Just when you thought IT budgets were recovering, Gartner dumps a bucket of cold water on the notion — particularly in the business intelligence (BI) space. According to new research, spending on BI has stagnated again, and it doesn’t look like the situation will improve in the near future.
Gartner rated SAP as the biggest BI vendor by far, followed by Oracle, IBM, SAS and Microsoft. While Microsoft only ranks fifth, it experienced the most growth in the space in the past 12 months, the survey found.
The report shows that the BI market is increasingly dominated by big vendors who are happy to buy whatever technology they need to give them an edge, as is evidenced by the recent purchase of Jaspersoft, an open source businesses intelligence company, by TIBCO for $185 million.
Only Single-Digit Growth
Given the stagnation in spending in the BI space, which Gartner identified in its Market Share Analysis: Business Intelligence and Analytics Software, 2013 (paid) report, it is likely that the drive to buy any technology that can conceivably give vendors an advantage will intensify.
According to Gartner, BI and analytics software -- a market which consists of BI platforms, corporate performance management suites, analytics and advanced analytics applications -- was worth $14.4 billion in 2013, up eight percent from 2012's revenues of $13.3 billion.
To help understand the perhaps disappointing single digit growth in the BI and analytics space -- which has been the subject of much hype recently -- Gartner offers up three reasons why growth has not met expectations.
1. Macro Economics
The first is the fact that, no matter what anyone says, the macroeconomic environment is still challenging. Despite signs that the world’s developed economies are starting to shake off the difficulties of the last few years, growth is still slow and fragile, and could be reversed by even the smallest upset.
Gartner points to the fact that no region in the world grew faster than 12 percent over the year, which puts a damper on the widespread assumption that developing markets are an untapped source of sales. There is definitely potential in the developing market but, like everywhere else, it’s hard to sign sales.
2. IT Budgets
The second source of trouble, which is related to the first, is that IT budgets in many enterprises have been largely unchanged over the past few years. This is combined with the fact that IT driven traditional BI tools have been over bought in recent years. This means that IT departments are spending whatever money is available to them outside the BI space.
3. Big Data Confusion
The third element that is causing problems is one which vendors can actually do something about. According to Gartner, there is still considerable confusion around the best way to use analytics with big data. Most of the big data investments are happening outside traditional BI in experimental silos, and much of what has been learned there has yet to trickle into the mainstream.
But the issue here may be a little bit more serious than the failure of vendors and researchers to push big data analytics into the mainstream. Could it be that businesses are just turned off to the idea completely?
Only yesterday, for example, we saw that big data, in the words of CMS writer Virginia Backaitis “may not be the ticket that we once thought it was.” It may be that businesses just don’t see the need for it. The jury is still out on this one, but it’s definitely something that vendors need to consider.
However, that is only some of the story. According to Gartner’s Dan Sommer, who says the market is at a tipping point:
As the market shifts gear, we see a series of tipping points in 2014 that will accelerate adoption, but it may come from a different place. These tipping points are that half of BI and analytics spending will be business driven, half of new license spending will be driven by data discovery requirements, and half of organizations will consider deploying BI in the cloud, at least tactically.”
He added that other, smaller vendors that offered analytics over the year to manage the explosion of new information sources got a lot of attention and experienced considerable growth, even if it created a smaller market footprint.
To counter this, the big vendors are expected to dramatically improve their stories around becoming more nimble with data discovery and cloud this year and the next. Finally, analytics is also moving beyond just being a singular tool to become more omnipresent, embedded in various other applications and infrastructures.”
BI Leaders and Applications
Although the overall market is stagnant, competition between the vendors is not. SAP is still the top dog with revenues of $3.1 billion and a market share of 21.3 percent, up 5.3 percent from 2012. However, the really interesting figures were those from Microsoft, which grew at the impressive rate of 15.9 percent, totaling $1.4 billion in revenue:
Even still, Microsoft has some way to go before catching up with SAS, the next vendor above it on the list with revenues of $1.6 billion and growth of 6 percent over the year.
Breaking BI down into segments, the research found that data discovery drove growth in BI platforms, showing a slow but steady shift in emphasis from reporting centric to analysis centric tools. It also shows that the market for advanced analytics is growing, as organizations look for better predictive and prescriptive analytics.
If economic growth continues apace in both North America and the developed economies of Europe, which should also pull the developing economies along, there is no knowing what the figures will show next year. Stagnant as it is now, there is still the potential for considerable future growth.