The days of strong double-digit growth in the business intelligence (BI) market are over as the industry enters a state of flux following vendor consolidation, increasing maturity and price erosion, says Gartner.
However, BI remains mission-critical for businesses as it turns information into an asset for deriving insight and making decisions.
Speaking ahead of the Gartner BI Summit, to be held from 5 to 7 February in Amsterdam, The Netherlands, Gartner analysts said worldwide growth rates in 2007 are expected to be slightly lower than the previous year, at 12.5%. The growth will move into single-digits beyond $7 billion by 2011, with a five-year compound annual growth rate of 8.6%.
Following consolidation among BI vendors, Gartner added that value to users can also increase as a result of mergers and acquisitions in the market.
"Consolidation activities by SAP, Oracle, IBM and Microsoft should help accelerate the value derived from BI," said Dan Sommer, Gartner senior research analyst and presenter at the Gartner BI Summit.
"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."
Sommer added that increased BI innovation also means query, reporting and online analytical processing capabilities have reached parity and no longer deliver a competitive edge.
"Most vendors now include these basic BI capabilities in their product stacks, including Microsoft, which added more BI functionalities in SQL Server 2005, Office 2007 and PerformancePoint Server," he said.
"Remaining pure-play vendors can recruit application vendors (not SAP, Oracle or Microsoft) as original equipment manufacturers of their BI platform to provide analytical applications, or leverage relationships with value-added resellers for domain-specific solutions."
Successful pure-play BI vendors will incorporate emerging areas in BI such as dashboards, predictive modelling, enterprise search, interactive visualisation techniques and in-memory analytics, he said.
"Hosted BI through software as a service is one new approach being pioneered by a cluster of vendors, including Seatab and LucidEra. They can also continue thriving by specialising by industry or geographic region. In addition, smaller and medium-sized organisations are becoming an important target market for BI vendors, with a large proportion being new opportunities."
The big vendors
The acquisitions by Oracle (Hyperion), SAP (Business Objects, still pending) and IBM (Cognos, still pending) in 2007 were disrupters for the market, which, if they are finalised, will eliminate all larger publicly traded BI companies, he said.
"Overall, more than two-thirds of the current BI market is now attributed to the mega-vendors.
"The remaining BI powerhouse vendors SAS, Microstrategy, Information Builders; and more so smaller BI vendors such as Arcplan, Panorama, or Qliktech, will need to increase market push to stay visible above the increased noise from the 'big four'."
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, Sommer said.
"However, 'greenfield' opportunities, together with fast economic and structural developments, will fuel double-digit growth in Asia/Pacific, Eastern Europe, the Middle East and Africa, and Latin America.
"Gartner advises end-users of BI solutions from vendors that have recently been acquired to hold strategic investments until a product roadmap has been clearly presented from the vendor," said Sommer.
"While there is no doubt that the acquired core products, such as Oracle's Hyperion Essbase, Business Objects XI, or Cognos 8 will remain highly strategic and supported by extensive research and development funding, overlapping products in a vendor's portfolio may see some defocus in the mid-term."
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