Eying a market for business intelligence software that is projected to grow at a healthy clip over the next several years, Accelrys and InforSense are both looking to use their experience in the scientific workflow software market as a springboard to broader success in the BI realm.
This week in a presentation at the AeA Micro Cap Financial Conference in San Diego, Accelrys officials described the firm as a “scientific business intelligence” company, and outlined the opportunity for its “scientific operating platform” built upon the SciTegic Pipeline Pilot workflow software, sales of which are currently growing more than 40 percent annually.
In the presentation, which was webcast, Accelrys CEO Mark Emkjer reiterated the “business intelligence” message that he has been delivering in the firm’s quarterly earnings calls for around a year. This time, however, he was addressing an audience of investors who were largely unfamiliar with the company’s scientific software background, which presented an opportunity for him to position the firm as an innovator in the burgeoning BI market.
Emkjer said that the company’s experience in the life sciences gives it an advantage in BI, which, broadly defined, applies to software that can help companies improve business decisions and better manage their strategic planning.
“We’re different from traditional business intelligence firms in that we understand biological sequences and chemical structures, and very complex images — [that’s] very different from traditional business intelligence vendors that understand structured text and numerics,” he said during the presentation.
Emkjer added that the company’s software is the “de facto scientific operating platform” for the research market, and that “there is no competitor that has the bevy of science that we have along with a platform capability,” though he did acknowledge that Accelrys’ main rival in the workflow market, InforSense, “does a little bit of business in our space.”
For its part, InforSense also defines itself as a business intelligence provider on its website and in its marketing materials.
David Menninger, vice president of global marketing and product management at InforSense, told BioInform this week that the company’s BI strategy is in step with the market, which has “evolved from point solutions to integrated platforms.”
Menninger echoed Emkjer’s comments that there is a need for more domain-specific solutions in the BI market.
For example, he said, “the ability to store, manipulate, display, and compare chemical compounds is not the first thing that business intelligence vendors are going to add to their generic platforms, but if you want to compete in the life science space, you better be able to do that.” Likewise, “there are some specific ways in which you want to display and manipulate genetic information that is not natural and is not easy to do in a generic business intelligence tool.”
He noted that last year’s rash of high-profile BI acquisitions — SAP acquired Business Objects, IBM acquired Cognos, and Oracle acquired Hyperion — could benefit smaller software shops like InforSense.
“There are two macro trends that are occurring,” Menninger said. “One is that the mega-vendors are expanding their product lines by acquisition, and [the other is that] the smaller innovative vendors are building product lines from the ground up that address the breadth of requirements.”
While the “mega-vendors” generally offer more complete capabilities, “the smaller, innovative vendors tend to have more tightly integrated solutions,” Menninger said.
“If you go to … any of those [large] vendors, if you wanted to use all of their functionality, there’s a legacy of different products being combined into the single product stack, so you end up having to switch from one interface to another, you end up having to synchronize metadata, so there are gaps and ‘gotchas,’” he said.
On the other hand, Menninger said, “if you’re building something from the ground up, you can obviously create tighter integration than if you’re stitching together products that have been acquired and patched together after the fact.”
The BI Boom
If Accelrys and InforSense can establish themselves in the BI market, they stand to ride a wave of continued growth. IT market research firm Gartner last month said it expects the worldwide market for BI platforms to grow 11.2 percent this year to $5.8 billon, and to achieve a compound annual growth rate of 8.1 percent over the next four years to reach $7.7 billion by 2012 (see below for details of Gartner’s definition of the BI market).
Gartner said in a statement that it expects BI platform revenue to be “less affected by an economic downturn than some other technologies” because CIOs in a recent Gartner survey called BI their “No. 1 technology priority” for 2008.
“If you look at that the business intelligence area outside of scientific data, it’s a very hot space.”
IDC, meanwhile, estimates that the BI segment of the broader business analytics market will reach $7.8 billion in 2008, and will enjoy an 11.9-percent CAGR through 2011 to reach nearly $11 billion.
“If you look at that the business intelligence area outside of scientific data, it’s a very hot space,” said Chad Bennett, an analyst with Northland Securities who covers Accelrys. “You’ve had a lot of consolidation … all in the last 12 to 18 months … but all those other business-intelligence guys handle financial data, or accounting data, or sales data. They don’t know how to handle scientific data real well, so that’s [Accelrys’] niche, to be the BI player that handles scientific data going forward.”
Bennett said that the investment community is likely to view a company that defines itself as a business intelligence player much more favorably than one that markets itself as primarily a scientific software shop.
