Gartner predicts slow growth in BI during 2008

Analyst firm Gartner predicts a slow growth in the business intelligence (BI) market during 2008 because of its increasing maturity.

Gartner expects the BI market growth rate to be at 12.5 per cent this year, and to move beyond $7bn by 2011.

Nigel Rayner, Gartner research vice president, said that as markets mature, growth rates tend to decrease and this leads to consolidation. “Increasing consolidation in a market reflects its maturity,” he added.

The BI market maturity is reflected by lack of differentiation between BI solutions, Rayner said, because of this it has become harder for vendors to deliver a competitive edge in capabilities such query, reporting and online analytical processing.

“This is a popular space that has been commoditised, and most organisations have technology that is mature and a proliferation of BI tools,” Rayner said, adding that the outcome of this is buyers are putting pressure on vendors to lower prices, and in many cases organisations have multiple platforms they need to rationalise.

Gartner’s report warned of “mega-vendor domination” and said two-thirds of the current BI market is now attributed to the mega vendors.

“The remaining BI powerhouse vendors SAS, Microstrategy, Information Builders, and more so, smaller BI vendors, such as Arcplan, Panorama, or Qliktech, will need to increase market push to stay visible above the increased noise from the big four,” said the Gartner report.

With this mega vendor domination, there will be less opportunity for new comers to enter the market and bring through innovative solutions, Rayner warned.

But there are still opportunities for innovation in 64bit technology and advanced visualisation techniques, Rayner said. Other areas “emerging” areas, according to Gartner are: predictive modelling, enterprise search, interactive visualisation techniques and in-memory analytics, and notes they are being incorporated by pure-play vendors. Also, hosting BI as software-as-a-service is being pioneered by vendors such as Seatub and LucidEra, the report notes.

To ensure more growth opportunities Gartner recommends BI vendors to specialise in an industry or geographic region, as well as target smaller and midsize organisations. Additionally, Gartner pointed to “Greenfield” opportunities in Asia, Eastern Europe, the Middle East and Africa, where economic and structural developments are likely to fuel double-digit growth.

Rayner also discussed the outgrowth of a new market from BI; corporate performance management, and referred to an online survey Gartner recently took of 603 IT professionals working in the BI area. The results show the second most popular tool used for BI purposes is the spreadsheet, while the most popular solutions are reporting tools.

The significance of the Excel spreadsheet's popularity is that it shows BI tools are too simple for users and users need more complex tools which they can use to manipulate data, Rayner said.

“The corporate performance management market has emerged over the last five years and is the fastest growing market we track,” Rayner said.

While the BI market is beginning to stall in growth, the corporate performance management market increased by 20.2 per cent last year, and the reasons for this are because it allows end users capabilities such as reporting and forward planning, said the analyst firm.

The increasing growth of the new market is also fuelling a lot of the BI market consolidation, Rayner explained. It is one of the reasons for SAP buying Business Objects and for Oracle buying Hyperion, Rayner said, adding that Microsoft’s PerformancePoint Server is also competing in the space.

The focus of Gartner’s February BI Summit in Amsterdam will be on these changes occurring in the BI market.

“The market is changing to help business people manage business performance more effectively rather than just providing query and reporting tools in the hope that they might find out about more in business performance,” said Rayner.