Abstract
Overview
Introduction
Against the backdrop of a looming recessionary environment in its major end-market, the BI market is witnessing a flurry of large ticket acquisitions and rampant commoditization leading to slowdown in growth rates. This report aims to provide clarity to vendors and investors in BI solutions by simplifying the dynamics of this changing market and forecasting future growth opportunities.
Scope
- Provides an overview of the most important trends affecting the BI market and influencing its competitive dynamics.
- Delivers a comprehensive assessment of BI bundles, in-memory technology, natural language processing, and mobile BI and their impact on end-users.
- Presents Datamonitor' s view on the future of the industry value chain and recommends specific go-to-market strategies for each vendor category.
Report Highlights
The BI market has been abuzz with acquisition and consolidation activity over the last two years due to the entry of several large software vendors. Consolidation has been beneficial for most acquiring and acquired vendors but is starting to affect independent pure-play vendors.
In such a turbulent market, technology evolution has been relatively tepid but increasingly customer focused, as evident from the proliferation of bundles tuned to end-user needs. Emerging technologies such as in-memory analytics and natural language processing also look promising and expand the boundaries of BI analysis.
Datamonitor analyzes the changing dynamics of the market and calls for a re-evaluation of go-to-market strategies by each vendor. Datamonitor believes vendors should assess the diversity of end-user needs and increased competition and target specific channels to reach customers.
Reasons to Purchase
- Gain in-depth knowledge on the dynamics of BI market consolidation and growth strategies of pure-play vendors and conglomerates
- Understand the effects of commoditization on various parts of the value chain
- Adjust go-to-market strategies against current market challenges
Table of Contents
- Overview
- Catalyst
- Summary
- Key Messages
- The wave of consolidation may be beneficial to bothacquiring and acquired companies
- Opportunities from the BI market will still remain solidin real terms
- As market dynamics change, technology will becomeincreasingly customer-focused
- End-users should be aware of long-term implications andlook beyond current turmoil
- Intensifying competition and the entry of larger playerswill integrate the value-chain
- Conglomerates will try to bridge portfolio gaps whilesmaller players exploit niches
- Go-to-market strategies will need to be re-evaluatedagainst current market challenges
- Table of figures
- Table of tables
- Market Opportunity
- The pure-play vendor-dominated BI market is undergoing awave of consolidation
- Consolidation is a likely win-win for acquiring andacquired companies
- Conglomerates will be able to boost growth rates andprofitability riding on BI solutions
- Acquired vendors will be able to combat revenue and margingrowth
challenges better
- Price competition and cost inflation has started to affectpure-play vendors
- Microsoft and other conglomerates are trying tocommoditize basic BI further
- Consolidation will expand the addressable market for BI,benefiting pure-play vendors
- A stabilizing market growth rate still leaves enough roomfor revenue expansion
- Increasing organizational data, shifting userdemographics, and
convergence will drive BI
- Data explosion will continue to fuel demand for monitoringand analysis
- A younger user demographic will adopt BI tools faster
- Convergence will help to expand the addressable market
- Recessionary signals and traditional hindrances to BI mayslow down uptake
- A recessionary environment may affect vendors with highexposure to financial service firms
- Vendor consolidation may foster a "wait-and-see"attitude in end-users
- Traditional roadblocks to BI will still remain
- Long-term growth opportunities exist in spite of theturbulence from consolidation
- Technology Evolution
- Attractiveness of converged bundles to drive acceleratedend-user adoption
- Pre-integrated product bundles
- Add-on industry bundles
- Alternative approaches to data analysis may becomemainstream in the
medium-term
- In-memory analytics could be to BI what just-in-time (JIT)is to manufacturing
- In-memory analytics is faster, simpler and more flexible
- Natural language processing will help BI to analyzecritical but oft-neglected data
- Mobile BI could shift from a ' good-to-have' to a' should-have' feature for reporting
- Technology evolution has been relatively tepid butincreasingly customer focused
- Attractiveness of converged bundles to drive acceleratedend-user adoption
- Customer Impact
- Acquisition frenzy may foster a "wait and see"attitude in end-users
- End-users can derive short-term gains as conglomerateschase market share
- Best-of-breed products and features will probably beretained over the long-term
- The entry of conglomerates will help end-users looking forend-to-end solutions
- Short-term end-user impact is minimal, but expect somelonger-term rationalization
- Competitive Landscape
- Conglomerates, mid-layer, and niche vendors form thecurrent BI market
- Conglomerates
- Mid-Layer
- Niche
- Timing of acquisitions important as valuations driven upby demand
- The reshuffling of vendor categories has disturbed thetraditional BI value chain
- A highly converged future value chain will still containniches for
smaller players
- Pre-integrated product bundles will increase adoption anddrive pervasiveness
- Add-on industry bundles will deliver industry-orientedsolutions, generating higher value
- Complete BI bundles will deliver end-to-end solutions andunlock maximum value
- In spite of converged offerings, some gaps will likelyexist for smaller vendors
- The BI sector could also witness the entry of additionalvendors
- Possible scenarios in the converging market
- An integrated value chain requires conglomerates to bundleas others develop niche skills
- Conglomerates, mid-layer, and niche vendors form thecurrent BI market
- Go to Market
- Look for bundling opportunities when creating new productofferings
- Establish footprint into large enterprises and growth SMEsthrough pre-integrated bundles
- Target business and industry issues in large enterpriseswith add-on industry bundles
- Exploit sub-prime concerns and recessionary signals tohard-sell risk management BI
- Capitalize on channel partnerships and hosted solutions toreach SMEs
- Develop SaaS offerings and innovative pricing models forprice sensitive SMEs
- Leverage channel partnerships to target SMEs that havelimited in-house IT infrastructure
- Recommendations
- For conglomerates:
- Conceptualize, develop, and market bundles at everyopportunity
- Use size and financial muscle to your advantage
- For pure-play vendors:
- Innovate with agility
- Exploit gaps
- Advanced capabilities gap
- Vendor independence gap
- Relationship gap
- Industry alignment gap
- Capitalize on partnerships
- Look for bundling opportunities when creating new productofferings
- APPENDIX
- Definitions
- Methodology
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Major acquisitions in the business intelligencemarket, 2006-2008
- Table 2: Current BI bundles consist of product andindustry bundles
- Table 3: Future BI bundles will combine BI with otherapplications to derive actionable intelligence
- Table 4: Respondents' mobility investment plans
- Table 5: Probability of various BI features to beoffered on mobiles
- Table 6: Respondent' s preferred approach to buying BI
- List of Figures
- Figure 1: Some BI vendors are growing at a higher pacethan their acquirers
- Figure 2: BI vendors exhibited higher margins than theiracquirers in 2007
- Figure 3: A majority of BI vendors are witnessing aslowdown in revenue growth rates
- Figure 4: Several BI vendors are reporting a decline ingross margin
- Figure 5: Growth rates are stabilizing to moresustainable levels
- Figure 6: Relatively mature segments such as retailbanking will witness a gradual slow down
- Figure 7: High exposure of BI vendors to financialservices customers could put them at risk
- Figure 8: The mobile applications market is growing at ahealthy pace
- Figure 9: Number of respondents that currently use orwill use mobility solutions
- Figure 10: Acquisition multiples and sizes of four majorBI M&A deals (2006-2007)
- Figure 11: Traditional value chain: limited overlapbetween layers resulting in commoditization
- Figure 12: Consolidated value chain
- Figure 13: Scenario planning diagram
- Figure 14: Take hosted BI offerings to the UK, Benelux,Australian, and French markets
- Figure 15: Targeting SMEs requires a formidable localand national reseller base
