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IDC OPINION
IDC continues to see healthy demand for business intelligence (BI) tools. Although
there are signs of a shift in the competitive landscape, BI tools remain an attractive
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market for software vendors and one of the top investment priorities for end-user
organizations. Market highlights include:
! An 11.5% growth rate was achieved in 2005 for a total market size of $5.7 billion
in worldwide software revenue.
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Methodology
See the Learn More section for a description of the data collection and analysis
methodology employed in this study.
! The information contained in this study was derived from the IDC Software
Market Forecaster database as of May 26, 2006.
For more information on IDC's software definitions and methodology, see IDC's
Software Taxonomy, 2006 (IDC #34863, February 2006).
IDC defines the BI tools market as being composed of two market segments: query,
reporting, and analysis (QRA) and advanced analytics. A further segmentation by
software packaging divides the market into standalone and database-embedded BI
tools:
! The packaged data mart market was merged into the end-user query, reporting,
and analysis market.
! The data mining and technical data analysis tools markets were merged to create
the new advanced analytics software market.
For full details on these taxonomy and methodology changes, see IDC's Worldwide
Business Intelligence Software Taxonomy, 2006 (IDC #34994, March 2006).
SITUATION OVERVIEW
In 2005, the BI market grew 11.5% to reach $5.7 billion in worldwide license and
maintenance revenue. As Table 1 shows, the database-embedded BI server market
experienced a higher growth rate (19.9%) than did standalone BI software (10.7%).
The query, reporting, and analysis market outgrew the advanced analytics market in
2005. We had anticipated a higher growth rate for advanced analytics. One of the
reasons for the lower-than-expected performance of this market segment was a
larger-than-expected shift in revenue to query, reporting, and analysis tools as well as
to packaged analytic applications by SAS, the largest advanced analytics tools
vendor.
2003–2004 2004–2005
2003 2004 2005 Growth (%) Growth (%)
Standalone
FIGURE 1
Asia/Pacific
(11.3%)
Americas (52.9%)
EMEA (35.8%)
Total = $5.725B
FIGURE 2
i5 and OS/400
(1.2%)
Mainframe
(12.1%) Windows 32
and 64 (54.5%)
Unix (20.6%)
Total = $5.725B
Although the overall market continues to grow in the forecast range, the performance
of individual vendors varies widely. As in other steadily maturing markets, the share of
the top 10 BI vendors continues to increase — from 57.9% in 2003 to 60.8% in 2004
to 62.3% in 2005. IDC continues to expect further consolidation also through mergers
and acquisitions. Table 2 shows the performance of leading BI vendors.
2003–2004 2004–2005
2003 2004 2005 2003 2004 2005 Growth (%) Growth (%)
Business Objects 649.9 712.6 795.3 14.3 13.9 13.9 9.6 11.6
SAS Institute 473.4 514.5 582.4 10.4 10.0 10.2 8.7 13.2
Hyperion Solutions 262.8 258.6 287.1 5.8 5.0 5.0 -1.6 11.0
Information Builders 112.0 140.0 170.0 2.5 2.7 3.0 25.0 21.4
Visual Numerics 36.8 37.4 38.7 0.8 0.7 0.7 1.8 3.5
Fujitsu Ltd. 31.2 36.5 38.1 0.7 0.7 0.7 17.1 4.4
Lawson Software 31.0 31.0 35.0 0.7 0.6 0.6 0.0 12.9
Teradata (NCR) 16.3 18.4 20.6 0.4 0.4 0.4 13.0 12.0
SAS Institute
SAS was the second-largest vendor in 2005, with $582 million in BI tools revenue and
a 10.2% market share. Fifty-nine percent of SAS' BI tools revenue comes from
advanced analytics software. However, in 2005 the company saw strong performance
from its Enterprise BI Server product suite, which resulted in a 26% growth in its
query, reporting, and analysis revenue (for more details see SAS Revamps Its BI
Software and Finds Traction Outside Its Core Competency of Data Mining and
Statistics, IDC #34846, February 2006).
SAS is also continuing to find success in specialty analytic applications that take
advantage of its advanced analytics tools. Examples include applications for various
types of forecasting, optimization, and descriptive and predictive analytics. Although
this revenue is not accounted for in the current BI tools study, it influences the
company's overall product mix and in aggregate has a tempering effect on BI tools
revenue.
In the short term, IDC does not see any serious challenge to SAS' dominance of the
advanced analytics market and expects the company to continue to experience
above-market growth rates for query, reporting, and analysis. However, at the same
time there is likely going to be a long-term, continuous shift toward more packaged
analytic applications.
