Bi Economics

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Copyright © 2004 Robert Frances Group, Inc. 1

The Changing Economics of Business

Intelligence

Presented by

Evan Bauer, Principal Research Fellow

Stacey Quandt, Senior Analyst, Open Source Practice Lead Robert Frances Group (RFG)

November 2004




Agenda• Opportunities and Requirements for BI

– Information Explosion

– Compliance

– Convergence Opportunities

• Economics of Traditional BI

• Facts and Economics of Linux Deployment• Proprietary Software Stacks on Linux

• Cost-Effectiveness of 64-bit Systems




Introduction to Business Intelligence

• Business Intelligence is the application of decision support tools to enable...

– real-time, interactive access,

– analysis,

– manipulation, and

– reporting

• ...of mission-critical corporation

information.




Uses of Business Intelligence

•Traditional Applications

●Sales (CRM)●Finance (Budget, Accounting, etc.)

●HR (Compensation analysis, etc.)

●Manufacturing (Supply chain mngmt)

•Compliance requirements monitoring

•Better “big picture” tools for executives

•Evaluation of return on assets/capital•Knowledge built on data from across the enterprise

•Enterprise risk management

•Multi-dimensional analysis•Status reporting

•Easy access to data via the intranet

Strategic

Tactical

Functional




Opportunities for Business Intelligence

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Linux

Disaster Recovery

Off Shore

Grid / On Demand

Business Intelligence

Financial Applications

Security

Compliance

Storage

App. DevelopmentNew applications up

5% to 10%

Storage up 50% at

most companies

BI driven by the

search for revenue

growth and crosschannel initiatives

Over 50% increase in

Linux spending

Source:

FT Ventures RFG

Survey 2004of top

Financial Services

Institutions




Information Explosion

• Transaction rates in e-commerce, securities trading,credit card purchases, increased by 40% last year generating operational data trails

• Proliferation of historical and partner/external datasources provide additional information resources

impacting business operations and decisions

• Firms retain 70% more detail data per year for operational control, decision support and regulatory

reporting




Compliance

• Compliance is the fastest growing component of IT budgets in 2004

• US Corporations require programs for:

– SARBOX 404 / 409 – HIPAA / GLBA

– AML/ATF

– Basel 2 / Operational Risk

• ConsolidatedWarehouses andOperational data Stores




Compliance and BI• Financial Reporting

Including OpRisk – Sarbanes-Oxley

– Basel II

– HIPAA / GLBA /PIPEDA

• AML / ATF

– USA Patriot Act

– Know Your Customer

• Policy and Procedure

Upgrades OperationalData Stores

• Enterprise Reporting

• Transaction-Detail

History Databases

• Compliance Monitoring

Applications and Portals

Compliance is the fastest growing component of IT budgets in 2004




Convergence OpportunitiesRegulatory reporting requirements drive extensive data

aggregation and metadata reconciliation

Operational data stores, rather than warehouses becoming

the norm for control and management reportingResulting data resources provide the basis for operational

and marketing systems (within the limits of confidentiality)

The investment in control and compliance can generate

black ink




Economics of Legacy BI

• Data warehouses required specialized, proprietary MPP

hardware

• Reporting data was snapshots of closed periods

• Systems scaled up, not out. Costs averaged in themillions of dollars for hardware and packaged software.

• Reporting done in 4GLs by small numbers of specialist

developers with eccentric tools• Reports were static, dynamic queries were rationed by

access, performance, complexity




Why BI on Linux?

• Business Intelligence requirements and volumes of underlying data continue to increase

• Real-time dynamic reports should be all users –

again increasing the BI workload• Cost constraints should not limit the enterprise's

access to BI

• Linux is the most cost-effective platform for thenew business intelligence applications.




Linux Adoption TrendsLinux is now the number 2 server operating system

worldwide with the highest rate of growthLinux is a top 5 priority for financial services CIOs in 2004

2004 SG Cowen Securities survey of more than 500 North

American IT users found that more than 80 percent of respondents were currently using Linux and that more thanhalf planned to increase their use within the next two years.

Linux use by tier:

– Web: 76%

– Application 68%

– Database 57%




Mixed Open/Proprietary Software Stacks• Combined stacks have always been with us for

years: ftp, sendmail, emacs, Apache on proprietaryUNIX

• Open source software is most competitive in areas

with common requirements and little activecompetition

• Linux is the poster child for open source, often

providing the platform for proprietary products• Specialized requirements and competitive markets

keep proprietary software leading edge in other

areas – BI continues to be one of them




Linux: One OS, a Choice of Hardware

4-way RISCSMP Server Mainframe 8-way RISCSMP Server

Rack-MountBlade Server

4-way x86SMP Server

Personal Computers Smart Phone




64-bit RDBMS Servers

• The advantages of expanded memory for data caching has been proven since theintroduction of the DEC Alpha in 1992

• Real world experience shows that increasedmemory per DBMS node is of greater

incremental value than increased node count• Current 4-way servers need 4+ GB to fully

utilize the CPU for BI workloads




It isn't always nice to share...

Shared-nothing systems, like grids, scale

linearly. The challenge is in partitioning

The choke point in shared disk systems

data effectively.




Linux Drivers

Linux

Linux Kernel

Maturity

Commodity

Chipsets

Price/performance

Server

Consolidation

Open Standards

Growing

ISV Support




Why Linux?

Copyright © 2004 Robert Frances Group, Inc.

• Focus on Lower IT spending

• Complexity of legacy

architectures

• Recognition of Linux as a

business enabler

• Freedom of choice of hardware

• Benefits of commodity infrastructure

• Innovation

•

Time to market opportunities

• Ease of Unix-to-Linux

migration• Open Standards




Key Linux Capabilities

Strategy

Technology

O perations &

Organization

Architecture

Standards

Compliance

Reduce reliance oncomplex legacyarchitecture

Flexibility to

Control IT Destiny InnovationTime to Market

APIsClustering

Security

Performance

Scalability

Serviceability

Lower IT Spending

Address Unpredictable

Workloads

ATCA

3G Wireless

Linux







Summary• BI demand and volumes continue to grow in 2005

• The Linux OS is now a proven application and

database platform with leading price performance

• Scale out with workload-appropriate hardware• New options combine for better results at lower costs

• Platform risk is controlled by integrated solutions

The new BI platforms improve both the top and bottom lines




Questions & Answers

Evan Bauer Principal Research Fellow

Robert Frances Group

Business Advisors to IT Executives

www.rfgonline.com

phone: +1 203 291 6900 (US EasternTime)

[email protected]

Stacey QuandtSenior Business Analyst

Robert Frances Group

Business Advisors to IT Executives

www.rfgonline.com

phone: +1 203 291 6900 (US EasternTime)

[email protected]


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Bi Economics