By Matthew Healey and Elizabeth Hedstrom Henlin
Data creation is exploding, computational power is keeping pace, and networking allows everyone to tap into both streams. Oh, and clients’ expectations are also exploding. This means opportunity, specifically for business intelligence (BI) and analytics, as the value of data can only be realized if it can be used to generate actionable business insights.
Moving to Embedded Analytics
In the early phases of the market, dominant players were legacy, on-premise software providers with ties to core database installations. However, with the explosion of data, computational power, and evolution of business models, disrupters including GoodData, Birst, and Splunk shattered market expectations and reinvented purchasing with flexible tools that capitalize on customers’ heterogeneous environments, demonstrating that businesses can gain actionable intelligence from these sources.
With disruption comes acquisition and consolidation. The first wave included SAP’s purchase of predictive analytics leader KXEN, IBM’s purchase of Now Factory, and Oracle’s purchase of Endeca. The goal for the incumbent application (app) and database vendors was to acquire analytics capabilities that could be embedded into apps or databases. Embedding BI functionality into apps enables vendors to balance serving advanced BI customers and basic BI customers. For the customer well versed in the use of analytics, having the tool built into the app enables them to more effectively accomplish their goals. For the late adopter, having the tool built into the app provides them with a preconfigured starting point based on other clients’ best practices.
Market Forecasts: BI and Analytics
In coming years, enterprise software vendors look to analytics as a way of increasing the value of their business and industry apps, and thus reducing the chances that customers will migrate to upstart cloud-based app providers. Additionally, BI capabilities can provide incumbent software vendors with increased share of wallet from existing customers as they begin to expand analytic use.
The embedding of analytics in apps, however, does not mean that standalone analytics providers that are not able to embed the analytics will be blocked out of the market growth. In many cases, business problems are not limited to a single software workload, but rather require several different workloads. In these cases, embedded in-app analytics may not be the right approach. This is where the standalone analytics providers play a role.
Not all activity in this market is limited to the software providers. In many cases, deploying and using advanced analytics capabilities is a complicated task. Generally, first task customers that are either new to or expanding analytics capabilities need to build and understand the business case for deploying the tools. Failing to understand what is actually possible and achievable is a critical step in deploying any BI tool. Not properly setting expectations can lead to unrealistic goals that are not achievable and a perception that the project is a failure.
For many customers, using an outside IT consulting partner that can assist is critical in this step. Once the business goals are developed and articulated, the work associated with integrating the tools into the environment begins. Legacy databases need to be integrated with analytic tools and new data sources need to be captured and understood. All of this requires expertise in traditional consulting and systems integration.
Long-Term Outlook: Analytics
Over the long term, there is no reason to think that the market for BI and analytic capabilities will not continue to grow. The winners in the market—from an IT vendor perspective—will be the vendors that are able to assist customers in the difficult process of turning raw data into actionable business insight. SW
Matthew Healey, principal analyst for Technology Business Research, Inc.’s (TBR) software practice, leads the firm’s SourceIT program, a research initiative that analyzes customer-buying behavior by vertical industry.
Elizabeth Hedstrom Henlin, analyst, Software Practice, TBR, tracks trends and provides strategic insight on vendor business models. Her current areas of focus include enterprise software, virtualization, and BI and analytics. SW
Apr2014, Software Magazine