Local research house BMI-TechKnowledge predicts that the business intelligence (BI) tools market will grow at a compound annual growth rate of 19% during the next four years, reaching R632 million by 2006.
BMI-TechKnowledge makes the prediction in its first South African Business Intelligence Tools Market Assessment and Forecast, 2001-2006.
According to Andreas Bertoldi, e-service division manager and one of the report authors: "While some of the BI tools segments are expected to decline, the overall BI tools market is expected to increase at a faster rate (coming off a low base) than the general software market. The total BI tools market was valued at R262 million in 2001, up from R220 million in 2000."
The report defines business tools as online analytical processing (OLAP) tools, executive information systems (EIS), end-user query and reporting tools, packaged data marts and data mining software.
Bertoldi says: "The maturity and greater level of ERM [enterprise resource management] application integration is driving the need for increased data management, while the explosion of Internet usage has added to this complexity. Current BI tools adoption levels are low, with most companies having disparate tools implementations. It should also be noted that perhaps the key 'BI tool` in SA at present, is the spreadsheet. While levels of awareness vary greatly across company size classes and sectors, the overall indicators are that almost 10% of companies interviewed plan to implement some BI tool by the end of 2002."
BMI believes the SA market is too small for the large number of current players and foresees considerable fall-out as smaller players exit the market, move to an indirect presence via value-added resellers, or are acquired by larger software players. For traditional BI tools vendors, the market will increasingly become competitive as enterprise resource planning, database and other vendors enter and promote the market for bundled tool sets. Consolidation is expected at the upper end of the BI tools market, while the bottom-end of the standalone tools market is likely to become commoditised as players like Microsoft bundle BI functionality into mass-market applications such as Excel.
"Integration and value extraction will be the key focus areas for businesses, which will drive BI tools adoption. This will also place increasing emphasis on consulting, implementation and other services. For large organisations with existing disparate BI tools implementations, the shift towards an integrated BI solution will be critical. This will mean that services and support will be crucial to survival for BI vendors in the local market as well as the ability to offer more complex BI solutions - primarily through partnerships," says Bertoldi.
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