“If you look at the modeling and simulation business, I don’t think any company wants to be associated with that at this point,” he said. “Right or wrong, the investment community views modeling and simulation companies geared toward pharma and biotech as dinosaurs that are going away, just due to layoffs and standardization and more open-source products that are being given away for free.”
He added that Accelrys is looking to shed its image as a modeling and simulation company with “point products” for bioinformatics, cheminformatics, and other applications.
“They’ve dealt with that type of data for a long time, and the idea is they’re going to be able to take that data and put some analytical capabilities behind it and allow large pharmas or large oil and gas companies to more easily share that data, either across business segments or across stages of the product cycle,” he said.
But Gartner analyst Bill Hostmann cautioned that companies like Accelrys and InforSense may not want to stray too far from their life-science roots.
“You can do business intelligence, but you better be really domain-specific to your area,” he said. “And if your area is life sciences, then you better understand the kinds of questions and the kinds of answers that managers of those kinds of domains need.”
Hostmann said that BI technology is “pretty much generic … so the value isn’t in the technology. The value is in the domain expertise, and that’s what everyone is looking for right now.”
New players in the BI market will have to differentiate themselves, he said. “There isn’t a big appetite in the market yet to go buy yet another BI tool from yet another vendor. People are trying to winnow them down. … So unless somebody’s got some unique, unusual capabilities, they’re not going to go and buy another BI platform,” he said.
Success for companies like Accelrys and InforSense in this market “is going to become a function of how well you have domain expertise to be able to communicate, to differentiate yourself,” Hostmann said. “Otherwise, you’re just going to be bumping right into the infrastructure vendors who maybe have some of the same capabilities.”
Indeed, Menninger said that as InforSense has moved into non-life-science customers in the fields of financial services and manufacturing, “we absolutely bump into other business intelligence platform vendors,” but hasn’t yet had that problem in the life-science market.
In that space, however, the firm’s strong footprint in research informatics presents its own problems. “We are first and foremost associated with [customers’] R&D efforts. It’s not like they immediately think of us if they’re doing a business -intelligence application,” Menninger said. “But I would say that there’s a trend that the organizations where we’re successful are ones that are in fact looking for broader applicability of the technology.”
Emkjer said that Accelrys is also seeing broader adoption of its platform within existing customers. As an example, he said that Pfizer currently has 1,500 employees using its scientific operating platform, up from 50 three years ago. By 2010, he said, Accelrys hopes to have “thousands and thousands of users” for its platform within a large company like Pfizer.
“The platform … allows us to begin moving all the way upstream with the customer into development, into clinical, into manufacturing in the case of biopharmaceutical firms, and to get involved in much larger spend patterns,” Emkjer said.
Emkjer estimated that spending in these downstream segments is “at least five, six, seven times as large” as research spending. He did not elaborate.
What is Business Intelligence Software?
Generally speaking, the moniker “business intelligence” could be applied to any software platform that helps firms make business decisions and manage their strategic planning. In attempt to narrow this definition, IT consulting firm Gartner has identified 12 criteria that it considers to be core to any self-respecting BI platform.
According to the firm, successful BI vendors deliver at least eight of the following 12 capabilities:
- Integration: All tools in a BI platform should use the same basic functions, and should share the same look and feel.
- Metadata management: All tools in the system should rely on the same metadata, and the platform should allow users to search, use, and publish metadata objects.
- Development: The platform should provide a set of programmatic development tools, and should enable developers to build BI applications without coding.
- Workflow and collaboration: The system should allow users to share and discuss information, and the application should be able to assign and track events or tasks allotted to specific users.
- Reporting: The platform should allow users to create formatted and interactive reports.
- Dashboards: A subset of reporting, this criterion allows users to publish formal, web-based reports that indicate the state of a performance metric, as opposed to a goal or target value.
- Ad hoc query: The system should enable users to ask their own questions of the data without relying on IT staff to create a specialized report.
- Microsoft Office integration: Gartner notes that for many users, Excel and other Microsoft Office tools act as the primary BI client, making it “vital that the BI vendor provides integration with Microsoft Office.”
- OLAP (On Line Analytical Processing): The platform should enable end users to analyze data with fast query and calculation performance.
- Advanced visualization: The system should display data with interactive pictures and charts, instead of rows and columns.
- Predictive modeling and data mining: The platform should help users to classify categorical variables using mathematical techniques.
- Scorecards: This capability takes the metrics displayed in a dashboard and applies them to a strategy map that aligns performance indicators to a strategic objective.
Source: Gartner’s “Magic Quadrant for Business Intelligence Platforms,” 2008