands for extract, transform, and load. ETL is a process that enables
businesses to consolidate their data from different sources and in different
formats.
Alerts Event based alerts sent by email, SMS, etc. Events usually triggered by
business rules.
Repository The repository defines the functions and services to store BI structured
data and metadata (e.g. report templates, business rules, and semantic
layer data).
Security This enables administrators to define different user roles and permissions
based on business needs.
Scheduling Ability to schedule report generation and other actions.
Table 3.1. BI Functionalities criteria group for BI evaluation, adopted from (Rawat 2007)
The list of functionalities, summarised in table 3.1, is adopted from Rajeev Rawat’s
(2007) “BI function requirements”. Some functionality such as data mining and
spreadsheet services have been added based on the literature study (Gartner,
Magic Quadrant for BI Platforms, 1Q07 2007). In section 4.1 we will provide an
analysis of major commercial BI vendors to support our claims about general
acceptability of these BI suite functionalities.
14
3.3.2 BI Solution Maturity
Maturity is another important criterion, especially from open source software
perspective. In order to make it definable and measurable it has been broken down
into sub-criteria (e.g. measurable criteria such as duration of the product
availability in the market and number of customers actively using product can
show how mature this product is).
Solution Maturity
Open Source Community Size Number of registered open source community members.
Number of forum and mailing list posts made by open source
Open Source Community Activity
community members.
Downloads (Open Source only) Number of product downloads (indirectly shows popularity).
Table 3.2. Solution maturity criteria group for BI evaluation, adopted from (Rawat 2007)
15
4 Results and Findings
In the next two sections (4.1 and 4.2) benefits of commercial and open source BI
suites estimated and compared based on the criteria defined in sections 3.3.
Sections 4.3 and 4.4 mainly explore costs of BI implementation through the two
different research methods (survey and case study) in order to increase results’
accuracy. Further analysis of these findings will help us to answer research
question stated in section 1.5 (section 5).
Published information about the leading commercial BI products and their formal
system documentation were consulted in order to support the claims of generality
of the accepted BI suite functionalities defined in table 3.1. We found that all
claimed functionalities are provided by reviewed commercial BI suites. The only
exception was the BusinessObjects XI which relies on 3rd party tools in data mining
and OLAP server. Summary of these analyses based on the criteria defined in
section 3.3 can be found in table 4.1.
It is important to note that the portfolio of these major vendors usually stretches
beyond BI and covers advanced business applications such as Business
Performance Solutions (BPS) which are not included in our list of functionalities.
16
Business
Oracle BI
Cognos
Objects
SAS BI
BI
XI
BI Functionalities*
Infrastructure Integration Yes Yes Yes Yes
Reporting Yes Yes Yes Yes
Dashboard Yes Yes Yes Yes
Ad Hoc Query and Reporting Yes Yes Yes Yes
Spreadsheet Services Yes Yes Yes Yes
OLAP Server No Yes Yes Yes
OLAP UI Yes Yes Yes Yes
Data Mining No Yes Yes Yes
ETL Yes Yes Yes Yes
Alerts Yes Yes Yes Yes
Repository Yes Yes Yes Yes
Security Yes Yes Yes Yes
Scheduling Yes Yes Yes Yes
Solution Maturity
Availability duration (years) >10 >10 >10 >10
Customer base * 43.000 n/a 43.000 23.000
Standards compatibility ** 6 5 8 6
Ready-to-use out of the box Yes Yes Yes Yes
ISV-ready: embeddable & extensible Yes Yes Yes Yes
Localised and internationalised Yes Yes Yes Yes
Training availability Yes Yes Yes Yes
* Information is taken from the vendor’s official web site
** Scores based on a scale of 0 (weak) to 10 (strong) and adopted from (Datamonitor 2007)
Comparison results of these four open source products based on the criteria
defined in section 3.3 is represented in table 4.2. In order to be considered as a
comprehensive alternative to a commercial BI, the OS BI suite should provide all
functionalities previously defined. We chose Pentaho for further comparison since
17
only Pentaho provides all defined functionalities as well as the most active
community and a high number of downloads. It should be noted that JasperSoft’s
high number of community members and downloads can be explained respectively
by mandatory registration (as community member) for all downloads and greater
number of downloadable items.