Cognos
Cognos finished 2005 as the third-largest BI vendor, with $567 million in BI software
revenue and a 9.9% market share. Like its longtime rival Business Objects, Cognos
experienced competitive market pressures, which kept its query, reporting, and
analysis revenue growth rate below that of the market. IDC speculates that the
company's ReportNet product, which had tremendous growth when it was first
Although Cognos still derives a majority of its revenue from BI tools, the company
experienced a higher growth rate in its business performance management applications
than it did in BI tools. This trend is indicative of a steady shift toward a focus on analytic
applications. As the market for BI tools matures, Cognos is likely to continue to expand
on its strategy of both developing and acquiring packaged analytic applications in areas
such as workforce analytics (released in 2006), supply chain analytics, customer
analytics, and business performance management. This expected shift will put internal
pressure on BI tools. However, these trends take years to play out; in the meantime,
Cognos remains solidly one of the top BI tools software providers.
Microsoft
IDC estimates the value of Microsoft's BI tools at $353 million, which puts the
company into fourth place with a 6.2% market share. Among its closest competitors,
Microsoft is a relative newcomer to the BI tools market; the company introduced its
OLAP server at the end of 1997. Nevertheless, Microsoft has seen strong growth over
the past several years as it has expanded and enhanced its database-embedded BI
features and combined them with related tools such as data integration. Specifically,
the high growth rate in 2004 is attributed to the release of SQL Server Reporting
Services.
Hyperion Solutions
Hyperion recorded a strong year of BI tools sales with revenue of $287 million and a
5% market share. The growth was driven by the new Hyperion System 9, which in
essence was the first major release of a combined BI suite incorporating the best of
Hyperion and former Brio technologies. It's also interesting to note that Hyperion had
weaker-than-expected results in its financial and business performance management
(BPM) applications business lines. These two major revenue streams for Hyperion
seem to oscillate in performance as sales and marketing efforts shift from year to
year. Hyperion remains the largest financial and BPM analytic applications vendor,
Oracle
Oracle's BI tools revenue in 2005 came in at $247.7 million, which increased its
market share to 4.3%. The company derives BI revenue from both database-
embedded BI servers and end-user query, reporting, and analysis tools. There was a
clear increase in marketing emphasis on BI in 2005, and IDC expects Oracle to
continue above-market growth rates in BI tools as the current market cycle plays itself
out over the next 15 years. Having said that, Oracle has had other marketing pushes
into BI in the past, which did not necessarily result in expected sales execution. At
Oracle, its BI tools must compete not only with other vendors' products but also with
its own analytic applications and Daily Business Intelligence, a component of the
company's e-Business Suite (not accounted for in this study).
Oracle's market position in BI tools and analytic applications has been significantly
strengthened via its recent application company acquisitions. Oracle's March 2006
launch of a new line of three BI packages was especially newsworthy due to the
prominent position of the Siebel Analytics technology (named Analytic Server) that is
included in certain bundles, reflecting not only the success of Siebel in analytics, but
also the value to Oracle of the federated query technology that underlies the Siebel
Analytics products. With its enhanced arsenal of BI technologies, the company set
direct aim at the independent BI companies that currently lead the BI market. (For
more details see Oracle, Armed with Acquired Ammunition, Reloads for Business
Intelligence, IDC #201036, March 2006 and Oracle + PeopleSoft + Siebel: What Does
the Combination Mean for BI, Analytics, and Performance Management? (IDC
#34382, November 2005.)
! SAP's presence in the BI tools market is derived from tools related to its
NetWeaver platform that are primarily focused on the analytic server formerly
marketed as SAP BW. SAP is a significantly stronger player in packaged analytic
applications. However, the company's core applications business does require a
supporting tools infrastructure, and increasingly, SAP does not want to relegate
that opportunity to competitors.
! Actuate's software revenue has remained stable over the past two years as the
company expanded its product line from its core reporting software to more ad
hoc analysis tools. At the same time, Actuate continues to have a solid
embedded reporting business through the indirect channel both in the
commercial world and through its participation in the Eclipse Foundation.
! Lawson is one of the few enterprise applications vendors that also has a distinct
BI tools product line. The company markets its BI tools exclusively to its installed
based of applications customers. Because more users expect to see BI
functionality as part of their applications in an integrated workflow, Lawson is
capitalizing on this trend. Lawson's recent merger with Intentia has created an
even larger applications vendor with presence in both North America and
Western Europe. Because Lawson is claiming a 90% attach rate for selling its BI
suite with its new applications deals, IDC expects that after a certain period
opportunities will surface to expand Lawson's footprint in the BI tools market by
also targeting the former Intentia user base.
! QlikTech was the fastest growing of the top 20 BI tools vendors in 2005.
