In-Depth

BI Industry Consolidation—You Ain’t Seen Nothin’ Yet

Meta Group advises BI customers to pick one of today’s heavyweights and use its stack as a base to begin reducing BI tool proliferation

• By Stephen Swoyer
• 08/13/2003

According to analyst firm Meta Group, the business intelligence (BI) market will continue to consolidate over the next several years, eventually coalescing around a few big players.

The upshot, Meta says, will be a handful of vendors capable of addressing 95 percent of an organization’s BI needs. Meta’s advice: Pick one of today’s heavyweights and use its stack as a base to begin reducing BI tool proliferation.

Meta analysts believe that today’s largest BI players, including Business Objects SA and Cognos Inc., will in all likelihood remain forces to be reckoned with as the market consolidates—unless they’re acquired by larger vendors from outside of the BI space, that is. In this respect, Microsoft Corp., in particular, could be an aggressive BI buyer.

In the meantime, however, today’s BI heavyweights can’t afford to rest on their laurels. Take Business Objects, which acquired Crystal Decisions last month, for example. If Meta is to be believed, Business Objects has its work cut out for it: There’s considerable overlap in the two companies’ product lines, which could lead to difficulty as Business Objects attempts to integrate Crystal’s sales and development teams with its own.

Nevertheless, the Crystal gambit was worth the price, Meta analysts suggest, because it—along with Business Objects’ acquisition of extraction, transformation and loading (ETL) specialist Acta—gives that company almost all the pieces it needs to become a legitimate end-to-end BI player.

What’s missing? Meta identifies OLAP as the sole remaining weak spot in Business Objects’ product line-up: “While it is not necessary for a BI suite vendor to have an OLAP engine … it is important to have a first-rate OLAP viewer. The combined company must quickly leverage the best feature of Crystal Analysis and the Business Objects OLAP tool to achieve a first-rate OLAP viewer.”

As for Hyperion, Meta notes that Brio helps it to nail down several missing planks—ad hoc SQL query and reporting, enterprise reporting and dashboards—in its business performance management (BPM) platform. In sharp contrast to the high degree of overlap between Business Objects’ and Crystal’s product lines, those of Hyperion and Brio are almost entirely free of overlap. The only downside to Brio, Meta finds, is its diminished standing among IT organizations, few of which consider Brio’s products for use with new products. Nevertheless, Meta analysts argue, the Brio acquisition instantly makes Hyperion a contender in the race for BI suite market leadership.

As for other players, Meta notes that predictive analytics powerhouse SPSS Inc. is a $230 million force to be reckoned with in the mid-market, especially in AS/400 shops. Meta analysts say that SPSS must be prepared to make a major push out of its market niche if it’s to become a dominant player: “[SPSS] has the resources; the question is whether it has the desire.”

Interestingly, Meta analysts believe that privately held SAS Institute Inc., which generated more than $1 billion in revenue during 2002 (about as much as Cognos and Business Objects combined), must also make an aggressive move if it’s to position itself for BI market leadership. Like SPSS, Meta concedes that SAS has the resources to make such a push, but suggests that the company may not have the desire.

Another potential darkhorse candidate for BI supremacy is enterprise-reporting specialist Information Builders, Meta says.

What's to be Done?

In the near-term, Meta analysts recommend that companies standardize as much as possible on no more than six best-of-breed BI vendors which address their BI needs.

Because Meta sees market consolidation trending toward purveyors of end-to-end BI suites, it advises organizations to include products from at least one of today’s BI heavyweights, and to expand investments in this tool suite as its purveyor enhances it. Eventually, Meta analysts write, this tool suite should become the standard for 90 percent of an organization’s BI needs.

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