Intelligence
Pentaho BI
SpagoBI
Jasper
OpenI
BI Functionalities*
Infrastructure Integration Yes Yes Yes No
Reporting Yes Yes Yes Yes
Dashboard No Yes No Yes
Ad Hoc Query and Reporting Limited Yes No No
Spreadsheet Services No Yes No Yes
OLAP Server Yes Yes Yes Yes
OLAP UI Yes Yes Yes Yes
Data Mining No Yes Yes Yes
ETL Yes Yes Yes Yes
Alerts Yes Yes No No
Repository Yes Yes No Yes
Security Yes Yes Yes Yes
Scheduling Yes Yes No Yes
Solution Maturity*
18
4.3 Interview and Survey of BI Consulting Companies
In order to provide an answer to the second research question (whether OS BI
solution provides cost saving) we have conducted a number of interviews and
web-based surveys. Interviews were conducted based on the questionnaire from
Appendix B in order to better understanding of the real situation in the market.
Unfortunately, very few companies accepted request for interview, mainly due to
lack of time of the potential interviewee. In order to increase accuracy of the
results, more companies have been approached through the simplified web-based
survey form where we included only questions 1–4 (questions aimed to
understand attitude of consulting companies regarding small enterprises) from the
same questionnaire (Appendix B). Overall, two consulting companies providing BI
services have been interviewed in person and four other companies responded to
the web survey. Complete results of interviews and surveys are given in Appendix
C.
80%
60% 50%
40%
20%
0%
0%
Small Medium Large
Enterprise Types
Medium
14,7%
Small
3,3%
Large
82,0%
19
Web survey and interview results for the questions 1-3 (Appendix B) has been
summarised in figures 4.1 and 4.2. It can be clearly seen that none of the
respondents consider small enterprises as a main target group (figure 4.1), though
small enterprises constitute 3.3% of their customers (figure 4.2). According to the
interviewed consultants, the majority of the small and medium enterprises
implementing BI (figure 4.2) expect fast growth in the next 5-10 years and
consider BI investments as a part of their long-term vision.
Questions number five and six (Appendix B) was mainly aimed to support our list
of functionalities explored in section 3.3.1. It can be seen from figure 4.3, where
results for these questions depicted, that the major part of proposed functionalities
were considered as a part of BI while no additional functionalities were proposed
by interviewees. The only exception was alerts which track significant events (e.g.
profit target exceed). According to the one of the consultants, largely used nightly
data updates make alerting functionality ineffective; however alerts would be
much appreciated in the operational (real-time) BI systems.
Reporting
100%
Dashboard Scheduling
75%
50%
OLAP Server Alerts
25%
0%
Finally, interviewees were asked (questions no. 7-8, Appendix B) to estimate the
cost components defined in section 3.1 for the experimental setup case which has
been described in Appendix CAppendix D. Gathered costs have been averaged and
reflected in figure 4.4. This is important to note that all interviewees offered
Microsoft’s BI products (PerformancePoint 2007 and SQL Server 2005) as most
suitable commercial products for this case (question no. 9, Appendix B).
20
Nevertheless, interviewees mentioned another important fact that other vendors
such as BusinessObjects or Oracle would have a notably more expensive solution.
Cost SEK
21
mobile phone owners. In order to better understand customers' behaviour and
identify new markets company wants to be able to process operational data which
located in a number of different sources.
The hardware platform used to develop and run Pentaho BI was Intel Core2Duo
workstation with 2GB of RAM and running Linux operating system. Data
warehouse has been built on MySQL RDBMS. Note that both, Linux and MySQL are
open source products.
