Gartner Business Intelligence Summit Reveals Changing, Growing BI Market

Friday May 6th 2011 by Drew Robb
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Business intelligence trends include data discovery and dashboard growth, soaring BI revenue and bullish forecasts, and emerging companies challenging the top tier vendors.

Gartner Business Intelligence Summit 2011, held in Los Angeles earlier this week, attracted a record crowd of more than 1,000, showing that business intelligence remains one of the hottest enterprise software markets.

Gartner analyst Bill Hostmann discussed how the business intelligence (BI) market is evolving in his opening keynote. A few years back, BI was all about technology and data warehousing, he said; now it has evolved to embrace areas such as analytics, performance management and business processes.

"We need to shift our brand identity, as BI is now about making better decisions to forward business objectives," said Hostmann.

He laid out a scale of BI maturity. The bottom rung is occupied by those organizations that are "Unaware." These companies may buy BI tools, but don't know how to use them.

"If you buy a violin, that doesn't mean you can play in the orchestra," said Hostmann. "It takes years to acquire the skills required."

The next level is "Opportunistic." These companies might have implemented some form of performance management and analytics and are harnessing them internally. They may even be working on improving data quality. But their projects are largely ad hoc and not well thought out. Various areas of the company may be operating on different analytics engines, for example. Gartner places about 30% of firms in this bracket.

The third level is "Standards." There are just too many skills, technologies and processes that fall under the BI umbrella for companies to avoid standardization. The establishment of standards, said Hostmann, begins with technology. Gartner estimates that 25% of large enterprises are in this category.

At the "Enterprise" level, standards are fully in place. Agreement exists among top management on BI strategy, performance measures and common definitions. Plenty of know how has been accumulated on how to do complex business analyses, and how to implement governance over BI actions. However, relatively few companies have attained this strata.

The final level is "Transformative." What Gartner means by this is using BI to change an entire industry. Hostmann gave the example of an engineering organization that deals with mining, dams, hydroelectric power and offshore drilling. Most of its projects are large, complex and take five years or more. Management has two key performance measures: cost and time.

"Decisions made early have tremendous impact on five-year programs," said Hostmann. "This company saved $800 million and established better customer relations by using BI to make better decisions far earlier in the process. The whole industry is now looking at them to understand how to use BI and analysis."

After laying out this scale, he pointed out that you can't easily jump multiple levels. It takes time to develop the competencies needed to evolve.

"You have to set realistic expectations on what can be achieved as you move from one level of maturity to the next," he said.

He then surprised everyone by stating that some companies have overinvested in business intelligence tools and analytics engines. He cited a bank in Brazil that deployed a real-time infrastructure to facilitate decision making. But the technology couldn't be utilized easily, as the surrounding business process stipulated that it took a month to three months to make those sorts of decisions due to compliance and regulatory rigidity.

"You can overinvest in analysis and BI if your processes are wrong or too rigid," said Hostmann. "But tools and technology are often not the hard part. You have to work out a strategy, achieve management buy-in, and move up the maturity curve."

 

Gartner analyst Rita Sallam delved into more detail on BI trends. She is bullish about the market, noting that 2010 was the first year that business intelligence revenue exceeded $10 billion and was one of the rare areas of software that continued to grow throughout the recession. Last year, sales soared by 13.4%.

"If information is the oil of the 21st century, then BI is its refinery and its biggest opportunity," said Sallam. "BI has remained one of the CIO's top priorities for the past five years."

Within that growth, however, there is plenty of change going on. In 2009, most money went to building BI platforms based on the tools of such companies as Oracle, SAP, Microsoft, IBM and SAS. In 2010, applications rebounded and grew more than the platform side. Sallam said this highlights a focus on advanced analytics and out-of-the box solutions. She also expects BI services to grow by 3X in the coming years.

Another factor behind the platform decline, she added, might have been customer discontent. As the financial picture worsened a couple of years ago, BI vendors such as Actuate and SAP made changes in maintenance that may have caused some discontent with customers. That may have boosted revenue in the short term, but not in the long run. 2010, on the other hand, was characterized by a wave of new releases such as Oracle 11G and IBM Cognos 10. There also appears to be more vendor independence being demonstrated by customers.

On the one hand, Sallam said, many users are standardizing on reporting with the big stack vendors, but on the other side of the coin, business users are demanding easier to use tools. In particular, they are buying flexible data discovery tools to model their own data, as well as mobile interactive tools.

"Those categories of tools are doing well," said Sallam.

MicroStrategy, she said, grew in the double digits due to it mobile dashboards. QlikTech, too, moved into the leaders portion of Gartner's BI Magic Quadrant (MQ) due to its nimble data discovery technology. Its IPO, one of the first in BI for several years, was a big success, she said.

Shifting usage patterns are another trend. Reporting and ad hoc querying may be two of the more common usages of BI, but both are declining, according to Gartner surveys. In contrast, dashboards and interactive visualization are rising rapidly.

"North America grew almost as fast as emerging markets in the past year," said Sallam. "Overall, we expect the market to increase by 11% to 15% annually over the next few years."

One problem for BI in general, though, is low penetration rates. According to Gartner, penetration has been pegged below 30 percent for several years, as only about 28 percent of possible BI users actually access the system. The reason behind this is that they find it too difficult and too time consuming. But younger users arriving on the scene are bringing about a marked shift. They expect their analytics to work just like a Google search. That's why ease of use has emerged as the top buying criterion for the first time. Companies such as Targit, Tableau, Tibco Spotfire, QlikTech, Kxen, Board and LogiXML have emerged to fill this need.

"Purchases by business units are increasing and they will control at least 40% of total BI budgets by 2014," said Sallam. "They want newer and better BI with rapid data discovery and simplicity."

 

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