By computer industry standards, the business-intelligence sector has reached full maturity. Many software makers have been around for more then a decade, and many of them, Information Builders, is even celebrating it’s 26th year. But the market is rife with change and innovation, most of which should benefit corporate buyers in the coming months and years.
True, with IT budgets flat (at best), BI sales have grown a scant 5 percent annually, according to IT advisory firm Gartner, a far cry from the 40 percent jumps that companies such as Brio, Business Objects, Cognos, and others enjoyed during the 1990s. But consulting firm Meta Group says the BI/business-performance management market is far from saturated, and growth could hit 20 to 25 percent if and when the economy recovers. For now, the marketplace has entered into a classic period of consolidation and commoditization. BI providers are merging as a way to maintain market valuations as well as to flesh out their product lines and grab a greater share of customers’ spending. Hyperion’s acquisition of Brio, completed just last month, is but one in a series of high-profile deals that have affected the market this year.
BI covers a lot of ground, from routine financial reporting to analytical applications to software that helps users model business and develop plans and forecasts. It is a label embraced both by companies that make ready-to-go applications (such as Hyperion and Cognos) and those that make software tools that allow customers to develop their own analytical software (Information Builders and Business Objects, among others).
It’s also an arena of interest to enterprise resource planning (ERP) vendors such as SAP, Oracle, and PeopleSoft, each of which has announced expanded BI offerings in the past year. However, feature for feature, many of these tools tend to fall short of the BI software from companies that specialize in that area, says Joshua Greenbaum, principal of Daly City, California-based consulting firm Enterprise Applications Consulting. He says the ERP vendors are virtually giving away BI products to customers that invest in their software suites.
Microsoft, as always, looms large. The software giant seems mainly interested in winning small and midsize businesses, but a forthcoming version of its SQL Server database product, code-named Yukon, is expected to sport much BI capability. “Yukon will be much more competitive with current offerings,” says Richard Sherman, founder and head of Athena IT Solutions, a BI consultancy in Stow, Massachusetts. Meanwhile, Microsoft’s Excel spreadsheet stands supreme as the bedrock number-cruncher which with other products must interface.
That makes for difficult buying decisions, complicated even further by the advent of new, Web-based versions of older products, which are often redesigned to work as suites. Some say all these factors create a situation in which companies may want to step back and assess a long-term BI strategy to which the entire organization can adhere.
New and Improved
On the plus side, the products are getting notably better. ERP vendors aren’t shy about using marketing clout to paralyze markets they seek to enter, but they also have the resources to develop substantive new BI software that can crunch all the data that already resides in their transactional systems. BI and ERP companies are pursuing a common vision of business-performance management (variously billed as BPM, CPM, or EPM). And during the past four years, venture capitalists have plowed nearly $150 million into emerging BI-related firms, according to VentureWire, a Dow Jones daily that tracks venture financing. Many of those start-ups, often founded by veterans of the mainstream BI market, are just now starting to enter the marketplace, making 2004 a good year for scouting future BI-technology trends. Working in the start-ups’ favor is that the main BI tool suites remain incomplete: Meta Group says most big companies still have four or five different BI products to meet users’ needs. Whether these start-ups can win sales in a tight market or are ultimately acquired remains to be seen, but in either case, BI technology is ripe for enhancement.