Data Sources Data Storage Data Analysis Data Visualisation
Operational DB OLAP
(Internal Data) (Pentaho Ad-hoc Query
Analysis)
ETL
Mobile Operators Data Warehouse
(Pentaho Data Dashboard
(External Data) (MySQL backend)
Integration)
Reporting and
Excel Sheets Charting
(Personal Data) Metadata
(Pentaho
Metadata Editor) Ad-hoc
Reporting
As shown on figure 4.5, Pentaho Data Integration (DI) is the very first in the chain
of BI components performing extracting, transforming, and loading (ETL) from
different data sources into single data warehouse nightly. Sample Pentaho DI
transformation and job are shown on figure 4.6. Construction of this component
(ETL) consumed 75% of the total work amount.
22
Next step was description of data warehouse structure through Pentaho Metadata
Editor and publishing this metadata to the Pentaho BI server. As soon as metadata
information published, end users were able to run self-service (ad-hoc) reports.
Finally, Pentaho Report Designer was used to create a number of sample reports
and invoices with charts and tables. Some reports have been scheduled for
periodic generation and distribution by email.
23
4.4.2 Setup Results
Experimental setup results are discussed below in the form of answers to the
research questions stated in section 1.5.
All business needs described in the mini case (Appendix D) have been met.
Customer found results and functionalities of the BI software completely
satisfactory.
We will answer this question indirectly by providing costs for the experimental
setup. In the next sections these costs are compared to the commercial BI costs in
order to answer this research question. Based on the setup results, acquisition
costs have been estimated and reflected in table 4.3.
24
5 Analysis and Discussion
5.1 Comparison of Benefits
In this section we compare commercial and OS BI suites based on the criteria
forming BI benefits which have been defined and explored in section 3.3. In case of
a very close match between these criteria we will consider that an enterprise will
gain similar gross benefits from different BI suites.
For comparison simplicity and due to very close criteria match between different
commercial BI suites we generalise them as a “Commercial BI”. Data for
Commercial BI and Pentaho OS BI have been taken from sections 4.1 and 4.2
respectively. Side by side comparison of the criteria has been provided in table 5.1.
It can be seen from table 5.1 that both solutions cover the whole range of
functionalities. It should be noted that functionalities of the commercial BI suites
are usually more advanced. Nevertheless, according to the experimental setup
25
results (section 4.4.2) OS BI functionalities are advanced enough to meet basic
needs of small companies.
It is necessary to mention that standards used by OS BI (e.g. CWM, BPEL, etc.) are
very new in comparison with the BI industry. This fact could be one of the major
reasons why commercial BI vendors poorly support them.
26
Estimated Cost Estimated Cost Estimated Cost
Cost Type of Outsourced of Outsourced of Insourced
Commercial BI Pentaho OS BI Pentaho OS BI
Acquisition Costs
BI software, RDBMS or other system licenses 200.000 SEK 0 SEK 0 SEK
Consulting, installation, and configuration 550.000 SEK 550.000 SEK 60.000 SEK
Hardware and other infrastructure 125.000 SEK 125.000 SEK 40.000 SEK
Operations Costs
Maintenance and Support 300.000 SEK/year 300.000 SEK/year 270.000 SEK/year
Upgrades 10.000 SEK/year 0 SEK/year 0 SEK/year
User Trainings 15.000 SEK/year 15.000 SEK/year 0 SEK/year
TCO, 1 year period 1.190.000 SEK 990.000 SEK 370.000 SEK
TCO, 5 year period 2.500.000 SEK 2.250.000 SEK 1.450.000 SEK
This is important to emphasise the great cost of the professional services (i.e.
consulting, installation, etc.) and support which together form 91.11% of the OS
BI’s TCO over a five-year period. Such a high costs for professional services could
be explained by results of the survey which have shown that none of the
responded BI consulting companies see small enterprises as their main customer
group (figure 4.1) and prices for their services mainly set for medium and large
enterprises.
