Economic Outlook: Business Intelligence (Market Focus)

The opportunities in the Business Intelligence market are growing, mainly driven by positive developments in adjacent markets. The convergence of BI with additional enterprise applications is resulting in new opportunities but also in aggressive market consolidation.



Report Highlights
Business intelligence is a mature market that is continuously evolving. The adoption rates are not very high, but the investment levels and the volume of demand are growing, albeit not equally across the enterprise size-bands. The market is shaped primarily by convergence with neighbouring technology areas, particularly enterprise applications and by the ongoing cycles of consolidation, commoditization and innovation. Driven by the attempts to derive further value from enterprise applications and the growing volume of data they generate, demand for business intelligence is set for further growth. Datamonitor estimated the market to be worth around US$4 billion in 2006, and predicts that the market size will double by 2012.


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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
ANALYSIS 2
Market Definition 2
Market Development 3
Upon initial consideration the BI market appears reasonably well penetrated and technologically mature. It is important to consider that BI is still deployed primarily as a department-level specialist tool running on top of enterprise applications or legacy systems. Should the number of enterprises that have deployed BI throughout large swathes of their organization be considered, take-up levels would be much lower. The situation may change, as investment levels are growing. 3
Much like the rest of enterprise applications, adoption has been led by larger enterprises and BI is still not ubiquitous among small and medium-sized enterprises. Anecdotal evidence indicates that the mid-market accounts for 30% to 40% of BI revenues. Most of the activity in this segment of the market originates in the top-end of the segment, among enterprises with 1,000 to 5,000 employees. This leaves a huge swathe of the market in which BI is not making enough of an impact. 3
BI take-up levels lag behind other technology areas 3
Datamonitor's Technology Trends data reinforces many of the points raised. The first relates to the relatively low level of penetration of BI technologies, certainly when compared to other enterprise applications. Out of eight technology areas covered by the Technology Trends survey in 2006, only Enterprise Mobility has a lower level of adoption than BI. Whereas up to 85% of enterprises interviewed in the survey, claim to have deployed enterprise applications, less than 60% of the enterprises have BI systems. 3
BI Investment is set to grow in the medium-term 5
Market drivers 7
The rise of the digital business 7
Enterprise applications form the backbone of the modern enterprise 7
Enterprises are generating increasing volumes of data 9
Organizations are seeking to protect enterprise application investments 9
Core BI technology has become commoditized 10
Market Trends 11
BI is being transformed from a specialist tool to a pervasive application 11
BI solutions are consolidating into comprehensive end-to-end platforms 12
Advanced analytics will also become more pervasive 12
BI will rapidly converge with enterprise applications 13
Industry-specific BI application bundles are a crucial go-to-market strategy 14
On-demand BI 14
Vendor strategy in the evolving BI market 15
Pervasive BI requires new BI interfaces 15
Enterprise-wide consolidation can be offered through single-vendor platforms or solution partnerships 15
Competition for CPM will increase and vendors should integrate CPM acquisitions quickly 16
Vertical solutions are a key differentiator in the commoditized market 17
On-Demand BI is developing but certain inhibitors are to be overcome 17
Vendor Positioning 18
Convergence and consolidation favors enterprise conglomerates' position in the BI market 18
Market Size 20
Between 2006 and 2012 the BI market is set to double 20
Large enterprises and industries generating high volumes of transactional data will lead the market growth 21
Summary 22
APPENDIX 23
Definitions 23
Extended methodology 24
Further reading 24
Ask the analyst 24

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Table 1: 2006 penetration of technology areas covered in the 2006 Technology Trends survey 4
Table 2: Which of the following Business Intelligence technologies do you currently have and use? 5
Table 3: Which of the following technologies do you currently have or use, and which would you have in 6 months and 24 months time? 5
Table 4: Which of the following enterprise application technologies do you currently have or use, and which would you have in 6 months and 24 months time? 8
Table 5: Datamonitor's BI revenue model ($US millions, product license revenues only) 21


Figure 1: Business Intelligence and adjacent application areas 2
Figure 2: Take-up of BI solutions lags behind most of other technology areas 3
Figure 3: BI adoption levels are related to the enterprise size 4
Figure 4: Short- and medium-term investments in BI are set to increase 6
Figure 5: Adoption levels are proportional to the scope of their applicability 7
Figure 6: The wider adoption of enterprise applications is expanding the BI market 8
Figure 7: BI investments can derive further value from existing systems 9
Figure 8: Commoditization and the rise of digital enterprise dictate the dominant market trends 11
Figure 9: Advanced analytics are to become more pervasive through easier interface and embedding 13
Figure 10: Data infrastructure complexities hamper implementation of non-rudimentary functionality 14
Figure 11: The BI market is set to double in size between 2006 and 2012 20

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