Expected impact of recent EPM/BI software consolidation on independent consulting (and what you should be doing about it)

The long anticipated consolidation of the EPM and BI software industry is well underway. With Oracle's acquisition of Hyperion complete and SAP's announced intent to acquire Business Objects, two of the top tier EPM/BI pure play software vendors will soon be absorbed by two industry behemoths. Putting aside for a moment that SAS, Cognos and a handful of smaller BI/EPM pure plays remain independent (for now), the times are changing for the majority of consulting "partners". Firms that can anticipate change and adapt will likely thrive, while those taking a "business as usual" approach will be spending more time on the bench.

Before attempting to figure out the short and long term consequences to your business, especially if it is highly dependent on customers of Hyperion or Business Objects, it is important to first understand the "big picture". By big picture, I mean how Oracle and SAP view the world and your company's role in it. Like any technology vendor, SAP and Oracle leverage channel partners to provide market coverage and services to customer segments not covered by their own sales and professional services organizations. Unlike most technology vendors, there are not a lot of market segments that SAP and Oracle can't cover directly. Oracle has more sales people focused on just selling training than Hyperion had sales people and more directly employed consultants than Hyperion had employees. Whether the smaller software firms want to admit or not, they are highly dependent on their partner ecosystems to fill gaps in their own product development, pre-sales and consulting organizations. This is much less the case with the mega firms.

So if Oracle and SAP can afford to put a sales and consulting office on the moon, why do they want small partners? Actually, the question is "where" do they want small partners? The answer is, yeah you know what's coming...the MID MARKET baby! The good news is that the big firms actually have reasonable definitions for the mid market. While smaller vendors use mid market as a euphemism to mean "accounts that we think will never buy our stuff so let's see if we can get partners to focus on them", the major vendors generally segment the mid market as accounts with annual revenue/turnover of less than $1 billion US.

If your favorite vendor sales rep is not calling as often as she used to, it may be time to make some adjustments to your business plan. Here are a few ideas that can help you or your consultants get back in the saddle and off the bench:

1. Become specialized: Small firms with unique solutions targeting a vertical or functional business need will remain in demand while generalists will struggle. Be careful not to overestimate the "uniqueness" of your solution if a major vendor has their sights set on providing the same or similar solution.

2. Buddy up with the big kids on the playground: Explore alliances with global SI's (IBM, Accenture, Deloitte, etc...) who are always looking for specialized subcontracting help and are harder for the IT vendors to push around. The GSIs are complicated and while partnering is not easy to figure out on your own, it can be very lucrative.

3. Expand your network: Identify and team up with other small firms to collectively provide a broader footprint of services and value within your existing client relationships. Use our upcoming Orchestra Online application to find specialized resources from other small firms like yours while making your experts available for contracting to the community as well.

4. Get organized: I'm not talking Jimmy Hoffa organized, but it is tough for any one small firm to exert meaningful influence on their own. IT vendors will at least listen intently when an entire community of partners present common issues with a unified voice. Typically, vendor management hear fragmented messages from individual partners only seeking to advance their own parochial agendas (yawn). Leverage HyNote BackStage (this site) to get your voice heard by participating in vendor-related forum discussions and surveys.

- Mike Dayton