First, some quick history.
- I first heard of KXEN 7-8 years ago from Roman Bukary, then of SAP. He positioned KXEN as an easy-to-embed predictive modeling tool, which was getting various interesting partnerships and OEM deals.
- Returning those near-roots, KXEN is being bought (Q4 expected close) by SAP.
- I say “near roots” because KXEN’s original story had something to do with SVMs (Support Vector Machines).
- But that was already old news back in 2006, and KXEN had pivoted to a simpler and more automated modeling approach. Presumably, this ease of modeling was part of the reason for KXEN’s OEM/partnership appeal.
However, I don’t want to give the impression that KXEN is the second coming of Crystal Reports. Most of what I heard about KXEN’s partnership chops, after Roman’s original heads-up, came from Teradata. Even KXEN itself didn’t seem to see that as a major part of their strategy.
And by the way, KXEN is yet another example of my observation that fancy math rarely drives great enterprise software success.
KXEN’s most recent strategies are perhaps best described by contrasting it to the vastly larger SAS.
- SAS is built around a programming language for statisticians. KXEN tries to automate away many of the steps that SAS experts would program.
- This goes to the extreme that statistically-astute businesspeople are supposed to be able to use KXEN themselves. (However, it’s a general rule — dating back to the 1970s — that marketing claims of “programmers/technologists/experts aren’t needed” tend to be more aspirational than accurate.)
- SAS tries to offer every statistical and machine learning algorithm under the sun. KXEN is pretty focused on a single statistical approach.
- KXEN has followed SAS into offering applications. (It’s also a general rule that predictive modeling “apps” tend to be more in the way of quick-starts than complete products.)
- KXEN has recently tried to sell into markets where SAS isn’t strong, for example internet companies.
That all sounds a bit like a disruption narrative, but KXEN CEO John Ball never gave me the impression he thought strongly in those terms. And indeed KXEN never disrupted much of anything.
So what will SAP do with KXEN? Integrating predictive modeling and business intelligence is both important and difficult. So I imagine they’ll try, but I won’t hold my breath for great short-term success.
The bigger win could come on the application side. I’m skeptical about “analytic applications”, because it’s so tough to build complete ones. But let’s imagine an application that had elements of:
- Database query and update.
- Reporting and perhaps other BI.
- Predictive modeling.
That would seem more plausible, because it allows the analytic aspects to be smaller and more circumscribed.
As for which specific application areas could use predictive components, the usual suspects are:
- Above all, marketing and CRM (Customer Relationship Management).
- Risk, although KXEN is nowhere near handling hardcore Basel III compliance, Monte Carlo techniques, or anything like that.
- Quality, especially if we include maintenance as part of quality.
I imagine SAP will start trying to integrate KXEN in some of those areas.