Business Intelligence: Revenues Drift Down
June 21, 2008
The business intelligence revolution has come and seems to be headed for knee surgery. The nimbleness is gone. If Information Week has it right, business intelligence in the US needs help to get back on the revenue treadmill. Mary Hayes Weier’s essay “Business Intelligence Software Growth Shows Dramatic Drop in U.S.” is here. Ms. Weier’s key point is, “Sales growth of BI software in the United States…sputtered to just five percent.”
BI, as the aficionados prefer, is the stuff that fires the synapses of smart managers. That may be true, but the market is dominated by a handful of companies who seem to be intent of sucking the oxygen from the market, stunting smaller BI vendors, and competing with one another.
Software giants like IBM, Microsoft, and Oracle seem to be moving to a super sized version of Microsoft Office only this time the suite contains application servers, databases, analytics, and search. Will this strategy of delivering a dump truck filled with software help or hurt business intelligence?
My thought upon reading Ms. Weier’s essay was that the effect of on premises systems of such complexity will hasten the emergence of cloud-based solutions. The reasons are easy to identify:
- Information technology departments are no longer able to budget reliably. The slightest glitch can chew through a budget. More complexity means more glitches and less control and predictability in IT spending. Solution? Shift to the cloud and a price list.
- Vendors will find their marketing assurances losing efficacy. Customers cannot afford systems that do not work as advertised. For many years, licensees have been reluctant to grouse. That is beginning to change. Even stage managed vendor trade shows are becoming tough to hold to the party line. Going forward, licensees may become more vocal in their criticism of software and pricing policies. Buggy software “sells” consulting services until licensees get savvy about this ploy.
- Smaller firms may find it easier to explore alternative delivery, pricing, and support models. A small vendor has narrow margin of error. On the other hand, a smaller outfit can make a change to a business quickly. When there are large numbers of competitors, one or two of these outfits may find the keys to the kingdom. The giant firms will be unable to adapt quickly and in effect become more vulnerable.
The business intelligence wave has come, hit the shore, and is now receding. Companies want to make decisions based on data, and the winners will be firms who can make complexity less painful from the cloud. My hypothesis is that a shake up is coming. It may take many years, but the dominant companies will be the BI equivalent of Toyota and Honda surrounded by a small number of specialists. Whom do you think will emerge as the BI winners? I am going to put my money on the GOOG for these reasons: big league analytics in an easy to use package, cloud capability, and big data to complement the puny data sets most companies crunch for their current BI analyses.
Stephen Arnold, June 21, 2008
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