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COMPETITIVE ANALYSIS

Worldwide Business Intelligence Tools 2005 Vendor


Shares
Dan Vesset Brian McDonough

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
www.idc.com

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.
F.508.935.4015

! Broader adoption of BI software is expected to continue as more end users gain


access to query and reporting tools and as organizations embed BI software into
operational applications supporting all business processes.
P.508.872.8200

! Interest in advanced analytics for forecasting, optimization, and other decision


support techniques is growing as organizations look to move beyond using BI
tools only for query and reporting.
Global Headquarters: 5 Speen Street Framingham, MA 01701 USA

Filing Information: July 2006, IDC #202603, Volume: 1, Tab: Vendors


Analytics and Data Warehousing Software: Competitive Analysis
IN THIS STUDY
This IDC study examines the business intelligence (BI) tools market and vendor
shares for the period 2003–2005. Worldwide market sizing is provided for 2005, with
trends from 2003. Geographic and operating system splits for the overall market are
provided in addition to a vendor competitive analysis, with revenue and market share
for the leading vendors for 2005. This study also includes profiles of leading vendors
and identifies the characteristics that vendors will need to be successful in the future.

Methodology

See the Learn More section for a description of the data collection and analysis
methodology employed in this study.

In addition, please note the following:

! The information contained in this study was derived from the IDC Software
Market Forecaster database as of May 26, 2006.

! All numbers in this document may not be exact due to rounding.

For more information on IDC's software definitions and methodology, see IDC's
Software Taxonomy, 2006 (IDC #34863, February 2006).

Business Intelligence Market Definition

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:

! End-user query, reporting, and analysis. Query, reporting, and analysis


software includes ad hoc query and multidimensional analysis tools as well as
dashboards and production reporting tools. Query and reporting tools are
designed specifically to support ad hoc data access and report building by either
IT or business users. This category does not include other application
development tools that may be used for building reports but are not specifically
designed for that purpose. Multidimensional analysis tools include both online
analytical processing (OLAP) servers and client-side analysis tools that provide a
data management environment used for modeling business problems and
analyzing business data. Packaged data marts, which are preconfigured software
combining data transformation, management, and access in a single package,
usually with business models, are also included in this functional market.

! Advanced analytics. Advanced analytics software includes data mining and


statistical software (previously called technical data analysis). It uses
technologies such as neural networks, rule induction, and clustering, among
others, to discover relationships in data and make predictions that are hidden,
not apparent, or too complex to be extracted using query, reporting, and

©2006 IDC #202603 1


multidimensional analysis software. This market also includes technical,
econometric, and other mathematics-specific software that provides libraries of
statistical algorithms and tests for analyzing data. Although statistics products
vary in sophistication, most provide base-level functions such as frequencies,
cross-tabulation, and chi square. This market also includes a specialized form of
statistical software focused on functional areas such as the industrial design of
experiments, clinical trial testing, exploratory data analysis, and high-volume and
real-time statistical analysis.

Business Intelligence Tools Taxonomy Update


In light of the recent changes in the business intelligence market, IDC has changed
the taxonomy by which it accounts for market sizing and vendor shares in the BI
software market. The following changes are reflected in the current BI market study:

! 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.

! Database-embedded BI server products such as OLAP, data mining, and


reporting servers are now accounted for in the BI tools market rather than the
data warehouse (DW) management tools 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

The Business Intelligence Market in 2005

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.

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T ABLE 1

Worldwide Business Intelligence Revenue by Segment, 2003–2005 ($M)

2003–2004 2004–2005
2003 2004 2005 Growth (%) Growth (%)

Standalone

Query, reporting, and analysis 3,298.8 3,618.2 4,023.0 9.7 11.2

Advanced analytics 971.6 1,062.6 1,157.4 9.4 8.9

Subtotal 4,270.4 4,680.8 5,180.4 9.6 10.7

Database embedded 287.5 462.4 554.4 60.9 19.9

Total 4,557.9 5,143.2 5,734.8 12.8 11.5

Source: IDC, July 2006

Performance by Geographic Region in 2005


Figure 1 shows the geographic breakdown of the BI market. The Americas region
continues to be the largest segment of the market, followed by Europe, the Middle
East, and Africa (EMEA) and Asia/Pacific. Further details and analysis of specific
regional and country-level trends and market shares are available from IDC.