Clearly, small enterprises will save grate amount of the investment only by
reducing cost of professional services. Experimental setup results suggest that
utilising internal resources can save up to 80% on the professional services
(consulting company estimated professional services for mini case 550.000 SEK
(table 5.2), while experimental setup has shown roughly 30.000–60.000 SEK
(section 4.4.2) cost for the same item). In that case, company’s IT department may
be hired for installation, configuration and support of the BI software while
business analysis and consulting services outsourced.
However, projecting costs based on experimental setup case for the longer time
period will unveil grater TCO of insourced OS BI. Experimental setup case
proposed (section 4.4.2) usage of internal resources in order to minimise initial
setup expenses. Based on that assumption we can calculate ongoing maintenance
and support costs. According to experimental setup results, average monthly
salary of internal staff member estimated at 45.000 SEK. BI solutions require daily
maintenance to ensure that nightly ELT processes successfully completed and
reports are prepared. Moreover, it requires regular updates of data sources, ETL
processes and design of new reports. All these tasks may require up to 50%
utilization of the single internal resource which will be equivalent to 270.000 SEK
annually (45.000 SEK × 0.5 × 12 months). Thus, in comparison to consulting
companies, utilization of internal resources will save roughly 10% on support and
maintenance (300.000 SEK vs. 270.000 SEK).
27
TCO of BI suites over a five-year period
3000000
2 500 000
2500000
2 175 000
It can be seen from table 5.2 that cost saving brought by outsourced OS BI over the
first year will be 16.80% of the commercial BI’s TCO. If we project these expenses
over the 5 year period (figure 5.1), we will find that cost saving gets more and
more insignificant in the light of growing maintenance and support costs. Thus, as
it is shown in figure 5.1, cost saving for 5 year period will represent only 10% of
the commercial BI’s TCO.
28
increase many-fold and drastically broaden the gap between OS and commercial BI
TCO.
29
6 Conclusion
In order to find out whether an open source BI suites can facilitate for small
enterprises to remain competitive, three research questions were stated in section
1.5:
1. Does an OS BI provide enough business value for small enterprises to be
considered as an alternative to the commercial BI suites?
2. Does an OS BI solution provide cost savings in comparison with commercial
BI suites?
3. Does an OS BI actually fit into small businesses’ ICT budget?
Two different approaches have been chosen in order to estimate the costs for the
same BI implementation case and gather supportive information:
1. Interviews and web-based surveys of consulting companies helped to
capture costs of outsourced solution and answer additional questions
stated in questionnaire (Appendix B).
2. Experimental integration was set up in order to measure functionality of OS
BI and capture the costs of insourced solution.
Results of the research summarised and grouped below according to the research
questions stated earlier.
30
Nevertheless, the greatest value of OS BI lays in minimizing risk of proprietary
vendor lock-in and maximizing flexibility of BI solution through the support of
open standards and source code availability.
Cost saving provided by OS BI solution formed only 10% of the commercial BI’s
TCO over a five-year period (2.500K SEK versus 2.250K SEK). Such insignificant
cost difference between commercial and OS BI solutions can be explained by the
number of factors:
a. Estimated commercial solutions are based on the BI software from the
Microsoft which recently announced products (PerformancePoint 2007)
which are aimed to bring “BI for the masses” and make it affordable for
SMEs. This explains low costs of the commercial solution.
b. Estimated license fees of the commercial solution allow only up to 5 end-
user connections. As company grows, cost of commercial software licenses
may increase many-fold and drastically broaden the gap between OS and
commercial BI TCO.
31
almost as high as for commercial solution. Unfortunately, due to lack of time, we
were able to provide experimental setup only in one small enterprise which
reduces accuracy of this answer.
Therefore, in depth analysis of small enterprises based on the average figures and
costs from this research may expose small companies’ real demand for BI.
