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Oracle Tops in Red Hot Business Analytic Segment

Oracle controlled 13.2 percent of the overall business analytics market—far ahead of runner-up SAS.

• By Stephen Swoyer
• November 29, 2006

Who’s tops in the red hot business analytics software segment? Oracle Corp., by a long shot, according to recent research from market watcher International Data Corp. In fact, IDC says Oracle controlled nearly one-seventh of the overall business analytics market—far ahead of runner-up SAS Institute Inc., which garnered an 8.2 percent share of overall revenues.

In a sense, this isn’t surprising. Two of Oracle’s biggest acquisitions—PeopleSoft Inc. and Siebel Systems Inc.—brought respected (and, in the case of Siebel, especially) thriving business analytic practices into the Oracle fold.

IBM Corp. rounded out the top three, posting nearly $1.3 billion in revenue. That translated into a slight increase in IBM’s annual business analytic revenue (just under 8 percent) and a corresponding decrease in analytic market share (of 0.2 percent) from 2004 to 2005. Microsoft Corp., Business Objects SA, SAP AG, Cognos Inc., Hyperion Solutions Corp., Teradata (a division of NCR Corp.) and Fair Isaac respectively rounded out the rest of the Top 10.

According to IDC analysts Dan Vesset, Kathleen Wilhide, and Brian McDonough, who tri-authored the report, the business analytics segment is a Big Tent, rife with boutique or specialty opportunities for just about any vendor. For this reason, many of the top ten players have carved out distinctive market niches for themselves.

"Although all of the top 10 vendors derive revenue from more than one segment, many have clearly focused on certain segments of the market. Thus, Oracle, SAS, IBM, Microsoft, and Teradata derive the majority of their [business analytics] revenue from data warehousing tools," the trio writes. "SAP and Fair Isaac do so from analytic applications. Business Objects and Cognos continue to derive most of their revenue from business intelligence tools. Hyperion has the most balanced revenue stream, with about a 50:50 split between business analytic tools and applications."

IDC collectively groups tools for data warehouse generation; data warehouse management; end-user query, reporting, and analysis; advanced analytics; and analytic spatial information management (that’s SIM, for short) in its business analytic software category. That’s in addition to CRM, supply chain, services operations, and financial and business performance management (BPM) software on the application side. All told, it’s a pretty big tent.

It’s a pretty big combined market, too, with the former (analytic tooling) amounting to $11.5 billion in revenue and the latter—i.e., analytic applications—to $5.1 billion. At the same time, the IDC trio notes, these once-discrete markets are increasingly blending together. "In the past, [there was] a clear shift from business analytic tools to business analytic applications. This trend remains intact for many specialty BA vendors," they write. "However, as large IT vendors such as Oracle and Microsoft become more active in the BI tools market, they are counteracting this revenue shift. Thus, the two market segments are expected to continue to grow at about the same rate over the forecast period."

In addition to sales and market share (measured as a percentage of revenue), IDC offers a more subjective assessment of the business analytic market space, measuring vendors in terms of "diversity" (i.e., the breadth and depth of product offerings across all business analytic market segments), "momentum" (the software growth rate of a vendor adjusted for that vendor’s size), and "reliance" (the extent to which a vendor’s total software revenue is dependent on its business analytics software revenue).

Of the top 10 business analytic vendors, IDC says, SAS has the greatest overall diversity of offerings. "SAS has a broad portfolio of products that spans all segments of the market. At the same time it holds one of the top shares in several of the BA market segments," the trio writes. On the momentum tip, SAS was also number one—thanks to an above-market growth rate of 13.6 percent, which (in combination with its sizeable revenue base and pervasiveness in almost all business analytic software categories) helped it finish on top.

Microsoft had the second-strongest momentum, according to IDC: even though Redmond ranks fourth in the overall BA market (with $1.15 billion in revenue), it nevertheless grew its share by nearly one-quarter (23.5 percent) in 2005. That makes the software giant a comer, the IDC braintrust says.

As for IDC’s reliance metric, it’s not surprising that some of the biggest business analytic players—namely, IBM, Microsoft, Oracle, and SAP—are also the least reliant on business analytic revenues. That’s because these vendors generate the bulk of their revenues from thriving relational database or enterprise applications practices, and not primarily from BA sales. "[F]or database-focused vendors [such as IBM, Microsoft, and Oracle] and enterprise applications-focused vendors [such as Oracle and SAP], business analytics software continues to represent less than 25 percent of revenue," they write. "Teradata is an exception to the list of database vendors. …[It] does have other application software revenue, but the company focuses primarily on business analytics."