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

Copyright © 2004 Robert Frances Group, Inc.

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 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
Copyright © 2004 Robert Frances Group, Inc.
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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.
Copyright © 2004 Robert Frances Group, Inc.
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Uses of Business Intelligence
Strategic
•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
Tactical •Status reporting
•Easy access to data via the intranet
•Traditional Applications
●Sales (CRM)

Functional ●Finance (Budget, Accounting, etc.)

●HR (Compensation analysis, etc.)

●Manufacturing (Supply chain mngmt)

•Compliance requirements monitoring

Copyright © 2004 Robert Frances Group, Inc.
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 Opportunities for Business Intelligence
New applications up
App. Development
5% to 10%
Storage
Storage up 50% at
Compliance most companies

Security BI driven by the

search for revenue
Financial Applications growth and cross
Business Intelligence
channel initiatives

Grid / On Demand
Over 50% increase in
Linux spending
Off Shore
Source:
Disaster Recovery
FT Ventures RFG
Linux Survey 2004of top
Financial Services
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Institutions
Copyright © 2004 Robert Frances Group, Inc.
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 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 data
sources 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
Copyright © 2004 Robert Frances Group, Inc.
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 Compliance
• Compliance is the fastest growing component of IT
budgets in 2004
• US Corporations require programs for:
– SARBOX 404 / 409 • Consolidated
– HIPAA / GLBA Warehouses and
Operational data Stores
– AML/ATF
– Basel 2 / Operational Risk

Copyright © 2004 Robert Frances Group, Inc.

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 Compliance and BI
• Financial Reporting • Policy and Procedure
Including OpRisk Upgrades Operational
– Sarbanes-Oxley Data Stores
– Basel II • Enterprise Reporting
– HIPAA / GLBA /
PIPEDA
• Transaction-Detail
• AML / ATF History Databases
– USA Patriot Act • Compliance Monitoring
– Know Your Customer Applications and Portals
Compliance is the fastest growing component of IT budgets in 2004
Copyright © 2004 Robert Frances Group, Inc.
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 Convergence Opportunities
Regulatory reporting requirements drive extensive data
aggregation and metadata reconciliation
Operational data stores, rather than warehouses becoming
the norm for control and management reporting
Resulting 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
Copyright © 2004 Robert Frances Group, Inc.
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 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 the
millions 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
Copyright © 2004 Robert Frances Group, Inc.
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 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 the
new business intelligence applications.

Copyright © 2004 Robert Frances Group, Inc.

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 Linux Adoption Trends
Linux is now the number 2 server operating system
worldwide with the highest rate of growth
Linux 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 than
half planned to increase their use within the next two years.
Linux use by tier:
– Web: 76%
– Application 68%
– Database 57%
Copyright © 2004 Robert Frances Group, Inc.
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Mixed Open/Proprietary Software Stacks
• Combined stacks have always been with us for
years: ftp, sendmail, emacs, Apache on proprietary
UNIX
• Open source software is most competitive in areas
with common requirements and little active
competition
• 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
Copyright © 2004 Robert Frances Group, Inc.
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 Linux: One OS, a Choice of
Hardware

8-way RISC 4-way RISC Rack-Mount

Mainframe SMP Server SMP Server Blade Server

4-way x86 Personal Computers Smart Phone

SMP Server

Copyright © 2004 Robert Frances Group, Inc.

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 64-bit RDBMS Servers
• The advantages of expanded memory for
data caching has been proven since the
introduction of the DEC Alpha in 1992
• Real world experience shows that increased
memory 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
Copyright © 2004 Robert Frances Group, Inc.
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It isn't always nice to share...
The choke point in shared disk systems

Shared-nothing systems, like grids, scale

linearly. The challenge is in partitioning
data effectively.
Copyright © 2004 Robert Frances Group, Inc.
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Linux Drivers
Linux Kernel
Maturity
Server
Consolidation Commodity
Chipsets
Linux
Growing
ISV Support
Open Standards Price/performance

Copyright © 2004 Robert Frances Group, Inc.

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 Why Linux?
• Focus on Lower IT • Benefits of commodity
spending infrastructure
• Complexity of legacy • Innovation
architectures • Time to market
• Recognition of Linux as a opportunities
business enabler • Ease of Unix-to-Linux
• Freedom of choice of migration
hardware • Open Standards

Copyright © 2004 Robert Frances Group, Inc.

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 Key Linux Capabilities
Operations & Standards
Organization Compliance
Lower IT Spending ATCA
Address Unpredictable 3G Wireless
Workloads

APIs
Reduce reliance on
Clustering Linux complex legacy
Security architecture
Performance Flexibility to
Scalability Control IT
Innovation
Serviceability Destiny
Technology Time to Market
Architecture
Strategy
Copyright © 2004 Robert Frances Group, Inc.
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 New Economics in BI Platforms
Accepted, popular, open source OS Skills, tools, support, reliability,
Platform for Database and underly the platform with community
Applications costs
Scale-out Database Software Effectively scales to hundreds of
Architectures SMP nodes
Information efficiently delivered
Web distribution of data wherever it is needed
Information access available across
Web-based development the enterprise
Structure and timeliness available to
Inquiry and production reporting in a use data as intelligence, enabling
common tool the enterprise

Copyright © 2004 Robert Frances Group, Inc.

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 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

Copyright © 2004 Robert Frances Group, Inc.

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 Questions & Answers

Evan Bauer Stacey Quandt

Principal Research Fellow Senior Business Analyst
Robert Frances Group Robert Frances Group
Business Advisors to IT Executives Business Advisors to IT Executives
www.rfgonline.com www.rfgonline.com
phone: +1 203 291 6900 (US EasternTime) phone: +1 203 291 6900 (US EasternTime)
eb@evanbauer.com squandt@rfgonline.com

Copyright © 2004 Robert Frances Group, Inc.

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