The man in charge of this balancing act is John Schwarz, the former CEO of Business Objects who now heads the new BI division at SAP. Schwarz sat down with IDG News Service recently to discuss the integration plans, the future of BI, the emergence of Microsoft as a competitor, and why BI is still so hard to do. As reported separately last week, Schwarz also talked about SAP's plans to retire some overlapping products.

You announced your first joint offerings in January -- nine packages of SAP and Business Objects software -- but you plan much tighter integration in the future. Can you talk about those plans?

Schwarz: I'd be happy to, but I want to make another point first, which is that while we're integrating (Business Objects capabilities) into SAP as tightly as we can, we're giving an equal level of priority to not integrating in such a way that we can't sell outside the SAP domain. So the Oracle, IBM and Microsoft customers are just as important to us as the SAP customers.

Given that, there are some obvious things we have to do, and then some interesting things that we are doing because they'll add a lot of value. The obvious things are, we need to integrate so that customers who have SAP NetWeaver and SAP BW [SAP's data warehousing and BI platform] can use the Business Objects content seamlessly without having to build bridges or connectors.

We used to link using connectors and special bridges because we didn't have access to the technology; now we can use the components that are part of the SAP SOA architecture so that we're integrating directly to those interfaces. So as it relates to access to information, there's going to be a direct link from XI -- our Business Objects platform -- to BW as it is today, but directly, natively integrated.

We will integrate using NetWeaver where appropriate, without dragging NetWeaver along into an independent Business Objects installation.

We are also borrowing technology [from SAP] called Business Intelligence Accelerator, or BI Accelerator, an in-memory data management tool that was built by SAP primarily to improve the performance of access to massive data structures inside BW.

We have attached to BI Accelerator our query and our search capability, we will probably also attach our OLAP client, so we'll be able to do queries or search or slicing-and-dicing of the in-memory data cube with lightning speed. Ultimately, I'd like to use the technology outside of the SAP BW context as well, so we'll have the ability to do in-memory analytics everywhere, so that's a very exciting development on the BI side.

What will that mean for the non-SAP customers?

Schwarz: Obviously, the value of BI Accelerator is performance, it's having access to large volumes of data quickly, so if you take a look at a typical data warehouse at a large company, they'll have billions of rows of information, often with many hundreds of columns of data in each row.

When you start to do global search or start building reports that have to read all that data, the performance starts to be a significant barrier. So the more we can do to make access to that information really instant, the more the data becomes useful.

We are also working in the data integration area to share components in the Master Data Management solution. So SAP has a Master Data Management solution that's currently built primarily to underpin the collection and migration of data into the SAP processes, but we'd like to use it as a way to manage all of the data in the enterprise, whether it's SAP or non-SAP.

What's the timeframe for that?

Schwarz: There will be a continuing stream of improvements coming out in MDM, but because it's such a relatively new field it's hard to predict when there's going to be a definitive end-to-end MDM solution.

Right now we're focused on the PIM [product information management] side because that's where it grew up from. We'd like to deliver a CRM version of MDM and ultimately an HR version for employee data. There's a lot of development going on, I'm just not able to give you a date and say that by the end of the year it will be finished. I doubt if that's likely to be the case.

You have two goals with this merger: to integrate Business Objects technologies more tightly with SAP, but also to stay independent and work with non-SAP platforms. They seem like conflicting goals; how do you reconcile them?

Schwarz: Let me start by explaining the business justification. Business Objects is coming to SAP with more than 70 percent of its revenue based on non-SAP environments. SAP did not spend over $6 billion to lose 70 percent of the revenue that Business Objects brings to the table, it's essential to maintain the run rate in our business.

So we're very committed to it on that basis alone. Secondly, SAP's justification for buying Business Objects was at least partly to increase its own addressable market, and how better than by going after platforms that are non-SAP?

Now, you are right, as you go after this broad market there are trade-offs. The trade-offs are mitigated by SOA. SAP is committed to SOA architecture across the board; all of the services that one needs to see and integrate into SAP are now surfaced using SOA interfaces, and that makes it easy because Business Objects was also an SOA-architected business.

I can see the business incentive, but the challenge is to say independent while giving [SAP CEO] Henning Kagermann the tight integration that he's looking for.

Schwarz: Yes, but I think in that context my challenge is no greater than Rob Ashe's [the former CEO of Cognos, now part of IBM]. IBM is a very neutral company and wants Cognos to support DB2 [IBM's database] as well as Oracle.

If you really want to have a BI component inside a large software company you've got to let the BI component live as it did before, otherwise you destroy its value. Maybe that's not so important for Oracle and Microsoft who are focused on a vertical stack, so Hyperion may have a tougher time in that regard than we do.

Do you see Microsoft emerging quickly as a competitor? They're adding a lot of BI capabilities to SQL Server and tying that to Dynamics.

Schwarz: Microsoft is a credible competitor -- certainly, the technology they are developing for individual users or individual applications is interesting. It's not an enterprise solution yet. Will it ever get there?

We'll see. We work with Microsoft, they OEM some of our technology inside their portfolio, so it's a good relationship. I could see a road map that says we will continue to partner and grow more integrated as we work with a new Office suite and as we work with SharePoint and build collaboration using their tools, or I could see us moving into more of a competitive direction if Microsoft is unwilling to cooperate or if they insist on adding functionality that gets more and more competitive. That road is open, too.

