Business Intelligence: Consolidation and Beyond (Strategic Focus) - This report provides comprehensive analysis of the business intelligence (BI) market focusing on market opportunities, evolution of technology, the competitive landscape, customers' conce

Business Intelligence: Consolidation and Beyond (Strategic Focus) - This report provides comprehensive analysis of the business intelligence (BI) market focusing on market opportunities, evolution of technology, the competitive landscape, customers' conce

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.

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.

Overview 1
Catalyst 1
Summary 1
Key Messages 2
The wave of consolidation may be beneficial to both acquiring and acquired companies 2
Opportunities from the BI market will still remain solid in real terms 2
As market dynamics change, technology will become increasingly customer-focused 2
End-users should be aware of long-term implications and look beyond current turmoil 2
Intensifying competition and the entry of larger players will integrate the value-chain 2
Conglomerates will try to bridge portfolio gaps while smaller players exploit niches 2
Go-to-market strategies will need to be re-evaluated against current market challenges 2
Table of figures 4
Table of tables 4
Market Opportunity 5
The pure-play vendor-dominated BI market is undergoing a wave of consolidation 5
Consolidation is a likely win-win for acquiring and acquired companies 6
Conglomerates will be able to boost growth rates and profitability riding on BI solutions 6
Acquired vendors will be able to combat revenue and margin growth challenges better 8
Price competition and cost inflation has started to affect pure-play vendors 8
Microsoft and other conglomerates are trying to commoditize basic BI further 11
Consolidation will expand the addressable market for BI, benefiting pure-play vendors 11
A stabilizing market growth rate still leaves enough room for revenue expansion 12
Increasing organizational data, shifting user demographics, and convergence will drive BI 14
Data explosion will continue to fuel demand for monitoring and analysis 14
A younger user demographic will adopt BI tools faster 14
Convergence will help to expand the addressable market 14
Recessionary signals and traditional hindrances to BI may slow down uptake 15
A recessionary environment may affect vendors with high exposure to financial service firms 15
Vendor consolidation may foster a "wait-and-see" attitude in end-users 16
Traditional roadblocks to BI will still remain 16
Long-term growth opportunities exist in spite of the turbulence from consolidation 16
Technology Evolution 17
Attractiveness of converged bundles to drive accelerated end-user adoption 17
Pre-integrated product bundles 18
Add-on industry bundles 19
Alternative approaches to data analysis may become mainstream in the medium-term 19
In-memory analytics could be to BI what just-in-time (JIT) is to manufacturing 19
In-memory analytics is faster, simpler and more flexible 20
Natural language processing will help BI to analyze critical but oft-neglected data 20
Mobile BI could shift from a 'good-to-have' to a 'should-have' feature for reporting 21
Technology evolution has been relatively tepid but increasingly customer focused 24
Customer Impact 25
Acquisition frenzy may foster a "wait and see" attitude in end-users 25
End-users can derive short-term gains as conglomerates chase market share 25
Best-of-breed products and features will probably be retained over the long-term 26
The entry of conglomerates will help end-users looking for end-to-end solutions 26
Short-term end-user impact is minimal, but expect some longer-term rationalization 27
Competitive Landscape 28
Conglomerates, mid-layer, and niche vendors form the current BI market 28
Conglomerates 28
Mid-Layer 29
Niche 29
Timing of acquisitions important as valuations driven up by demand 29
The reshuffling of vendor categories has disturbed the traditional BI value chain 31
A highly converged future value chain will still contain niches for smaller players 32
Pre-integrated product bundles will increase adoption and drive pervasiveness 33
Add-on industry bundles will deliver industry-oriented solutions, generating higher value 33
Complete BI bundles will deliver end-to-end solutions and unlock maximum value 34
In spite of converged offerings, some gaps will likely exist for smaller vendors 34
The BI sector could also witness the entry of additional vendors 34
Possible scenarios in the converging market 34
An integrated value chain requires conglomerates to bundle as others develop niche skills 36
Go to Market 37
Look for bundling opportunities when creating new product offerings 37
Establish footprint into large enterprises and growth SMEs through pre-integrated bundles 37
Target business and industry issues in large enterprises with add-on industry bundles 37
Exploit sub-prime concerns and recessionary signals to hard-sell risk management BI 38
Capitalize on channel partnerships and hosted solutions to reach SMEs 38
Develop SaaS offerings and innovative pricing models for price sensitive SMEs 39
Leverage channel partnerships to target SMEs that have limited in-house IT infrastructure 40
Recommendations 42
For conglomerates: 42
Conceptualize, develop, and market bundles at every opportunity 42
Use size and financial muscle to your advantage 42
For pure-play vendors: 42
Innovate with agility 42
Exploit gaps 43
Advanced capabilities gap 43
Vendor independence gap 43
Relationship gap 43
Industry alignment gap 43
Capitalize on partnerships 43
APPENDIX 44
Definitions 44
Methodology 44
Further reading 45
Ask the analyst 45
Datamonitor consulting 45
Disclaimer 45
List of Tables
Table 1: Major acquisitions in the business intelligence market, 2006-2008 5
Table 2: Current BI bundles consist of product and industry bundles 18
Table 3: Future BI bundles will combine BI with other applications to derive actionable intelligence 18
Table 4: Respondents' mobility investment plans 23
Table 5: Probability of various BI features to be offered on mobiles 24
Table 6: Respondent's preferred approach to buying BI 41
List of Figures
Figure 1: Some BI vendors are growing at a higher pace than their acquirers 7
Figure 2: BI vendors exhibited higher margins than their acquirers in 2007 8
Figure 3: A majority of BI vendors are witnessing a slowdown in revenue growth rates 10
Figure 4: Several BI vendors are reporting a decline in gross margin 11
Figure 5: Growth rates are stabilizing to more sustainable levels 12
Figure 6: Relatively mature segments such as retail banking will witness a gradual slow down 13
Figure 7: High exposure of BI vendors to financial services customers could put them at risk 15
Figure 8: The mobile applications market is growing at a healthy pace 22
Figure 9: Number of respondents that currently use or will use mobility solutions 23
Figure 10: Acquisition multiples and sizes of four major BI M&A deals (2006-2007) 30
Figure 11: Traditional value chain: limited overlap between layers resulting in commoditization 31
Figure 12: Consolidated value chain 33
Figure 13: Scenario planning diagram 35
Figure 14: Take hosted BI offerings to the UK, Benelux, Australian, and French markets 39
Figure 15: Targeting SMEs requires a formidable local and national reseller base 40