BI Industry Bucks a Downward Trend
While the bottom might drop out of other technology segments this year, the business intelligence industry appears poised for healthy growth
While the bottom might drop out of other technology segments this year, the business intelligence (BI) industry appears poised for healthy growth.
It's paradoxical, in a sense. Over the last 14 months, after all, the BI segment has undergone an unprecedented streak of tumult, with application vendors IBM Corp., Microsoft Corp., Oracle Corp., and SAP AG displacing best-of-breed leaders Business Objects SA, Cognos Inc., and Hyperion Solutions Corp. Although its vendor ranks might be shrinking, worldwide business intelligence platform revenues are expected to continue to grow at an 8.1 percent clip through 2012, according to industry watcher Gartner Inc.
This year, Gartner says, the worldwide market for BI platform solutions should reach $5.8 billon, which would represent an 11.2 percent improvement from 2007. Assuming that Gartner's correct, that means BI platform growth will outpace vanilla application growth, in part, the industry watcher says, because CIOs accord their BI platforms higher priority than other IT investments.
Just how high a priority are CIOs making BI? It's tops among IT decision-makers, according to Gartner, which says that in a global survey of 1,500 CIOs, executives cited BI as their No. 1 technology priority in 2008. That's the third year in a row in which CIOs ranked BI first, Gartner adds.
"The fact that BI has held the top spot with CIOs in this survey for three years running makes us believe that BI will be more resilient against the effects of a possible downturn in IT spending than some other technologies," said Dan Sommer, senior research analyst for Gartner, in a statement. "Furthermore, the survey indicates that CIOs are looking to increase their budgets for BI by about 11 percent this year."
So if BI is tops when it comes to IT investment, why do Gartner's projections anticipate slowing platform growth?
"Despite BI being a top priority for 2009 and beyond, we expect a downward-sloping growth projection because of product and vendor consolidation, which will be offset somewhat by larger sales forces behind some of the products," Sommer said. "Commoditization of BI across the board, but in particular for query, online analytical processing, and reporting, will drive price points down. This will be partially offset by newer, innovative BI capabilities, as well as the general proliferation of BI, allowing it to reach more users within organizations."
Growth isn't uniform globally. BI revenues are up, but the BI outlook in North America -- while more encouraging than in other segments -- trails BI growth expectations for other regions. One upshot of this is that growth in other regions is helping offset sluggish growth in the US.
In other words, Gartner says, surging BI revenues in the UK, as well as in Europe, the Middle East, and Africa (EMEA) -- where the pound sterling and the euro both trade at higher values relative to the U.S. dollar -- translate into exaggerated growth when measured in dollars. Even taking into account the strong value of the euro (relative to the U.S. dollar), the EMEA and Asia/Pacific regions still boast stronger BI platform growth rates than does North America. It's a trend that both regions are expected to reprise in 2008.
Surging growth in the EMEA and Asia/Pacific regions should help offset slumping growth in North America, where U.S. firms, especially, are feeling the effects of economic uncertainty. Through the first half of 2008, Gartner projects, BI and other technology segments in North America will grow at a slower-than-expected pace -- in part because of chariness on the part of organizations, many of which are loath to splurge on IT in the context of a deteriorating economic outlook.
About the Author
Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.