FIGURE 1

Worldwide Business Intelligence Tools Revenue Share


by Region, 2005

Asia/Pacific
(11.3%)

Americas (52.9%)
EMEA (35.8%)

Total = $5.725B

Source: IDC, July 2006

©2006 IDC #202603 3


Performance by Operating Environment in 2005
Figure 2 shows the operating environment breakdown of the BI market. Windows
continues to dominate the market, followed by Unix and mainframe platforms.
Although Linux represents only a small fraction of the worldwide OS share of the BI
market, it is by far the fastest-growing platform. New open source BI initiatives are
likely to sustain or accelerate this trend.

FIGURE 2

Worldwide Business Intelligence Tools Revenue Share


by Operating Environment, 2005

Linux/other open Other (11.0%)


source (0.6%)

i5 and OS/400
(1.2%)

Mainframe
(12.1%) Windows 32
and 64 (54.5%)

Unix (20.6%)

Total = $5.725B

Source: IDC, July 2006

Performance of Leading Vendors

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.

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T ABLE 2

Worldwide Business Intelligence Revenue by Vendor, 2003–2005

Revenue ($M) Share (%)

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

Cognos 415.5 511.5 567.2 9.1 9.9 9.9 23.1 10.9

Microsoft 125.0 281.4 353.1 2.7 5.5 6.2 125.1 25.5

Hyperion Solutions 262.8 258.6 287.1 5.8 5.0 5.0 -1.6 11.0

Oracle 195.2 214.0 247.7 4.3 4.2 4.3 9.6 15.7

MicroStrategy 142.2 185.0 212.3 3.1 3.6 3.7 30.1 14.8

SAP AG 123.9 152.2 181.8 2.7 3.0 3.2 22.8 19.4

SPSS 140.9 158.5 176.2 3.1 3.1 3.1 12.5 11.2

Information Builders 112.0 140.0 170.0 2.5 2.7 3.0 25.0 21.4

IBM 163.4 131.2 139.1 3.6 2.6 2.4 -19.7 6.0

Actuate 88.6 88.6 89.9 1.9 1.7 1.6 0.0 1.5

Hummingbird 38.2 41.4 42.9 0.8 0.8 0.7 8.4 3.6

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

CA 27.4 29.0 29.3 0.6 0.6 0.5 5.8 0.9

arcplan 20.0 22.0 23.7 0.4 0.4 0.4 10.0 7.7

QlikTech 7.2 12.9 22.1 0.2 0.3 0.4 79.1 71.7

ProClarity 13.0 17.7 21.5 0.3 0.3 0.4 36.2 21.5

Teradata (NCR) 16.3 18.4 20.6 0.4 0.4 0.4 13.0 12.0

Other 1,444.0 1,548.7 1,660.8 31.7 30.1 29.0 7.3 7.2

Total 4,557.9 5,143.2 5,734.8 100.0 100.0 100.0 12.8 11.5

Source: IDC, July 2006

©2006 IDC #202603 5


Business Objects
Business Objects ended 2005 again as the leading BI software vendor, with $795
million in BI tools revenue and a 14% market share. Business Objects is the dominant
query, reporting, and analysis vendor, with a broad user base spanning all major
geographic regions, company size segments, and industries. Building on this base,
the company has ambitious goals for growth. This growth can either be organic or
involve further acquisitions. Both paths will likely contribute to Business Objects' top
line over the foreseeable future, with most of the organic growth coming from query,
reporting, and analysis tools from both expanding the company's user base within
enterprise accounts and deeper penetration of midsize organizations.

However, competitive pressures, especially from database vendors, suggest that


organic growth will not be sufficient to maintain even low double-digit growth rates for
software revenue, which would make another acquisition an attractive option for
Business Objects. Such an acquisition is unlikely to be in the company's existing
stronghold segment of query, reporting, and analysis but could instead involve adding
advanced analytics, search, business process management, or packaged analytic
applications products into its portfolio.

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

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introduced at the end of 2003, encountered tough competition from the many
reporting products in the market from specialty BI and database vendors.

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.