32
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34
Appendices
Original list of the criteria for OS BI assessment proposed by Rajeev Rawat (2007):
4. Skills match
4.1. Business Users
4.2. Systems Users
4.3. Current vendor teams
4.4. New vendor team
A-1
Appendix B. Survey Questions
1. What types of enterprises are your company’s main target group (check all
applicable)?
Small Medium Large
B-2
PART B. MINI CASE QUESTIONS
7. Approximately estimate each of the BI costs based on the mini case (mini
case description included in separate file):
Acquisition Costs
Operations Costs
9. Which BI vendor(s) would you use in the assumed solution for the mini
case?
Proprietary/in-house developed
B-3
Appendix C. Interview and Survey Results
Respondent 6
Respondent 1
Respondent 2
Respondent 3
Respondent 4
Respondent 5
Question
5. Which BI functionalities usually included in the complete All except Data Mining,
All except Alerts.
BI solutions you provided? Alerts, and Scheduling.
6. What other functionalities/applications would you
None None
consider as “must have” part of BI suite?
7.1 + 7.3. Cost of BI software, RDBMS and other licenses 200.000 SEK 200.000 SEK
7.2. Cost of consulting, installation, and configuration 600.000 SEK 500.000 SEK
7.4. Cost of hardware and other infrastructure 100.000 SEK 150.000 SEK
7.5. Cost of maintenance and support 300.000 SEK 300.000 SEK
0 SEK
7.6. Cost of upgrades 20.000 SEK
(included in support fee)
7.7. Cost of user trainings 20.000 SEK 10.000 SEK
8. What other cost types you used to considered as typical
None None
in BI costs calculation?
Microsoft Microsoft
9. Which BI vendor(s) would you use in the assumed
PerformancePoint 2007 PerformancePoint 2007
solution for the mini case?
and SQL Server 2005 and SQL Server 2005
C-4
Appendix D. Business Case Description
BACKGROUND
“MobileComet” is a content provider (i.e. ringtones, pictures, games, etc.) for
mobile devices. Sales operated only through partner mobile operators. At the
moment company has 10 employees and annual turnover of €500K.
All operational data of the company stored in the single source – RDBMS database.
This source contains information about contents, customers, orders, mobile
handsets and their characteristics, and partners (known as aggregators). The
simplified domain model is depicted in figure d.1.
Aggregators are 3rd party resellers, who usually work based on revenue sharing
model. However, aggregators’ interest rates and similar financial information are
not stored in database and available only at financial department.
0..*
0..1
Content
1 0..* Publish Date 1 0..*
Artist belongs_to
Alias 0..*
provided_by
Category 0..*
Status 1
Rating 1
0..*
D-5
REQUIREMENTS
MobileComet would like to implement Business Intelligence solution which will
help them:
Monitoring of Key Performance Indicators (KPI) via Dashboard (e.g.
customer base, revenue, profit, etc.)
Automatic report generation (e.g. financial reports and invoices for internal
usage and 3rd parties)
Slicing and Dicing; Ad-hoc analysis and reporting (e.g. ability to create
complex, multidimensional queries to provide answer to questions like:
What is the monthly percentage of Samsung phones which failed to load
java games within last 1 year?)
Provide easier, online and centralized access to all data types.
Archive operational data. Operational database does not need anymore
keep data older than 3 months. Thus, reduce load of operational db and
save resources of production system.
Only 5 employees need to have access to the BI system. At this stage, company
does NOT need any Data Mining tools. However, they plan to implement it in
future.
DATA SOURCES
Even though company has centralised database, there is a lack of some data. To fill
gaps BI system should be able to access central DB as well as other data sources
listed below:
1. Central Operational RDBMS
2. Statistics provided by Mobile Operators (real-time, usually over
SOAP/XMLRPC)
3. Financial Data (rarely updated excel files, e.g. cost of services, interest rates
of aggregators)
D-6