David Housman

Actuate: Open Source Business Intelligence

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Excerpt from Task 4 from “Elements of Software Management” taught by Professor Ravi Thomas. Part of Master of Science in Software Management curriculum, Carnegie Mellon University, Silicon Valley.

(from page 6)

Product Differentiation & Positioning

Actuate is not destined to become the market leader of the enterprise BI software market. It doesn’t possess the resources or product capabilities to compete directly with the software mega vendors. Instead Actuate has focused its resources on a narrow scope.

Within the greater context of Business Intelligence, ActuateOne is a niche player. Actuate delivers a high quality product with capabilities that are powerful enough to rival any reporting tool on the market. ActuateOne has a high level of customizability, and a high degree of scalability, and features that make it attractive to large corporations. It also delivers usability and consolidated supporting hardware- reducing costs for training and maintenance, giving it a wider appeal across corporations of different sizes. No matter what the future holds, Actuate cannot sacrifice the cornerstone of its reputation: delivering a reporting tool that rivals any on the market. Efforts toward diversification or improved competition must be secondary to Actuate’s brand.

Actuate’s primary threat is from above- the Mega-vendors that match and exceed Actuate’s offering, and offer integration with ERM systems out of the box. If the market continues to tighten, or if a Mega-Vendor reaches hard times, they may be tempted to horizontally integrate into the middle and low ends of the market. Even now, sales pitches will only become more challenging when the discussion turns to costs associated with implementation. In order to safeguard its long term prosperity, Actuate needs to begin devoting resources to matching its competitors’ ability to integrate with ERM systems now,. Similarly Actuate can keep its product offering competitive through strategic partnerships with high quality niche vendors that may get tired of waiting for the Mega-Vendors to find the inclination to put them out of business.

Leverage Lock-in

For Actuate, customer lock-in is about more than customer retention: it means that Actuate has the inside track to upselling Eclipse BIRT users. Once a contract has been signed, the resources involved in implementing BIRT and training users to use BIRT create significant lock in. Despite the migration packs offered by Actuate and Crystal Reports, any switch to another vendor is costly. Costs of switching between Eclipse BIRT and Actuate BIRT are much lower. When adolescent companies are deciding which commercial solution to use, it is be difficult to ignore savings from upgrading to Actuate BIRT when compared to adopting a competitor’s solution. Actuate’s adoption costs start low for smaller companies; they scale with the size of the implementation, and can quickly become a sizeable investment. This makes adoption of Eclipse BIRT essential to Actuate’s future.

There are a limited number of businesses that grow to become SMEs. Eclipse BIRT is free and can be adopted by small companies that would ordinarily be priced out of the Enterprise Reporting BI market. When small companies using BIRT grow to become big companies, their reporting needs grow as well. Eventually some Eclipse BIRT customers grow to need the services of a more comprehensive solution. Actuate courts a finite number of Small and Medium Enterprises.

Pushing adoption of Eclipse BIRT, a product that sees no revenue, may seem like a bad investment. But in the long run, it will open doors for Actuate to court demographics outside its traditional niche, broadening the market for its products and laying the groundwork for easier customer acquisition in the future. Every user Eclipse BIRT acquires is a potential Actuate BIRT client in the making. Moreover, this is a sales tactic that Actuate’s competitors cannot use. For every sale that Actuate doesn’t make, it should leave the prospective client with an implementation manual for Eclipse BIRT.

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