More recently, Microsoft acquired ProClarity. (The acquisition closed in 2006;


therefore, IDC has shown the two companies as separate entities in this 2005 market
share study.) This acquisition filled an important gap in Microsoft's BI software
portfolio. The company now has not only server-side BI engines for OLAP and data
mining but also a Web-based (as well as thick-client) end-user query, reporting, and
analysis tool.

Microsoft's impact on the BI tools market cannot be overemphasized. Currently this is


especially true with respect to its Reporting Services and Analysis Services products.
However, the company is also going to have an impact at the "front end" of BI in the
coming years. Note that although Microsoft Excel is not counted as a purpose-built BI
tool, Microsoft's recent focus on promoting Excel as a key interface for BI is also
going to have a negative impact on competition. Again, this impact will not create any
sudden material shifts in the market, but an evolutionary change has been put into
motion by the database vendors, and it will reshape the BI tools market over the next
15 years.

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,

©2006 IDC #202603 7


and over the long term, IDC expects Hyperion to experience higher growth rates in
this product line rather than in BI tools.

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.)

Comments on Other Selected Vendors


! MicroStrategy continues to deliver on a strong product suite, which remains an
attractive option for many large-scale BI deployments that benefit from its
underlying relational OLAP (ROLAP) infrastructure. Its reporting tool, general
user interface, and development functionality remain at the forefront of innovation
and usability. However, the company's phenomenal growth rates of the past few
years finally caught up with it, and the software growth rate halved to a still
respectable 15%.

! 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.

! SPSS is the second-largest advanced analytics vendor. Its focus on predictive


analytics paid off in 2004 and 2005 after several years of lower-than-market
growth rates. In many cases, SPSS has also been able to cross-sell its query,
reporting, and analysis tools into its base of advanced analytics customers.

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! Information Builders Inc. (IBI) saw yet another shift in its product mix to
WebFocus from Focus, which accounts for the strong growth of its BI tools in
2005. After 30 years, IBI remains a viable player in the BI market, with new
products such as WebFocus ActiveReports, promising partnerships with GIS and
search vendors, and the synergy between its own BI and iWay data integration
business. IBI also remains one of the most scalable reporting environments on
the market.

! IBM saw a modest 6% increase in its BI revenue, reversing a negative growth


rate from the previous year. Like its major database competitors, IBM has
followed the path of embedding more BI functionality into its DB2 database. This
technology includes both multidimensional analysis through DB2 Cube Views
and data mining through DB2 Enterprise Miner. Cube Views, along with IBM
QMF and AlphaBlox, composes IBM's query, reporting, and analysis software. To
date, IBM has made an explicit choice not to enter the query, reporting, and
analysis market focused on business end users. The company has placed
primary emphasis on its BI, DW, and data integration platform. However, it's not
inconceivable that IBM will follow its database competitors and enter the
business end-user BI market with either BI tools or packaged analytic
applications. Given IBM's history, this shift would likely happen through
acquisitions.

! 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

©2006 IDC #202603 9


existing products. QlikTech recently also enhanced its reporting tool that enables
creation of production reports.

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.

! Celequest began in 2002 as a business activity monitoring vendor founded by


Diaz Nesamoney (cofounder of Informatica). Since then the company has
expanded its product suite to focus on operational BI through both data
integration and dashboarding tools. In addition, Celequest recently announced
the availability of LAVA, the industry's first BI appliance offering, which combines
Celequest's software with commodity hardware.

FUTURE OUTLOOK

The Next Wave of Business Intelligence

Just as security technology is something without which organizations can't survive, so


is BI technology something without which organizations can't succeed. However, BI
as a set of tools and concepts for managing organizational and individual
performance still has a long way to go in reaching all of the necessary people and
processes in companies, government agencies, hospitals, and universities.

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.

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When we look back in a few years, we'll see that 2005 was another turning point in
the BI market and the beginning of the new wave of investment in BI by organizations
in all industries. The current market cycle is expect to last until 2020 and will be
focused on expanding the reach of BI to more users both inside and outside the
organization and a move to automate more decision processes by combining QRA
and advanced analytics functionality.