CIO magazine just published an article entitled, "Business Intelligence: A technology category in tumult." These big BI mergers -- Oracle-Hyperion, IBM-Cognos, SAP-Business Objects -- create uncertainty for customers about road maps and where the technology is heading. Why would anyone risk starting a major BI project today?

Schwarz: My experience with customers is that they can't wait. The business drivers for BI are so dramatic and so pressing that no one waits just because they are uncertain about what the vendors are doing. They simply drag us in and have us explain what's going on.

BI vendors talk about how businesses can improve performance by analyzing data from multiple sources, but when you talk to IT people they say it's hard to get even two clean, reliable sources of data for real-time analytics. Why is BI still so hard to do?

Schwarz: The fundamental problem rests in the following: There are on average, in any sizeable organization, six systems that deal with customers -- you've got tools for selling, order processing, billing, maintenance, marketing. These systems were traditionally built independently and each has their own way of describing a customer. So this data is to some degree incorrect, and reconciling which of these systems is the primary, accurate representation of the business is very hard.

So the idea of master data management, which in essence is not a tool issue but a political issue -- figuring out who is the real owner of the information -- is where the real problem arises, and it's different for every customer. So it's hard to come up with a solution which says, out of the box, here's what you do.

You need someone to do the analysis to understand what the sources of data are, how good the systems are that produced that data, which of the systems holds the real canonical version of that information, and then align your systems to that one. Because you can clean up your data once, but if the underlying systems that created the data remain the same, a nanosecond later you need to clean it all again.

Oracle CEO Larry Ellison has said you can overcome this problem by putting all your data in an Oracle database, but obviously that won't work for all customers. So are we just left to struggle with this problem?

Schwarz: I think we are. It's good for our business by the way.

The interesting thing is that many customers can't agree among themselves. I had dinner last night with four CIOs that represented four divisions at a large customer. They are to some degree different businesses, but at the end of the day they deal with the same end consumer, even though the consumer has four different relationships with the company.

They would like to get a single view of the consumer, and there isn't a power in their organization who has the right to decide which is the right view. So they struggle and they compromise and they build subsets of those views that they try to reconcile, and even that's hard to do.

Having good tools is only one part of doing BI. There is also governance and how a company should architect its systems. How much of a role should BI vendors play in telling customers how to design their IT?

Schwarz: A very large role, because BI is wholly dependent on access to information. If the information is not available or architected poorly, or incorrect for that matter, which is 90 percent of the problem, the BI doesn't deliver any value.

So the ability to create a trusted broad universe of information is a fundamental success factor for the customer, which is why we went after the EAI market ourselves, because we didn't want to depend on other players to do it for us.

So what advice do you give them about the ways to architect their system?

Schwarz: We try to deliver reference examples of other customers who have done this successfully, we work with our partners who make their living designing data environments, partners like BackOffice Associates, a premium MDM solutions provider, to make sure their tools are mapped to ours in a way that makes the solution easy.

There are some fairly intellectually intensive techniques that are brought to this problem because it's not a tools issue, it's a design issue.

You've talked about creating a closed-loop process where SAP users will be able to draw from real-time BI data at key decision points in a business process. What does that mean?

Schwarz: That closed-loop process is where we try to link the management of strategy to the management of the execution of day-to-day business processes, and ultimately optimize those processes by understanding, in real time, how well they are delivering results.

What we now need to build are the analytics that will give the business user the opportunity to understand how well is the process performing and how well is the data supporting decisions that the user might want to make. There are already many analytics embedded inside the SAP suite, but we need to add more, we need to make the analytics more industry-specific, and we need to make the analytics more intelligent.

We need to give managers a broader perspective. Today the analytics tend to be buried inside the process, they tend to be very single-process specific, so you get a lot of data out but the synthesis still has to happen in the human mind. We'd like to begin to synthesize bigger pieces of it and deliver analytics that are more useful to a decision maker.

That work is under way right now. We have people across 26 different industry sectors who are building the knowledge and the analytics that are required to bring value to the customers.

Forrester Research Analyst Boris Evelson said the only way BI will become really pervasive is by integrating it tightly with business processes. Instead of having a separate BI portal, an analytics tool will pop up at key decision points in a business process. How do you see the future of BI, will we always have stand-alone BI or will it merge into the background?

Schwarz: You have two types of BI. What I think Boris is talking about is in-process analytics, and I think it's essential and we are doing our piece of that as I'm sure will the other application providers.

However, in order to do what we talked about, which is linking strategy to execution and giving them this closed-loop process, you need to see all your processes operating in concert end-to-end. So, yes, you can instrument any one process in the series and get a view of what that process is doing, but the process may be perfectly fine. If the linkage of the processes is not working well, then the outcome will not be good.

So the value of having an independent BI that can span all these different things and give you the predictive analytics and the model to understand your end-to-end business is just as important as these in-process analytics.

I would argue that there are many BI apps that have nothing to do with the underlying process. Think of a call centre, where you want to do an analysis on the sentiment of the people calling in.

The process that manages the call might be OK, and you might get analytics on how fast they take you to dispatch or how long did you have to wait in queue, but in order to say if you've dealt with a thousand customers in a day and that, in their spoken words they all talked about a certain issue that wasn't necessarily registered in the process itself, how do you get that info out?

So those kinds of BI solutions that are the higher-order capabilities are just as valuable as the embedded BI that Forrester's talking about.