Solid Gold: BI, PM Revenues Set to Surge
BI and PM together constitute an enormous revenue generating opportunity, worth nearly $24 billion in North America alone.
- By Stephen Swoyer
- April 11, 2007
If you’ve ever wondered just what’s behind the respective business intelligence (BI) power plays of big name vendors such as Hewlett-Packard Co. (HP), IBM Corp., Microsoft Corp., Oracle Corp., and SAP AG, you needn’t wonder any longer. According to market watcher AMR Research, the BI and performance management (PM) market segments together constitute an enormous revenue generating opportunity for would-be players, with a total value that could approach $24 billion in North America alone.
Viewed in this context, the litany of big-time acquisitions and major roll-outs in the last year or seems to make sense, such as: Oracle’s $3.3 billion acquisition of Hyperion Solutions Corp., Siebel Systems Inc., and PeopleSoft Inc., among others; HP’s ambitious data warehousing (DW) and BI putsch (capped earlier this year by the acquisition of BI and DW consultancy Knightsbridge Solutions); IBM’s seemingly boundless information integration push; Microsoft’s SQL Server 2005 and Office 2007 two-punch combo; and SAP’s string of BI-related acquisitions and attendant analytics push.
According to AMR estimates, North American companies will spend $23.8 billion this year on BI and PM technology. AMR, which breaks BI and PM revenues down into spending on software, hardware, labor, and integration services, notes that BI- and PM-related expenditures are expected to increase by nearly 9 percent this year. "We are nowhere near the business intelligence and performance management saturation point," said AMR vice-president John Hagerty, in a statement. "The vast majority of companies say they will expand their purchases this year. While BI tools are still the largest area of spending and could be considered the meat and potatoes of this space, analytics applications as well as dashboards and scorecards are growing at a healthy rate."
Spending on bread-and-butter BI tools—which AMR describes as tools that "gather information and provide analysis capabilities"—is expected to reach $6.6 billion this year. Meanwhile, spending on PM tools—such as dashboards and scorecards—will surge to $5.5 billion, according to AMR’s estimates. Organizations are increasingly adopting dashboards and scorecards to help track key performance indicators and monitor ongoing performance, AMR says.
Elsewhere on the PM front, organizations are expected to spend roughly $4.1 billion on planning, budgeting, and forecasting solutions. These are applications that provide a means to model and align resources, activities, and finances to meet strategic objectives, AMR says.
Infrastructure spending should account for about $4.3 billion of all BI and PM spending in 2007, AMR indicates. "Infrastructure" in this sense is hardly a generic term; AMR researchers describe an "analytic" infrastructure as one that enables an organization to store, organize, and prepare a "system of record" for enterprise reporting and analysis activities. Finally, analytic applications—or tools that gather, unify, coordinate, and analyze content-specific information— will generate about $3.4 billion in revenues this year.
That’s a mighty big pie. It could be even bigger, however, if North American organizations had their way: according to AMR’s research, nearly one-fifth (18 percent) of companies cite a lack of resources as the primary impediment to BI and PM expansion inside their businesses. This is good news of a sort for hourly BI pros: these organizations say they plan to spend more on internal services—raising employee head counts—and less on expensive (and comparatively scarce) external consulting resources, AMR researchers say.