Wednesday, June 29, 2011

Pentaho and Open Source BI: The New SMB

On Monday, Pentaho, an open source BI vendor, announced Pentaho BI 4.0, its new release of its “agile BI” tool. To understand the power and usefulness of Pentaho, you should understand the fundamental ways in which the markets that we loosely call SMB have changed over the last 10 years.

First, a review. Until the early 1990s, it was a truism that computer companies in the long run would need to sell to central IT at large enterprises, eventually – else the urge of CIOs to standardize on one software and hardware vendor would favor larger players with existing toeholds in central IT. This was particularly true in databases, where Oracle sought to recreate the “nobody ever got fired for buying IBM” hardware mentality of the 1970s in software stacks. It was not until the mid-1990s that companies such as Progress Software and Sybase (with its iAnywhere line) showed that databases delivering near-lights-out administration could survive the Oracle onslaught. Moreover, companies like Microsoft showed that software aimed at the SMB could over time accumulate and force its way into central IT – not only Windows, Word, and Excel, but also SQL Server.

As companies such as IBM discovered with the bursting of the Internet bubble, this “SMB” market was surprisingly large. Even better, it was counter-cyclical: when large enterprises whose IT was a major part of corporate spend cut IT budgets dramatically, SMBs kept right on paying the yearly license fees for the apps on which they ran, which in turn hid the brand on the database or app server. Above all, it was not driven by brand or standards-based spending, nor even solely by economies of scale in cost.

In fact, the SMB buyer was and is distinctly and permanently different from the large-enterprise IT buyer. Concern for costs may be heightened, yes; but also the need for simplified user interfaces and administration that a non-techie can handle. A database like Pervasive could be run by the executive at a car dealership, who would simply press a button to run backup on his or her way out on the weekend, or not even that. The ability to fine-tune for maximum performance is far less important than the avoidance of constant parameter tuning. The ability to cut hardware costs by placing apps in a central location matters much less than having desktop storage to work on when the server goes down.

But in the early 2000s, just as larger vendors were beginning to wake up to the potential of this SMB market, a new breed of SMB emerged. This Web-focused SMB was and is tech-savvy, because using the Web more effectively is how it makes its money. Therefore, the old approach of Microsoft and Sybase when they were wannabes – provide crude APIs and let the customer do the rest – was exactly what this SMB wanted. And, again, this SMB was not just the smaller-sized firm, but also the skunk works and innovation center of the larger enterprise.

It is this new type of SMB that is the sweet spot of open source software in general, and open source BI in particular. Open source has created a massive “movement” of external programmers that have moved steadily up the software stack from Linux to BI, and in the process created new kludges that turn out to be surprisingly scalable: MapReduce, Hadoop, noSQL, and Pentaho being only the latest examples. The new SMB is a heavy user of open source software in general, because the new open source software costs nothing, fits the skills and Web needs of the SMB, and allows immediate implementation of crude solutions plus scalability supplied by the evolution of the software itself. Within a very few years, many users, rightly or wrongly, were swearing that MySQL was outscaling Oracle.

Translating Pentaho BI 4.0
The new features in Pentaho BI can be simply put, because the details simply show that they deliver what they promise:

· Simple, powerful interactive reporting – which apparently tends to be used more for ad-hoc reporting that the traditional enterprise reporting, but can do either;
· A more “usable” and customizable user interface with the usual Web “sizzle”;
· Data discovery “exploration” enhancements such as new charts for better data visualization.

These sit atop a BI tool that distinguishes itself by “data integration” that handles an exceptional number of input data warehouses and data stores for inhaling to a temporary “data mart” for each use case.

With these features, Pentaho BI, I believe, is valuable especially to the new type of SMB. For the content-free buzz word “agile BI”, read “it lets your techies attach quickly to your existing databases as well as Big Data out there on the Web, and then makes it easy for you to figure out how to dig deeper as a technically-minded user who is not a data-mining expert.” Above all, Pentaho has the usual open source model, so it’s making its money by services and support – allowing the new SMB to decide exactly how much to spend. Note also Pentaho’s alliance not merely with the usual cloud open source suspects like Red Hat but also with database vendors with strong BI-performance technology such as Vertica.

The BI Bottom Line
No BI vendor is guaranteed a leadership position in cloud BI these days – the field is moving that fast. However, Pentaho is clearly well suited to the new SMB, and also understands the importance of user interfaces, simplicity for the administrator, ad hoc querying and reporting, and rapid implementation to both new and old SMBs.

Pentaho therefore deserves a closer look by new-SMB IT buyers, either as a cloud supplement to existing BI or as the core of low-cost, fast-growing Web-focused BI. And, remember, these have their counterparts in large enterprises – so those should take a look as well. Sooner than I expected, open source BI is proving its worth.

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