Although still of modest size with $22 million in software revenue, the company
grew over 70% in each of the past two years. QlikTech's expansion from its
European base into North America has been received well, and IDC expects
continued aggressive growth for the company in its chosen midmarket niche.
IDC's end-user research has shown that QlikTech's product, QlikView, is
attractive due to its ease of installation and ease of use. QlikView takes a very
different approach to data management (from all the other major BI vendors) by
providing what amounts to "infinite" dimensional ad hoc query and analysis to
end users — something that traditional OLAP vendors cannot provide with their
Beyond the top vendors whose shares are identified in Table 2, there are many BI
vendors whose combined revenue is aggregated under "other" vendors. These
software companies range in size, either provide niche products or focus on specific
geographic regions or industries, have different channel strategies, and target a range
of organizations from SMBs to large enterprises. Two examples of such vendors that
have made their mark in the BI market are Noetix and Celequest:
! Noetix traces its roots back to 1994. Over the years the company has
established a customer base of 1,300 organizations to which it provides BI tools
that are well positioned within the architecture of enterprise applications such as
Oracle e-Business Suite and Siebel. Although the company has an easy-to-use
dashboarding technology for end users, its primary value proposition comes from
the methods used to access and retrieve data from the enterprise applications in
order to support operational BI efforts. The mappings that Noetix has created to
these enterprise applications enable its customers to deploy the Noetix system
rapidly. As the underlying enterprise applications are modified, Noetix software is
able to automate many of the otherwise manual mapping requirements. This
automation lowers total cost of ownership and alleviates the pressure on already
resource-constrained IT departments.
FUTURE OUTLOOK
IDC research into the BI market has identified that it moves in 15-year cycles. The
first of these periods, from 1975 to 1990, was characterized by production reporting
on mainframes. (Companies such as SAS, IBI, and IBM began in the BI market
during the early years of this cycle.) The second 15-year period, from 1990 to 2005,
saw the beginning of the "modern era" of BI, characterized by end user–friendlier
client/server-based BI tools from vendors such as Business Objects, Cognos, and
Hyperion. Eventually query, reporting, and OLAP technology migrated from
client/server to Web-based architecture with the development of broad suites of BI
platforms.
But what about the rest of the organization? Whether we're talking about information
workers with higher levels of freedom to decide about their daily workflows and
processes or line-of-business employees who may be restricted by systems and
policies in how they perform their duties, a vast population exists whose business
intelligence requirements have not been met to their full potential.
The next wave of BI will reach out to these employees as well as other organizational
stakeholders such as suppliers, partners, customers, and government agencies to
improve information delivery and decision support functionality for all.
This shift in market focus can be only partially addressed through existing BI
software, which as already mentioned was created with the analyst or power user as
the intended audience. Clearly a frontline employee will have limited use for an OLAP
or an ad hoc query tool. In fact, to address the needs of frontline employees and line-
of-business managers, organizations must redefine and expand what they mean by
BI. The expanded vision of BI must take into account not only the technologies
involved but also business drivers and performance management methodologies.
Compliance
BI can help drive consistency in decision making. It's important to make correct
decisions, but often it is also important that decisions are not made arbitrarily (i.e.,
that different employees followed similar decision processes, which can be audited or
monitored).
Competitive Pressures
Intercompany Connectivity
The final driver is intercompany connectivity, or the linking of business processes with
partners, suppliers, and customers. It is important in these cases to have a more
comprehensive view of operations that goes outside the organization.
! How should master and metadata as part of broader data quality and compliance
effort be managed?
Another key emerging trend in the market is the convergence of traditional BI tools
and unstructured content access and analysis tools (including search technology). In
fact, it's quite likely that some of the emerging BI applications will closely resemble
common online community sites with the associated functionality for graphs, tables,
search, comments, notes, ratings, and other collaborative community features. It is
also clear that search as a ubiquitous interface has the potential to penetrate many
more users than end-user BI tools, which historically have required more training. As
such, the search technology has the potential to displace traditional BI tools in certain
ad hoc analysis and information retrieval use cases.
Finally, BI will find its way to the vast majority of users by being embedded within the
operational applications already used by these end users. IDC calls this evolving
concept intelligent process automation (IPA). IPA is the convergence of BI and
business process management technologies. It is the automation of repeatable,
operational decisions (not the more infrequent strategic decisions made at the
executive level). This is not to say that IPA replaces executive dashboards or ad hoc
BI solutions; the two technologies have different audiences and serve different needs.
However, only IPA can help automate repeatable, operational decisions to address
both performance management and compliance issues.
