According to analysts at Gartner Group, the business intelligence (BI) market is presently worth around $1.8 billion but is set to explode to $6 billion by 2002. However, although product functionality is maturing, there is no real sign that market consolidation is taking place.
Instead, new entrants to the UK are appearing and focussing on niche areas, rather than offering generic applications.
For example, although new to these shores, Mineshare and Whitelight offer product aimed at providing application specific functionality for financial services. As such, they make a contrast to traditional vendors like Seagate, Cognos and Businessobjects that between them share the largest slice of the desktop BI market.
But according to Howard Dressner, BI research director at Gartner Group terms, the BI market will change significantly over the next three years so that by 2001, the market will have clearly segmented into generic tools, BI platforms and BI applications.
However, the picture is not as simple as it sounds. Within the BI applications sector for example, Dressner divides the group between vertical market applications and custom applications but he gives few clues as to who the winners and losers might be, other than a ranking based on current functionality.
All the same, Dressner believes the market is on the cusp of important changes. Significantly, these centre around the need to employ new technologies to cater for the expected mass deployment of BI tools, largely on the back of Microsoft's OLE DB server services included in SQL Server 7.0
This is a view shared by independent analysts Nigel Pendse and Richard Creeth, co-authors of the Business Intelligence Olap Report. According to Creeth: "The commoditising of the Olap engine by Microsoft changes things because the vendors can no longer sell expensive engines but have to concentrate on the applications."
Even so, Creeth is sceptical about whether the current crop of vendors will adapt quickly enough in the face of a tide of new applications.
"I think we could see hundreds of new entrants, dreaming up all kinds of applications," he said.
Pendse, who has long held the view that Microsoft's entry into the market will radically change market dynamics adds that, "Surprisingly few people need more than what Microsoft offers. It's Olap engine really is good - and that's saying something."
If the analysts are correct, this leaves the field wide open for innovative product, but this will not happen without those same vendors crossing important technology barriers in the areas of scalability, system directed BI, scalable licence models and true Web integration.
"Vendors that aggressively attack and scale these hurdles first will derive a greater advantage over competitors," predicted Dressner.
However, one prosaic obstacle is moving customers away from the spreadsheet - still the major desktop analysis tool - to specialist products that address features only found in 'true' BI products. Some vendors have accepted that Excel is not going away in the short term and will remain the product people will naturally use and so are hooking their products to it, but in ways that ensure data integrity.
Mineshare for example used BI 99 last week to announce version 3.0 of its enterprise business intelligence suite. This aims to solve the problem of accelerating information delivery from multiple data sources but delivered through the familiar metaphor of the spreadsheet.
Nigel Geary, Mineshare's international vice president said: "It's like Excel on steroids. Most organisations use many tools. We believe we can help enterprises to bring that number down substantially by replacing at least some OLAP, reporting and query tools."
According to IDC analyst Henry Morris: "Mineshare has a well constructed approach for end user information access and delivery."
Lehman Brothers is an early adopter that is undertaking reporting between its Tokyo, London and New York offices and is looking to expand the implementation to include risk and trading analysis.
Meanwhile, Whitelight previewed release 2.0 of its Analytic Applications Server. This uses the idea of integrated decision processing based on the construction of rules that sit at the meta data layer. Originally created for a private client in the banking industry, Whitelight has been developed to work for other industries and today counts Unilever amongst its customers.
Explaining what makes Whitelight different to other BI products, Dennis McGinn, Whitelight's chief executive said: "As applications expand, the Achilles heel has always been consistency and end user trust. We've solved those problems." According to McGinn, users want to take ownership so they can add value by applying their own ways of thinking. "We've provided the means to get different cuts of the views very easily," he said.
Whitelight recently attracted $22 million of venture capital from Warburg's and estimates that about half its revenues are derived from financial institutions. Referring to risk assessment and brand management applications as examples of complex business requirements, John Rymer of Upstream Consulting added that, "Whitelight's promiscuous data access, flexible decision modelling and transaction system integration is the right combination for these applications."
But whether vendors such as these will gain higher visibility as they extend their products across different market sectors will to some degree depend on the extent to which the traditional vendors move into the enterprise BI suite (EBIS) space as defined by Gartner, creating vertical market applications along the way. Gartner believes the EBIS segment will dominate the market, although high benefit, industry specific applications will attract the big ticket prices.
The wild card is the potential Seagate effect, following its freebie offensive through which it expects to make an initial drop of some 2.5 million software CD's (see Newswire 18 June). If Seagate Software is successful in attracting significant numbers of real users rather than delivering shelfware, it could change market dynamics and throttle its smaller but more innovative competitors.
Presently, Gartner rates both Cognos and Businessobjects higher than Seagate on the ability to execute axis of its 'magic quadrant' but it could easily leapfrog both by pulling customers through based on example solutions and help offered through its website and army of 120 helpdesk operators. But even then, Pendse says that no vendor has all the functionality larger enterprises need.
None of this is good news for users. The impression is that of an increasingly complex marketplace with many vendors vying for pole position in their chosen spaces. One thing is certain though. If mass deployment becomes a reality, design weaknesses will quickly become apparent. And at that point, it will be clear which vendors are capable of delivering on their promises and it may be the new entrants referenced here that are working in very large scale deployments that are the ones who ultimately claim the winner's trophy.
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