As the BI market is maturing, the focus of organizations, BI software vendors, and


systems integrators is changing. To date, the BI market has primarily focused on
delivery of information to analysts and managers. Progress has been made in
delivering information faster and through various means (e.g., reports, dashboards,
and alerts on PDAs). However, analysts and managers represent only a relatively
small portion of an organization, estimated at about 15–20% of employees. In fact,
IDC believes that the market for reporting and OLAP tools for power users and
analysts has reached a level of maturity that cannot sustain the growth rates of the
past in terms of new license revenue. Instead, larger IT vendors such as Microsoft,
Oracle, and IBM along with the existing specialty BI vendors are now targeting this
market. As the market continues to mature, it is highly likely that the larger IT vendors
will continue to gain share.

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.

Business Drivers for the Next Wave of BI

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

Within the process of performance management, it is important to go beyond simply


dashboards and reports that focus only on information delivery. To put BI into an

©2006 IDC #202603 11


operational context, it's not enough to have dashboards that simply report on what
happened. This information is valuable but of limited use. Dashboards should also
show context around the information and provide guidance for action. In other words,
they need to be in the context of whatever business process the dashboard is built for
and support predictive analytics.

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.

The Changing Nature of BI Projects


At the same time, the discussion around BI implementations is changing from one of
technology to one of best practices in the process of performance management.
Some of the questions being asked include:

! What KPIs should be tracked, measured, and acted upon?

! How should BI competency centers be established and managed?

! How should master and metadata as part of broader data quality and compliance
effort be managed?

Other Key Emerging Trends

Availability and Scalability

BI technology must evolve to address the needs of the ever-broadening audience of


users. As more data becomes available for analysis and more users expect to receive
decision support based on this data, the scalability and availability requirements of BI
systems are becoming more robust. IDC research shows that already today, over
40% of organizations indicated that if their BI systems go down for just a few hours,
there will be significant material impact on their operations. At this point, BI systems
have not yet reached the requirements of operational systems; however, the trending
is toward a convergence of availability requirements between analytics and
operational systems.

Traditional BI and Unstructured Content Access and Analysis

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.

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Intelligent Process Automation

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.

Impact of Open Source BI Tools

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

As the BI market matures, it is bifurcating into large providers of standard query,


reporting, and analysis technology and specialty vendors whose tools and/or analytic
applications increasingly focus on narrower (industry- and/or business process–

©2006 IDC #202603 13


specific) solutions. In the latter group, scale will increasingly matter. Perhaps the
market can sustain only four to five large-scale BI vendors. However, there is plenty
of room for specialists, and in fact there remains a great need for such specialists.

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

IDC's Worldwide Business Analytics Services 2006–2010 Forecast (IDC #202492,


July 2006) exposes the services component around BI software and related business
analytics solutions. What is clear is that both large systems integrators (SIs) and
smaller specialty consultants are in a period of aggressive hiring into their BI/DW
practices. Technical and business consulting around BI or performance management
is an attractive opportunity. However, software vendors themselves are also looking
to tap into this market because some of them see their new license revenue growth
rates slow.

LE ARN MORE

Related Research

! Worldwide Business Analytics Services 2006–2010 Forecast (IDC #202492, July


2006)

! Business Analytics Appliances Are Here to Stay (IDC #202071, June 2006)

! Worldwide Business Intelligence Tools 2006–2010 Forecast (IDC #200973 April


2006)

! IDC's Worldwide Business Intelligence Software Taxonomy, 2006 (IDC #34994,


March 2006)

! IDC's Software Taxonomy, 2006 (IDC #34863, February 2006)

! Intelligent Process Automation: To Make Business Processes Intelligent Means


Making Business Intelligence Operational (IDC #34767, January 2006)

! Worldwide Business Intelligence 2004 Vendor Shares (IDC #33564, June 2005)

Appendix A: Business Intelligence Market


Segment Vendor Shares

End-User Query, Reporting, and Analysis


Table 3 provides data for worldwide end-user QRA tools.

