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BI, Analytic Growth to Slow in 2013, Gartner Says

This year’s projected 7 percent growth rate for BI and analytics software is good -- but hardly spectacular, given that BI software sales grew 16 percent in 2011. What’s dragging down the market?

This year, market watcher Gartner Inc. projects that the global market for business intelligence (BI) and analytics software will grow by a somewhat unspectacular 7 percent.

Sure, that's impressive, but it's not as impressive as it could have been. After all, in 2011, sales grew by 16 percent.

First, the good news: Gartner analysts say a quartet of forces -- cloud, mobile, social, and information -- is driving demand for BI and analytics. At the same time, the uncertain economic outlook, combined with a downturn in big-budget BI deals, is constraining BI growth. Gartner projects sluggish performance over the next few years, with growth in the high-single digits -- at most.

"BI and analytics have grown to become the fourth-largest application software segment as end users continue to prioritize BI and information-centric projects and spending to improve decision making and analysis," said Dan Sommer, principal research analyst at Gartner, in a statement. "As more and more information is generated, business models need reinvention, and it's increasingly clear that mastering analytics on big data will be a key driver for the next economic cycle."

The global market for BI software approached $14 billion in 2013, according to Gartner, which expects sales to eclipse $17 billion by 2016.

One reason for the downturn in big-budget BI deals is an increase in what Gartner describes as “tactical” buys -- in this case, for individual business units or departments.

This kind of purchasing activity is consistent with the “discovery” model touted by BI vendors such as QlikTech Inc. and Tableau Software Inc. "Although this is a mature market and has been a top CIO priority for years, there is still a lot of unmet demand. Every company has numerous subject areas — such as HR, marketing, social and so on -- that have yet to even start with BI and analytics," said Kurt Schlegel, research vice president at Gartner, in the same release.

"The descriptive analytics have largely been completed for most large companies in traditional subject areas, such as finance and sales, but there is still a lot of growth expected for diagnostic, predictive and prescriptive deployments. Since many midsize enterprises have yet to even start their BI and analytic initiatives, we expect the market for BI and analytics platforms will remain one of the fastest-growing software markets."

Another factor could be the still-gestating data-as-a-service (DaaS) market, which -- thanks to offerings from both Google Inc. (BigQuery) and Amazon (Redshift, an Amazon Web Services offering) -- suddenly seems much more creditable.

True, Gartner stresses: organizations still tend to roll their own in-house analytic apps. That's changing, however. “[O]rganizations increasingly will subscribe to industry-specific data services that bundle a narrow set of data with BI and analytic capabilities embedded,” the release indicated. Gartner sees DaaS as effectively inevitable, projecting that most vendors -- with enthusiasm or reluctance -- will ultimately introduce DaaS offerings.

“[T]his trend has the potential to grow the market significantly as a range of vendors look to embed a BI and analytic platform provider's software capabilities into their data-as-a-service offerings,” Gartner concluded.

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