The last couple of years have shown the first signs that open source software is
creeping into the BI tools market. The focus here is not on traditional BI tools
deployed on open source operating environments, but instead truly open source BI
software. Vendors such as Pentaho, JasperSoft, and Actuate clearly display the first
signs of a potential market niche. However, we believe that the impact of open source
BI tools will be very limited over the next five years. During the latter part of the
current 15-year cycle of the BI market, open source software may develop into a
stronger competitive force. However, unlike in the operating systems or database
markets where open source technology addresses a vast mass market, the BI market
is not large enough or "generic" enough to support significant open source offerings in
the foreseeable future.
Market Context
Vendor shares were last published for the business intelligence market in Worldwide
Business Intelligence 2004 Vendor Shares (IDC #33564, June 2005). The differences
in the vendor shares shown in this study and that earlier study are due to taxonomy
and methodology changes described in IDC's Worldwide Business Intelligence
Software Taxonomy, 2006 (IDC #34994, March 2006).
ESSENTIAL GUIDANCE
End Users
When you're developing your BI strategies, look not only at the traditional software for
query and reporting or at the decision support needs of power users. Instead, expand
your efforts to include features such as business process management, collaboration,
workflow, and annotations in addition to new scalability and availability
characteristics.
Software Vendors
Not all of the top 20 vendors listed in this study will survive the next cycle in the BI
market as independent vendors. M&A activity is likely to continue and increasingly
bring together players from different but related disciplines such as search, business
process management, workflow management, collaboration, and portals.
Services Vendors
LE ARN MORE
Related Research
! Business Analytics Appliances Are Here to Stay (IDC #202071, June 2006)
! Worldwide Business Intelligence 2004 Vendor Shares (IDC #33564, June 2005)
2003–2004 2004–2005
2003 2004 2005 2003 2004 2005 Growth (%) Growth (%)
Business Objects 649.9 712.6 795.3 18.3 17.7 17.6 9.6 11.6
Hyperion Solutions 262.8 258.6 287.1 7.4 6.4 6.3 -1.6 11.0
SAS Institute 181.5 191.8 241.6 5.1 4.8 5.3 5.7 26.0
Information Builders 112.0 140.0 170.0 3.2 3.5 3.8 25.0 21.4
Actuate Corp. 88.6 88.6 89.9 2.5 2.2 2.0 0.0 1.5
Lawson Software 31.0 31.0 35.0 0.9 0.8 0.8 0.0 12.9
Fujitsu Ltd. 25.6 30.2 31.7 0.7 0.7 0.7 18.1 4.9
T ABLE 4
2003–2004 2004–2005
2003 2004 2005 2003 2004 2005 Growth (%) Growth (%)
SAS Institute 291.9 322.7 340.8 28.9 29.0 28.3 10.5 5.6
Visual Numerics 36.8 37.4 38.7 3.6 3.4 3.2 1.8 3.5
Teradata (NCR) 16.3 18.4 20.6 1.6 1.7 1.7 13.0 12.0
Hitachi Ltd. 8.2 8.8 9.1 0.8 0.8 0.8 8.0 2.7
Fair Isaac 6.5 6.6 8.2 0.6 0.6 0.7 0.7 24.2
Silicon Graphics 10.1 9.1 7.2 1.0 0.8 0.6 -10.1 -20.3
Fujitsu Ltd. 5.6 6.2 6.4 0.5 0.6 0.5 12.4 2.1
Unica Corp. 6.5 8.5 5.7 0.6 0.8 0.5 29.8 -33.0
ANGOSS Software 3.1 4.4 5.0 0.3 0.4 0.4 41.9 13.6
The IDC software market sizing and forecasts are presented in terms of "packaged
software revenue." IDC uses the term packaged software to distinguish commercially
available software from "custom" software, not to imply that the software must be
shrink-wrapped or otherwise provided via physical media. Packaged software is
programs or codesets of any type commercially available through sale, lease, or
rental or as a service. Packaged software revenue typically includes fees for initial
and continued right-to-use packaged software licenses. These fees may include, as
part of the license contract, access to product support and/or other services that are
inseparable from the right-to-use license fee structure, or this support may be priced
separately. Upgrades may be included in the continuing right of use or may be priced
separately. All of the above are counted by IDC as packaged software revenue.
The market forecast and analysis methodology incorporates information from five
different but interrelated sources, as follows:
! Reported and observed trends and financial activity. This study incorporates
reported and observed trends and financial activity in 2005 as of the end of April
2006, including reported revenue data for public companies trading on North
American stock exchanges (CY 1Q05–4Q05 in nearly all cases).
Ultimately, the data presented in this study represents IDC's best estimates based on
the above data sources as well as reported and observed activity by vendors and
further modeling of data that we believe to be true to fill in any information gaps.
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