RESEARCH & RESOURCES

Business Intelligence Stands Up to a Bear Market

New research from Gartner paints a surprisingly bright picture of BI spending, with greater than 20 percent growth last year.

Since the advent of the financial crisis last year, business intelligence (BI) and data warehousing (DW) players have touted BI as a potential safe harbor in a sea of cost-cutting. Smart companies invest in BI (and its DW underpinnings) in such rocky times, industry players have argued.

Although it is still too early to for sure, new research from Gartner Inc. paints a surprisingly bright picture of BI spending, with greater than 20 percent growth (21.7 percent) last year.

True, the Gartner numbers don't take into account the revised budgetary landscape of 2009 -- but they do encompass the last four months of 2008, during which the situation in the financial sector escalated. For the year, Gartner found, BI platform, analytic application, and performance management (PM) revenues topped $8.8 billion, a better than 20 percent increase over 2007's performance.

Gartner analysts say that the consolidation shockwave that rippled through the BI segment in 2007 -- during which independent pure-plays Hyperion Solutions Corp., Business Objects SA, and Cognos Inc. were consecutively acquired by Oracle Corp., SAP AG, and IBM Corp., respectively -- was a primary growth driver.

"Industry consolidation has led to an increase in growth, despite the necessary product rationalizations and organizational changes," said Dan Sommer, senior research analyst at Gartner, in a statement. "The large stack vendors, especially the application vendors, have put a lot of focus and sales power behind their newly acquired BI products, with accelerated migrations and upgrades in the installed base as a result."

Industry consolidation helped vault applications giant SAP -- which not only had its own creditable BI practice (built on top of the NetWeaver BI stack), but had recently acquired the assets of PM player OutlookSoft -- to the very top of the business intelligence market heap, such that by the end of 2008 it controlled almost one-quarter (24 percent) of the overall market.

BI pure-play, analytics powerhouse, data mining specialist, and data integration (DI) stalwart SAS Institute Inc. ranked second in Gartner's BI industry power rankings, ahead of giants Oracle, IBM, and Microsoft Corp. SAS controlled almost 15 percent of the BI market in 2008 -- slightly outpacing (by $2.6 million in revenue) Oracle, and far outstripping both IBM (with 11.3 percent share and $996.5 million) and Microsoft (with 7.7 percent share and $681.3 million).

The consolidation trend hasn't been all upside for the industry -- not for many BI pure-plays, at least. Notwithstanding SAS' success, other players -- particularly "mid-tier" independent vendors -- have struggled, Gartner reports. "Most, but not all, of the midtier independent BI vendors targeting the enterprise struggled more, which indicates that there is bifurcation in buying to either more stack-centric behavior, or smaller tactical departmental projects," said Sommer.

This jibes with what other industry watchers say they're seeing. In an interview earlier this year, industry expert Cindi Howson, a principal with BIScorecard.com, conceded that SAP and Oracle have generated some momentum -- thanks largely to the attraction of canned integration with their enterprise applications. (Howson particularly cites Oracle's BI Applications in this regard.)

For BI independents, Howson says that market success is chiefly a question of articulating a compelling vision -- or, more precisely, of offering sufficient contrast or differentiation.

"I continue to believe that the ones who differentiate and articulate their unique selling point well are the ones who are continuing to do well," said Howson, during the same interview. She specifically cites both SAS and MicroStrategy Inc., which Gartner has at No. 7, just after Microsoft. (Granted, MicroStrategy's share of the BI market stands at just 3.2 percent.)

Elsewhere, the Gartner survey paints a picture of healthy growth in both the BI platform segment -- which accounted for 65.3 percent of overall BI spending -- and in the burgeoning analytic applications and PM space, which garnered the other 34.7 percent. For the year, uptake of analytic and PM applications slightly outpaced BI platform sales, 24.3 percent to 20.4 percent, respectively.

Gartner isn't all that sanguine about the BI and PM segments continuing to buck a downward trend in 2009, however. "Demand for BI, analytics and performance management is relatively strong even in a bearish economy. However, we don't expect these two markets to sustain the same high growth rate in 2009, as much of it came from the lowest-hanging fruit in up-selling products of an acquired company to an existing installed base and because the first half of 2009 was softer due to the recession," Sommer concluded.

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