At the end of last week Gartner published two different statements that contain all kinds of interesting facts and figures that together show that sales figures for business intelligence (BI) applications have taken a dramatic nose-dive. The market, it says, is being hit by the triple whammy of poor economic conditions, enterprise confusion over analytics and big data, and signs of market fragmentation caused by new entrants with funky new offerings.
BI Market Growth
However, before anyone starts predicting the demise of the business intelligence market in the same way that peddlers of bad news and misery are picking over the bones of the PC market, keep in mind that the BI market grew by 7% last year with impressive global revenues of US$ 13.1 billion.
The bad news, however, is that this is a drop from 2011 when the market grew by 17%. It also points to a market that is being badly hit by tough global economic conditions as well as new and emerging trends across BI, corporate performance management software, analytics and big data software that signal a difficult few years ahead.
After a few historic banner years of spend in the BI software market, which culminated in more than 17 percent growth in 2011, growth was more subdued in 2012, at 7%...While this seems like a dramatic drop, it was in line with our forecasts published during 2012,” Dan Sommer of Gartner said.
Business Intelligence Trends
In other words, if no one else saw it coming, Gartner did, and it wasn’t all that difficult to predict either. IT spending globally is slowing down, but in the BI market there are other factors at play that Gartner has broken down into five different elements:
- Challenging macroeconomic
- Term confusion around "analytics," "big data" and "BI"
- BI spending moves outside IT
- Data discovery goes mainstream
- SaaS became preferred option for granular analytics
Combined, while they still enabled the 7% growth that we did see over 2012, they collectively negatively impacted on that growth and created uncertainty in enterprises on how to move forward in this space in coming months, and even years.
For the moment, though, the five main players in the market maintained their position even if IBM and SAS exchanged places, pushing IBM into third above SAS and behind SAP in first position and Oracle in second place.
While Microsoft came in fifth and last it must, to some extent be happy with the result, even if it still only holds 9.1% of the market. This, however, was built growth of 12.2% over the year, as opposed to 0.6% for leader SAP.
In the face of these changes, Gartner says, IT needs to respond quickly to a world that is becoming increasingly dependent on analytics.
BI Future
IT departments need to play a core role in the development of new business models based on these technologies. Until now analytics has been built mainly around IT projects, but as digital technologies mature and start pulling together -- what Gartner describes as the Nexus of Forces -- CIO’s need to be proactive rather than reactive.
The percentages here are impressive and provide a storm-warning to any enterprise that refuses to be convinced.
Gartner predicts that analytics will reach 50 percent of potential users by 2014. By 2020, that figure will be 75 percent, and we will be in a world where systems of record, systems of differentiation and systems of innovation are enabling IT, business and individuals to analyze data in a much denser fashion than before. Post 2020 we’ll be heading toward 100 percent of potential users and into the realms of the Internet of Everything.”
Returning to the earlier figures that show a decline in growth, Sommer identifies the three main factors that are causing enterprises problems and are holding back investment in the different technologies associated with BI.
- Ease of use
- Performance
- Relevance
Only those that have moved to the dark side of technology will ignore them. Even Facebook and those developing Web browsers have had to listen and have implemented significant improvements in all of these areas.
BI Market Fragmentation
But the problems for established vendors don’t stop there. New and emerging functionalities that are being developed by agile, smaller, new entrants look set to shatter the status quo.
In this respect, Sommer points to interactive visualization and data discovery tools. These, he says, are tools with striking interfaces where you can mash-up data and push it into memory.
This area of BI alone is growing at three times the rate of traditional BI front ends and will reach a market value of US$ 1 billion by the end of next year.
Vendors that are dominating this segment are newbies like QlikTech, Spotfire or Tableau, even if more established vendors like IBM, Microsoft, MicroStrategy and SAS have all introduced competing technologies in the past month.
Another shift he identifies is the move from build to buy. There are now tools that address just about any specific need such as workforce analytics, fraud analytics, or churn analytics (churn rate being the number of people that cancel your services) for telecommunications.
The result of all this is that the market is opening up to an entirely new set of vendors to counter the dominance of the bigger players. These tend to be SaaS and data-as-a-service providers, or those that are developing products for single verticals, or for one horizontal context.
Even if the current wave of acquisitions and consolidation continues, new analytic applications will continue to emerge with innovation coming from smaller vendors on the fringes resulting in further fragmentation of the market.
As both the OECD and IMF have predicted that, globally, the path to full economic recovery and spending is 18 months away, it looks like the BI market at least, is facing a lot of unsettled weather in the coming months.
Original article and pictures take www.cmswire.com site
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