A wave of consolidation and a major newcomer to the list of business intelligence (BI) leaders mean good news for software buyers, according to Gartner's latest business intelligence Magic Quadrant.
Consolidation was the watchword of the last 12 months, according to the report, with enterprise software vendors SAP, Oracle and IBM acquiring top BI pure-players Business Objects, Hyperion and Cognos, respectively. Meanwhile, Microsoft made its first appearance in the report's leaders' quadrant, helping fuel BI's continuing transition from an expensive, strategic tool to a commoditized, mature technology.
The four so-called mega-vendors -- SAP, Oracle, IBM and Microsoft -- now offer similar, comprehensive BI tools and technologies, the report stated, and together control more than two-thirds of the market. As a result, Gartner expects BI prices to fall.
"Where you've got a large number of vendors offering roughly equivalent capabilities, then it leads to some level of commoditization," said Neil McMurchy, a Gartner analyst and co-author of the report. "And in that sort of environment, inevitably, there's more price competition." Gartner placed no fewer than seven vendors in this year's leaders' quadrant.
Other "flattening" factors -- including the growth of collaborative technologies, open source tools and Software as a Service (SaaS) -- also helped make BI more accessible and less expensive than ever before, according to the report.
Further, McMurchy said recent market consolidation has effectively eliminated any "middle ground" in the BI market, leaving only mega-vendors on one end of the spectrum and small, niche players on the other -- a common occurrence in mature markets. The good news for users is that with a number of well-proven vendors offering high-quality products, finding a solid BI tool is no longer a problem.
"This is not a market where users need to be concerned about whether solid technology exists," McMurchy said. "The challenges users are facing are more about whether they have an effective strategy, whether there's effective engagement between the business and IT, and whether they've put proper business cases together around BI to get proper investments into those projects."
Microsoft makes its BI move as SAP falters
Perhaps the most interesting development was Microsoft's ascension to the top of the leaders' quadrant, outpacing longtime BI mainstays IBM-Cognos and SAP-Business Objects in its ability to execute. Microsoft's BI platform and tools – including PerformancePoint Server and SQL Server – gained significant market traction last year thanks in part to improved customer service, McMurchy said.
Excel's improved functionality with Office 2007 and pre-existing user base also helped Microsoft make further inroads into the BI market. Supported by PerformancePoint Server, Excel is now better able to handle large data volumes, McMurchy said, while security improvements have eased some fears.
"The old argument was [that] once data got into Excel, it was out of control, by definition," he said. "[Microsoft] made Excel a lot more robust and potentially more manageable in a corporate environment as a business intelligence platform. The functionality may not be as strong as Cognos or Business Objects, but the quality of the software was consistently rated very highly by users."
SAP did not fare as well in 2007. Appearing in the challengers' quadrant for the second straight year, the German software vendor suffered from uncertainty created by its Business Objects acquisition, which closed last month. The two companies are ranked separately in the report, with Business Objects landing in the leaders' quadrant.
SAP customers expressed concern over the future of existing SAP products, McMurchy said. Those concerns could be allayed, however, as SAP unveils its Business Objects' integration strategy in the coming weeks and months.
Niche players driving future innovation
With the BI market now largely mature, users should expect less in the way of innovation, McMurchy said -- at least from the mega-vendors. Any innovation that does occur, he said, is likely to come from the remaining independent, niche vendors.
For instance, such companies as Toronto-based Panorama Software, which appeared in the niche players' quadrant, are developing technologies to integrate BI reporting and analytics with business processes, an increasingly important feature for users. McMurchy also expects to see advances in in-memory analytics by vendors like Radnor, Pa.-based QlikTech (which appeared in the visionaries' quadrant) over the next year.
Gartner bases its rankings on customer surveys and vendor-completed questionnaires. Each vendor is judged on its ability to execute its market strategy and on its completeness of vision, which Gartner defines as the ability to create value for customers. It is then placed in one of four quadrants: Leaders are those vendors that excel in both ability to execute and completeness of vision; Challengers have the ability to execute, but lack strong vision; Visionaries are market-thought leaders, but struggle with functionality issues; And niche players concentrate on just one or two specific segments of the BI market, but do it well.
Also appearing in this year's BI Magic Quadrant were Cognos, Oracle, SAS, Information Builders and MicroStrategy in the leaders' quadrant; Actuate, Arcplan and Board International in the niche players' quadrant; and Tibco Spotfire in the visionaries' quadrant.
Increasing pressure on CIOs to invest in strategic technologies that drive business transformation, the continued growth of corporate data, and demand from small and medium-sized businesses will probably fuel further BI market growth despite falling prices, the report said. It predicts that the BI market will grow at a five-year compound annual rate of 8.6% from 2006 through 2011.
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