Business Intelligence and Analytics Were Bright Spots Last Year

May 24, 2010 Timothy Prickett Morgan

A lot of areas in the IT business were slammed last year, with double-digit revenue declines, but the market for business intelligence, analytics, and performance management (meaning the performance of the business, not the underlying systems) software was not one of them.

According to the bit and money counters at Gartner, these three interrelated software products accounted for $9.3 billion in combined revenues in 2009, up a modest 4.2 percent from the $8.9 billion companies brought in during 2008.

“Even though growth was nowhere near the levels of 2008, and by no means immune to the recession, BI showed that it is not as cyclical as many other software areas, recording healthy growth in one of the toughest years recorded in software history,” explained Dan Sommer, senior research analyst at Gartner, in a statement accompanying the figures. “The dominant vendors continued to put BI, analytics, and PM front and center of their messaging. Organizations largely continued their BI projects, hoping that resulting transparency and insight would enable cost-cuts and improved productivity and agility. However, there is no doubt pressure has intensified on deal sizes and price points on new sales throughout the year.”

As readers of The Four Hundred know full well, IBM has put business analytics and optimization at the heart of its Smarter Planet marketing strategy. But IBM has yet to launch a Smartie analytics appliance that is based on the Power Systems i platform and exploit some of the advanced features that make it suitable for exactly this kind of work and particularly for AS/400 and i shops that already have their production databases on Power gear and the OS/400, i5/OS, and i For Business operating systems. To my great disappointment.

Across this combined software category, Gartner reckons that German software giant SAP is the king, and will no doubt improve its position if it prevails in its $5.8 billion acquisition of database maker and analytics expert Sybase, which I told you about in last week’s issue. SAP might have been the market leader in the BI-A-PM racket in 2009, with $2.08 billion in revenues and giving it 22.4 percent of the pie, but its business was off six-tenths of a percent, according to Gartner. The acquisition of BusinessObjects helped SAP, but as the big player aimed at large enterprises who slammed on the spending brakes, SAP took the hit.

Oracle, thanks to its acquisition of Hyperion nearly three years ago, was the number two player in this BI-A-PM space, says Gartner, with $1.35 billion in sales, up 5.2 percent from 2008. SAS Institute was right on Oracle’s heels, with $1.32 billion in sales, up 3 percent, followed by IBM, with $1.14 billion in sales, up 14 percent. If you want to know why IBM is talking up Smarter Infrastructure and Smarter Planet and even releasing its own version of the Hadoop MapReduce and file system software used by Yahoo, Facebook and others (as it did last week). this is why: IBM sees a lot of growth potential in big data crunching.

Microsoft is a distant fifth in the BI-A-PM space, with $739.1 million in revenues last year, but also grew at an 8.5 percent clip, more than twice as fast as the market at large. MicroStrategy, with $205 million in sales and growing at 5.4 percent last year, is still hanging in there as an independent, but with a market capitalization of $880 million as this newsletter goes to press, it is hard to imagine that IBM or Oracle won’t snap it up soon. Other vendors made up another $2.93 billion in sales of BI-A-PM products, up 3 percent and getting a 25.7 share of the pie. There are obviously a lot of niche players down there, and they are all acquisition targets from the big boys, too.

By product category, business intelligence and data warehousing platforms accounted for just under $6 billion in sales last year, up 4.8 percent from 2008. Corporate performance management (CPM) suites accounted for $1.94 billion in revenues, up 3.6 percent, while analytic applications and performance management software (this is distinct from standalone CPM suites and represents modules that are add-ons to existing ERP, SCM, and CRM applications) brought in $1.4 billion in sales, up 2.3 percent.

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