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The State of the Analytics Market Is Healthy -- For Upstart Vendors, That Is

According to a new IDC report, demand for business analytics software -- particularly advanced or predictive analytics -- is growing at a healthy clip. Demand for traditional query and reporting technologies is relatively flat.

• By Steve Swoyer
• September 22, 2016

Based on the performance of IBM, Oracle, SAP, and other traditional industry bellwethers, you wouldn't know that demand for business analytics software is increasing at a fairly healthy clip.

It is, however: sales of business analytics software grew by 2.5 percent in 2015 in current currency terms, according to market-watcher International Data Corp. (IDC).

Advanced Analytics and Cloud Services Driving Growth

Demand grew at an encouraging 10.7 percent rate in constant currency terms, per IDC, which said that "negative impact of currency exchange rates was more pronounced on vendors that derive a greater portion of their revenue outside of the United States."

Interestingly, demand for conventional analytics software -- e.g., query, reporting, and analysis tools -- grew by a meager 0.7 percent last year. This segment accounts for a staggering 72 percent of the overall business analytics software market.

Demand for advanced and predictive analytics software was more robust, growing by 7.8 percent in 2015. This segment accounts for 12.9 percent of the overall market.

We might look back on 2015 as the year in which enterprise analytics workloads started shifting en masse to the cloud. "In 2015, the on-premises portion of the overall market grew only 1.2 percent while the public cloud services revenue grew 38.5 percent," IDC said. "It was the first year that the public cloud revenue was more than 5 percent of the overall BI and analytics tools market."

Beleaguered Bellwethers

Currency fluctuation alone can't account for the sagging performance of industry heavyweights IBM, Oracle, and SAP, however. Oracle continues to lead the business analytics software market, even though its share dipped from 17.3 percent in 2014 to 16.4 percent last year. Oracle's year-over-year revenues also declined -- from $6.97 billion in 2014 to $6.78 billion in 2015.

SAP, the traditional number 2 player in the space, saw its share decline from 14.3 percent in 2014 to 13.1 percent last year. SAP's year-over-year revenues declined by 6.2 percent from 2014 ($5.79 billion) to 2015 ($5.44 billion). IBM, the longtime number 3, saw its share drop from 11.4 percent to 10.3 percent -- and its revenues decrease from $4.6 billion in 2014 to $4.27 billion last year.

Upstart Vendors Growing Fast

While the traditional market leaders are faltering, the upstarts -- Microsoft, Salesforce, Adobe, and (of course) Tableau -- are going gangbusters, as is industry veteran SAS Institute.

Microsoft increased its number4 share of the business analytics software market by 10.4 percent, outpacing its 2013-2014 growth (8.9 percent). Redmond now controls over 9 percent of this market.

SAS isn't an upstart, of course, but it's bucked the trend that has the traditional powers -- including number6 Teradata, which saw its share decline by 7.8 percent -- posting declines. SAS grew its share of the business analytics software market by 4 percent, outpacing its 2013-2014 growth.

Salesforce is number 7, with 1.8 percent of the market. Its revenue growth (at 23.7 percent) was second-highest among the top 10 players and eclipsed its 2013-2014 growth rate (22.3 percent). Adobe, number 8 in IDC's ranking, generated almost $650 million in revenue, growing its share by 14 percent. This outstripped its 2013-2014 growth rate (8.1 percent).

Tableau comes in at number 9 in the IDC tally. At 57.9 percent in 2015, it posted the highest growth rate of all the vendors in the top 10. This was down -- inevitably, really -- from its 2013-2014 growth rate, which exceeded 77 percent. Tableau in 2014 generated $399 million in business analytics software revenue; in 2015, the data visualization specialist nearly doubled that, posting $630.6 million. In just three years, Tableau has gone from controlling 0.6 percent of the market to a 1.5 percent stake.