In-Depth

The Business Intelligence Power Rankings

The BI Top Five is essentially unchanged from last year. In fact, the top four BI players seem to have dug themselves in for the long haul.

• By Stephen Swoyer
• 07/05/2007

By all accounts, it’s great to be a business intelligence (BI) player. For starters, the BI tools market notched healthy growth last year, surging by nearly 12 percent, while major and minor vendors continued to grow their revenues, thanks to new version releases and more effective marketing and sales efforts.

Elsewhere, industry watcher International Data Corp. (IDC) says demand for advanced analytics for forecasting, optimization, and other decision support practices continues to grow. The upshot, IDC reports, is that organizations are increasingly looking beyond using BI just for their query and reporting needs.

The BI Big Five is essentially unchanged, according to IDC—in spite of power moves by Microsoft Corp. and Oracle Corp. Numero Uno is Business Objects SA, followed by SAS Institute Inc., Cognos Inc., Microsoft Inc., and the former Hyperion Solutions Corp. (IDC’s survey—which describes each vendor’s performance in 2006—doesn’t take into account Oracle’s acquisition earlier this year of Hyperion.) That’s in the overall BI tools market.

Things get even more interesting in the query and reporting tools segment, where Microsoft—largely on the strength of its SQL Server Reporting Services technology—climbed to number three overall, behind Business Objects and Cognos. Redmond comes in at number six in the advanced analytics space, however—trailing dominant market leader SAS, SPSS Inc., Visual Numerics Inc., Oracle, and Teradata (a division of NCR Corp.).

Business Objects had an especially busy 2006, snapping up data quality specialist Firstlogic Corp., venturing into software-as-a-service (SaaS) with CrystalReports.com, and rolling out the first rev of its Enterprise Information Management (EIM) platform (which consolidates its ETL, data federation, and data quality tool offerings). Add it all up, say IDC analysts Dan Vesset and Brian McDonough, and you’ve got a BI market leader with a lot of momentum.

"[T]he latest information on the uptake of its Business Objects XI platform suggests a pickup in growth in the latter part of 2006 and early 2007. Business Objects is also making an aggressive push into the midmarket, where it targets organizations with less than $1 billion in revenue," they write. "The company's partner network is one of its strongest assets, and this effort, which depends in large part on indirect sales, is expected to contribute to the growth of Business Objects' BI tools. In the context of the broader business analytics market, Business Objects has made significant investments in financial performance management and data integration technologies. These technologies now represent the two other major product lines for Business Objects and make it a stronger competitor in sales engagements where the client organization is looking for a broad portfolio of related products from a single vendor."

In all but one respect, the duo write, Business Objects can credibly claim to address almost any of its customers’ needs. "Now the only missing piece in Business Objects' BI tools portfolio is advanced analytics for which the company currently relies on partners," Vesset and McDonough argue. The going could get choppier for Business Objects going forward, however—at least to the extent that its own interests and aspirations start to conflict more directly with those of larger rivals: "At the same time, Business Objects' investment activities have put the company on a clear competitive path in BI tools with other large IT providers such as Microsoft and Oracle. Business Objects will have to rely on continued innovation to stay a step ahead of these competitors while expanding and protecting its current leading market share."

IDC had an encouraging take on number two player SAS, too. Its software revenues approached $700 million, and SAS also notched the highest growth rate among the top three BI tools vendors—and the third-highest growth rate among the top 10 vendors. "SAS still derives more revenue from its advanced analytics tools, but its effort to revamp and more aggressively market its QRA [query reporting and analysis] tools since 2004 has paid off, with QRA's share of SAS' total BI tools revenue increasing from 37 percent in 2004 to 44 percent in 2006," Vesset and McDonough write.

Then there’s SAS’ citadel—the advanced analytics space—in which it controls more than double the share of its next strongest competitor (SPSS). "As the leader in the advanced analytics market, SAS holds 31 percent of that market segment. In addition, SAS derives a substantial share of its total software revenue from markets adjacent to BI tools, such as data integration and performance management or analytic applications," they say.

SAS has also demonstrated a willingness to reorient and re-architect itself, Vesset and McDonough point out, citing the company’s 2006 reorganization, which consolidated certain operational functions at its headquarters.

Traditionally, SAS hasn’t had as fractious a relationship with IBM Corp., Microsoft, and Oracle—i.e., The Big Three RDBMS triumvirate-- as have some of its BI competitors. That’s still the case, Vesset and McDonough acknowledge, but this could change. "SAS' strength has always been in its advanced analytics and applications incorporating such technology. This focus and strategy has kept the company more isolated from the direct competition with database and applications vendors faced by specialty BI vendors," they write. "However, because SAS has increased its presence in the query, reporting, and analysis segment of the market, it may begin to experience competitive pressure on its pricing model. Nevertheless, the synergies among its product lines will enable SAS to provide a broad portfolio of business analytic solutions."

Rounding out the top three, again, is Cognos, which notched more than $620 million in BI software revenues last year. That makes it one of only three vendors that has at least a 10 percent share in the BI tools market, according to Vesset and McDonough. This is in spite of the fact that Cognos—along with rival Hyperion—has developed a successful performance management (PM) practice, too.

"Cognos has pursued a two-pronged strategy of developing and marketing BI tools and financial performance management applications, with recent expansion into other related performance management markets such as workforce analytics," they write. "Nevertheless, BI tools remain Cognos' largest product line." Vesset and McDonough applaud Cognos’ efforts to more effectively tie its BI platform to Microsoft Office (with Cognos Go! Office), mobile BI (Cognos Go! Mobile), and search (Cognos Go! Search).

"Cognos also acquired Celequest, subsequently releasing the acquired technology under the Cognos Now! brand name. This appliance-based solution is an operational dashboard offering that includes the preconfigured hardware server and the BI software," Vesset and McDonough say. "It is also offered through the SaaS delivery model. These moves should position the company well for future growth, but will likely have a limited revenue impact in the short term."

Microsoft finished 2006 as the number four overall BI tools player, according to IDC—even though it notched the highest growth rate (28 percent) in the BI Top Ten. The software giant seems poised for surging growth in 2007, too.

"Microsoft's growth in the BI tools market can be attributed to focused sales and marketing efforts in recent years, accompanied by both internal R&D and acquisitions," Vesset and McDonough write. "While, in the past, Microsoft considered BI to be functionality that helps to sell databases and enhance its partners' more extensive BI capabilities, the company has since identified BI as a market worth pursuing directly. Its current strategy involves a mix of direct and indirect sales, with the expectation that Microsoft's traditional sales model of sales through its vast partner network will become the primary go-to-market vehicle in the coming years."