Consolidation, market maturity to cause slower BI growth, Gartner says
Double-digit growth will slow as Oracle, IBM and SAP become major players
January 22, 2008 (Computerworld) -- While business intelligence remains a mission-critical tool for businesses, the days of double-digit BI market growth are almost over, according to Gartner Inc.
The market researcher cited the massive industry consolidation over the past year, with consistent BI market leaders Business Objects, Hyperion and Cognos getting snapped up by larger software firms, along with the increasing maturity of the technology and price erosion.
On Monday, Gartner said that it expects worldwide growth rates for 2007 -- when the final numbers are tabulated in the next few months -- to be slightly lower than the previous year's 12.5% growth rate, and that worldwide growth rates will tumble into the single digits by 2011.
Analysts suggested that users whose technology has recently been acquired postpone making strategic BI investments until a product road map comes from the new owner. Core products like Hyperion Essbase, now owned by Oracle; Cognos 8, which IBM has agreed to buy; and SAP's Business Objects XI will remain highly strategic and supported by research and development funding. However, Gartner noted that product overlap may cause some secondary products to lose internal support.
"Consolidation activities by SAP, Oracle, IBM and Microsoft should help accelerate the value derived from BI," said Gartner analyst Dan Sommer, in a statement. "Large vendors will drive increased usage, while new BI vendors will emerge introducing innovative technology and products to demonstrate differentiation and fill the gaps in 'mega-vendor' product lines."
But this increased innovation also means that query, reporting and online analytical processing features can be considered commodities that no longer deliver a competitive edge to users, Sommer added. Most vendors now include basic BI capabilities in their product stacks, he added.
Gartner advises companies to broadly extend the use of BI tools in their companies by making them user-friendly, collaborative and process-driven, the firm advises.
The remaining independent BI vendors have gained an advantage over their acquired rivals in getting other firms to resell their tools, Gartner noted. Successful pure-play BI players will continue targeting emerging BI areas like dashboards, predictive modeling, enterprise search and interactive visualization techniques, it said.
The acquisitions and planned purchases of Hyperion, Business Objects and Cognos mean that two-thirds of the BI market has been snapped up by the enterprise software companies, according to Gartner. Thus, the remaining independent BI vendors like SAS Institute, MicroStrategy and Information Builders must ramp up their marketing efforts to maintain their visibility, Gartner said.
North America, Western Europe and Japan are the most significant regions in terms of BI spending and will still account for five-sixths of software revenue by 2011, Gartner noted.