14 #202603 ©2006 IDC


T ABLE 3

Worldwide End-User Query/Reporting/Analysis Revenue by Vendor, 2003–2005

Revenue ($M) Share (%)

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

Cognos 414.4 510.7 566.9 11.7 12.7 12.5 23.2 11.0

Microsoft 118.0 271.9 340.0 3.3 6.7 7.5 130.4 25.0

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

Oracle 181.4 197.1 227.7 5.1 4.9 5.0 8.7 15.5

MicroStrategy 142.2 185.0 212.3 4.0 4.6 4.7 30.1 14.8

SAP AG 123.9 152.2 181.8 3.5 3.8 4.0 22.8 19.4

Information Builders 112.0 140.0 170.0 3.2 3.5 3.8 25.0 21.4

IBM 149.9 115.2 121.9 4.2 2.9 2.7 -23.1 5.8

Actuate Corp. 88.6 88.6 89.9 2.5 2.2 2.0 0.0 1.5

Hummingbird 38.2 41.4 42.9 1.1 1.0 0.9 8.4 3.6

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

CA 27.4 29.0 29.3 0.8 0.7 0.6 5.8 0.9

SPSS 27.0 28.1 24.7 0.8 0.7 0.5 4.1 -12.1

arcplan 20.0 22.0 23.7 0.6 0.5 0.5 10.0 7.7

QlikTech 7.2 12.9 22.1 0.2 0.3 0.5 79.1 71.7

ProClarity 13.0 17.7 21.5 0.4 0.4 0.5 36.2 21.5

Other 934.5 996.2 1,064.4 26.3 24.7 23.5 6.6 6.8

Total 3,548.5 4,032.3 4,529.7 100.0 100.0 100.0 13.6 12.3

Source: IDC, July 2006

©2006 IDC #202603 15


Advanced Analytics
Table 4 provides data for worldwide advanced analytics tools.

T ABLE 4

Worldwide Advanced Analytics Revenue by Vendor, 2003–2005

Revenue ($M) Share (%)

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

SPSS 113.9 130.4 151.5 11.3 11.7 12.6 14.5 16.2

Visual Numerics 36.8 37.4 38.7 3.6 3.4 3.2 1.8 3.5

Oracle 13.8 16.9 20.0 1.4 1.5 1.7 22.1 18.3

Teradata (NCR) 16.3 18.4 20.6 1.6 1.7 1.7 13.0 12.0

IBM 13.6 16.0 17.2 1.3 1.4 1.4 18.0 7.5

Insightful 13.8 14.5 16.0 1.4 1.3 1.3 5.1 10.3

Microsoft 7.0 9.5 13.1 0.7 0.9 1.1 36.3 37.9

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

Software AG 4.5 5.1 6.0 0.4 0.5 0.5 13.6 17.6

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

Other 457.8 496.3 539.5 45.4 44.7 44.8 8.4 8.7

Total 1,009.4 1,110.9 1,205.0 100.0 100.0 100.0 10.1 8.5

Source: IDC, July 2006

16 #202603 ©2006 IDC


Appendix B: Methodology

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.

Packaged software revenue excludes service revenue derived from training,


consulting, and systems integration that is separate (or unbundled) from the right-to-
use license but includes the implicit value of software included in a service that offers
software functionality by a different pricing scheme. It is the total packaged software
revenue that is further allocated to markets, geographic areas, and operating
environments.

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).

! IDC's Software Census interviews. IDC interviews all significant market


participants to determine product revenue, revenue demographics, pricing, and
other relevant information.

! Product briefings, press releases, and other publicly available information.


IDC's software analysts around the world meet with hundreds of software
vendors each year. These briefings provide an opportunity to review current and
future business and product strategies, revenue, shipments, customer bases,
target markets, and other key product and competitive information.

! Vendor financial statements and related filings. Although many software


vendors are privately held and choose to limit financial disclosures, information
from publicly held companies provides a significant benchmark for assessing
informal market estimates from private companies. IDC also builds detailed
information related to private companies through in-depth analyst relationships
and maintains an extensive library of financial and corporate information focused
on the IT industry. We further maintain detailed revenue by product area models
on more than 1,000 worldwide vendors.

©2006 IDC #202603 17


! IDC demand-side research. This includes thousands of interviews with
business users of software solutions annually and provides a powerful fifth
perspective for assessing competitive performance and market dynamics. IDC's
user strategy databases offer a compelling and consistent time-series view of
industry trends and developments. Direct conversations with technology buyers
provide an invaluable complement to the broader survey-based results.

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.

Copyright Notice

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Copyright 2006 IDC. Reproduction is forbidden unless authorized. All rights reserved.

Published Under Services: Analytics and Data Warehousing Software; Business


Intelligence and Data Warehousing Strategies

18 #202603 ©2006 IDC

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