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Demand for Analytics Is Off the Hook

The outlook for general-purpose IT spending is mixed and uncertain. One thing that isn't mixed or uncertain, however, is demand for analytical products and services.

For executives and IT pros trying to plan for the Year Ahead, a new IT spending forecast from market watcher International Data Corp. (IDC) is something of a mixed indicator -- in that it explicitly contradicts an earlier spending forecast from rival Forrester Research.

One thing that isn't mixed or uncertain, however, is demand for analytical products and services.

If the Market Research Magic 8-Ball returns an "Outlook Uncertain" when queried about general IT spending, it responds with an unqualified "Without a Doubt" when asked about strong demand for analytics. Market research studies from IDC, Forrester Research, and 451 Research all conclude that demand for analytics is strong. That demand should resolve itself into healthy spending.

The latest IT market forecast, IDC's recently released Worldwide Black Book, offers both good and bad. On the bad front, IDC projects a "major" slowdown in IT spending in 2016, with growth clocking in at an anemic 2 percent. That slowdown comes on the heels of six straight years of constant 5 to 6 percent annual growth according to IDC. That's far from encouraging, to be sure.

Note that IDC's figures are on a constant currency basis. Pegged to the value of the U.S. dollar, the IT market actually declined by 2 percent last year, IDC reports. For 2016, the firm expects volatile exchange rates will be "a wild card which could influence the fortunes of IT suppliers." For what it's worth, a Forrester Webinar hosted in January shares IDC's exchange-rate concerns.

The good news is that analytics should be a source of spending strength in an otherwise down year. "IT buyers continue to prioritize software investments like data analytics and enterprise mobility, and have increasingly leveraged the service provider model in order to increase the effectiveness of their IT budgets," said IDC vice president Stephen Minton, in a statement.

IDC's outlook isn't quite bearish -- "Underlying buyer sentiment is strong," Minton added -- but it isn't bullish. A January IT-spending forecast published by Forrester Research was bullish, however. It found that IT spending on PCs, servers, tablets, and other hardware assets declined by 7.6 percent in 2015, but the firm projected a 2.4 percent uptick for 2016.

That 2.4 percent figure isn't far off of IDC's forecast, but Forrester also projects a 5.7 percent increase in software IT spending for 2016. The Forrester forecast specifically cited demand for analytics as a major engine for growth in 2016. What's more, as the nascent Internet of Things (IoT) grows, Forrester says, we'll see even stronger demand for analytic products and services.

The most interesting of recent spending surveys is one released by 451 Research late last year. That study, 2016 Trends in Data Platforms and Analytics, is a wealth of information. Not surprisingly, 451 Research finds bullish demand for analytical technologies, noting that spending on advanced analytics (33 percent) and machine learning technologies (3 percent) already accounts for 36 percent of the overall market for business intelligence (BI) reporting and analytics spending.

The 451 Report also projects that spending on complex event processing (CEP) -- a foundational technology for IoT -- will grow at a (staggering) compound annual growth rate of 29 percent over the five-year period between 2014 and 2019. In 2014, for comparison's sake, the CEP market sat at approximately $380 million; by 2019, it's expected to approach $1.4 billion.

That's a ringing endorsement of CEP, IoT, and (by implication) advanced analytics and machine-learning technologies. Then there's this: "Event/stream processing has been around for many years, but is now seeing increasing take-up outside early adopter markets (financial services) as more companies look to increase their rate of analysis in order to improve the speed at which they can make business decisions and respond to change," the report explains.

"Stream processing technologies enable enterprises to act on 'fast data.' Predictive analytics tools and techniques enable the business to not only react to this data, but proactively anticipate changing circumstances in order to remain competitive. Again, predictive analytics is in no way new, but it is being more widely adopted, to the extent that many enterprises now expect to take advantage of predictive analytics in their decision-making process."

About the Author

Stephen Swoyer is a technology writer with 20 years of experience. His writing has focused on business intelligence, data warehousing, and analytics for almost 15 years. Swoyer has an abiding interest in tech, but he’s particularly intrigued by the thorny people and process problems technology vendors never, ever want to talk about. You can contact him at evets@alwaysbedisrupting.com.


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