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February 28, 1999


By CBR Staff Writer

The proposed $270m takeover by Brio Technology of reporting tools vendor Sqribe is a defensive move by the reporting and query tool vendor which is becoming increasingly rattled by the creeping commoditization of analytical application platforms. As IBM, Oracle, Hyperion Solutions and Microsoft in particular, have begun to exert a vice-like grip on the OLAP market, niche vendors, such as Brio, that are unable to play the commoditization game, have found themselves becoming increasingly marginalized. The company’s merger with Sqribe was instigated to offer some protection from the OLAP shake-down. But how successful will it be?

Brio is suffering from the same long-term problem shared by all the vendors in the business intelligence space: the various layers of its software are steadily being devalued by work now well underway at Redmond. Microsoft OLAP technology strategy has led to a situation where a company only requires a browser or another ActiveX-based client, the Microsoft repository, Plato and SQL Server (or some other relational database) to easily build a Brio look-alike from a few relatively thin layers of software.

Give it a year or two and this sort of system will be widely and cheaply available, says Mike Norman, ComputerWire analyst and OLAP specialist. In a sense, Brio then becomes a ‘fifth wheel’ on this analytical applications vehicle. Why would a business want to pay extra for a non-standard infrastructure to run in parallel with a standard infrastructure that’s providing most of the same functionality? asks Norman.

The shifting dynamics of the market left Brio with two choices. The company could either re-fashion its software to directly interface with the emerging infrastructure from Microsoft et al and mirror Appsource’s strategy, or it could position itself as an alternative higher-value infrastructure and follow the path Hyperion, SAP, SAS, and Oracle have taken. Brio chose the second approach.

But time is running out for the business intelligence vendor. Brio has to deliver a higher-valuer platform quickly because it will need to ride the OEM/VAR tide – the key delivery mechanism in the commodity world. It will also need to build on its credibility credentials. You need to position yourself as a vendor that’s there for the long term. This game is going to be played out by the big boys. You only have to look at Gentia for an example of a vendor with a technically competent platform but an ability to pass the credibility gap, says Norman.

Brio feels that with the proposed merger, it is in a better position to deal with both these issues. First, it is backing the theory that bigger is better. (The company will double in size once the acquisition closes some time in late June.) In addition to adding headcount, Sqribe brings Brio a customer base of 7,000 to add to its own 4,000-strong installed base which will have a positive effect on market share figures. Second, the company expects the deal to be neutral to earnings in the fiscal year ending March 2000 and accretive the following year, thereby dispelling any concern that the acquisition will have a negative material impact on earnings. Moreover, it says complete product integration is anticipated within 12 months of the completion of the deal.

Brio currently has four strong selling points. First, it has a decent user model in the repository (for security and for report parameterization). Second, it has a sound approach to integrating relational and non-relational data in the same reporting framework. Third, it can handle mobile users in a seamless manner. Fourth, it has a neat ability to perform impact analysis on metadata changes. Furthermore, Brio has started to provide a development environment to enable people to build against its infrastructure in the latest release, version 6, of the product, which is based around JavaScript. This works with user interface components that operate within Brio’s own desktop environments rather than with standard ActiveX controls or Java Beans.

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Sqribe’s ReportMart, by contrast, provides an entry point or portal to a set of diverse business intelligence resources, including Sqribe’s own reporting technologies (which are based around its SQR reporting language) and other entities packaged as Java Beans, which effectively provide a set of personalized directories within a repository. However, there is little long- term value to be added at this point. ReportMart is just a very thin layer on top of the repository and the COM infrastructure that provides a few additional features. But Microsoft could add the equivalent functionality with a few extensions to its Open Information Model.

Brio and Sqribe know each other well already, having been partners for 18 months or so. As a result they have established simple interfaces between Sqribe’s SQR Enterprise Report Server and Brio’s client query tool products so that storage and access of Brio documents can be made via Scribe’s ReportMart. The two companies say they will formalize those capabilities and release a product integration roadmap before the end of March.

But the job of integrating Sqribe’s ReportMart and Brio is unlikely to be straightforward as it involves integrating the two products’ infrastructures rather than individual product features. The development tools of Brio 6.0 cannot operate directly with most of the entities held within ReportMart, for instance. And there will be similar problems operating directly with reporting components written in Sqribe’s SQR.

The one thing that Brio has in its favor right now is that it may have market dynamics on its side. Hence its unseemly haste to tell the world about 6.0, a product that’s only due for release during the second quarter 1999. However, the Sqribe acquisition still doesn’t give it enough functionality to provide a complete platform for analytic applications. Neither company has significant capability in the area of data extraction, translation and loading. In this light, we can expect Brio to continue its acquisition activities in 1999.

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