RESEARCH & RESOURCES

Demand for Analytics Keeps Growing

Growth in demand for business analytic software was impressive last year, and big data is a big reason why.

Judging by the numbers alone, SAS Institute Inc. has its work cut out for it in the market for business analytic software, where it's hard-pressed to hold its own. However, numbers don't tell the whole story. In the fast-growing market for advanced analytic software, for example, SAS is more than holding its own -- it's effectively dominating the market, according to market watcher International Data Corp. (IDC).

IDC's recent Worldwide Business Analytics Software 2012-2016 Forecast report paints a picture of a fast-rising tide in the business analytic software. It's rising so rapidly, in fact, that it's effectively buoying sales for all players. One upshot of this is that traditional analytic powers such as SAS are selling more software, even as the Gang of Four -- IBM Corp., Microsoft Corp., Oracle Corp., and SAP AG -- accounts for almost 60 percent of all business analytic software sales.

In the overall market for business analytic software, SAS currently sits in fifth place. With just over seven percent of all business analytic software sales, it trails market-leader Oracle Corp. -- which controlled almost one-fifth (19.3 percent) of revenues in 2011 -- IBM Corp. (14.5 percent), SAP AG (13.8 percent), and Microsoft Corp. (7.4 percent).

SAS and Microsoft were the only two players in IDC's Top Five that saw their market shares decline in 2011: Microsoft sacrificed 0.2 percent of share between 2010 and 2011, while SAS -- which suffered a significant 0.4 percent decline between 2009 and 2010 -- dropped just a tenth of a percentage point.

Despite the decline in market share, both vendors posted double-digit growth between 2010 and 2011 because growth in the overall market -- along with the Big Three of Oracle, IBM, and SAP -- was robust.

"In 2011, the worldwide business analytics software market grew 13.8 percent, exceeding even the strong 11.6 percent growth of 2010, which had been a rebound year following the dismal performance of recession-plagued 2009," the report -- authored by IDC analysts Brian McDonough, Dan Vesset, David Schubmehl, and Mary Wardley -- indicates.

"Of the three primary segments of the market, the data warehousing platform software segment grew the fastest, at 15.2 percent, followed by the analytic applications segment, which grew at 13.3 percent, and the BI and analytic tools segment, which grew at 13.2 percent."

Demand for business analytic software is a huge driver today, generating almost $32 billion in sales last year. It's likely going to be an even bigger driver over the next few years, thanks to the exploding popularity of big data. "Business analytics technology is finally reaching the mainstream market. Organizations of all sizes worldwide are hearing more about the benefits of business analytics from widely publicized cases about large retailers, social networking sites, search engines, intelligence agencies, and other organizations that generate and analyze vast amounts of data," the report indicates.

Advanced Analytics and SAS

SAS and other analytic pure-plays stand to benefit from growing demand for advanced analytic technologies. A decade ago, shops couldn't meaningfully mine or analyze all of the data they were collecting. Thanks to the advent of big data technologies such as Hadoop, that's no longer the case. With its heritage in data mining and statistical analysis, SAS is already benefitting from demand for advanced analytic technologies, says IDC, noting that SAS "dominates" an advanced analytic market of which it controls more than one-third (35.2) percent.

"SAS continues as the primary driver of advanced analytics that it markets as standalone tools and as the basis for all of its analytic applications, which account for 30 percent of SAS overall software revenue," the report points out.

IBM, Microsoft, Oracle, and SAP didn't come to dominate the overall business analytics market on their own. All four vendors spent their way to the top: IBM, Oracle, and SAP did so by acquiring the three largest BI best of breeds -- the former Cognos Inc., Hyperion Solutions Corp., and Business Objects SA (respectively). Microsoft, for its part, both leveraged the strength of its SQL Server relational database and Office product families and pulled the trigger on a few timely acquisitions, including the former ProClarity Corp. and DATAllegro Corp.

IDC predicts that the same thing will happen in the advanced analytic market.

To some extent, it already has: IBM purchased former statistical analysis pure-play SPSS Inc. three years ago, for example, and several other specialty players (including advanced data visualization specialist Spotfire Inc.) have changed hands over the last few years, too.

"In the past, large IT vendors have not had great success with highly specialized analytic applications. This is partly because each niche segment in itself represents a relatively small revenue opportunity for a large vendor," the report notes, predicting an explosion in the number and variety of industry- and process-specific analytic applications.

"[L]arge vendors [will] need to develop strategies to enter ever more narrowly defined market segments. This ... will provide smaller vendors with an opportunity to showcase their specialized skills in narrowly defined niches of the market," the report concludes. "Large vendors should continue to develop analytic applications that address the largest potential market opportunities while utilizing partners to develop additional applications on top of their BI platforms."

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