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October 10, 2007

Demand for business intelligence technology set to soar

Global demand for business intelligence, or BI, technology is set for continued growth as enterprises look to derive further value from existing enterprise applications. In 2006, the global BI market was worth around $4 billion in license revenue alone, and is expected to double by the end of 2012, driven by the rise of the digital enterprise and the commoditization of BI functionality.

By CBR Staff Writer

BI is a broad category of application programs and technologies for gathering, storing, analyzing and providing access to data to help enterprise users make better business decisions. It is often deployed to analyze information captured through such enterprise applications. Although BI is becoming an increasingly elusive technology to delineate, it can be defined as an analytical approach to information captured within an organization, including extracting, collating, analyzing and distributing data, in order to support its operations. Across all enterprise size bands, financial analytics are consistently the most ubiquitous.

Enterprises are generating increasing volumes of transactional data, which is fuelling BI market growth

Declining prices of storage, ubiquity of computing and the drive towards data access and corporate accountability are all causing enterprises to track, monitor and capture increasing volumes of data. This can be processed further by BI technologies in order to optimize the core business processes.

The sectors generating high volumes of transactional data, such as financial services (which accounts for a third of BI spend), telecommunications, retail and manufacturing, will continue to lead BI spending. The public sector and utilities are also expected to grow by an accelerated rate compared to other sectors.

Today, even the most ephemeral activities like web browsing, online finance transactions, smart card activities or B2C interactions generate an enormous volume of digital transactions that could be stored, queried and analyzed. Add to this corporate compliance and auditory pressures, which require data to be retained and archived. As such, the volume of data enterprises need to store, examine and analyze is greater than ever before.

Commoditization of BI technology is having a profound impact on the competitive landscape

Much of BI technology is becoming a commodity. Ongoing technological development has transformed large swathes of BI functionality into commodity products. Reporting and querying in particular have been rendered generic and functionally equivalent. The increasing number of database vendors integrating BI functionality into the database stack, with the intent to differentiate and strengthen their database offering, is only amplifying the trend further.

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This means that the scope for differentiation between BI vendors has shifted higher up the stack, towards issues such as predictive analytics and real-time BI. It has also moved lower down the stack, towards more pervasive BI and client BI applications. Other differentiation strategies may focus on strategic issues such as ease of deployment, on-demand offerings, industry-specific packages, enterprise application integration or go-to-market approaches.

In fact, it appears that the competitive landscape is breaking out into a group of vendors pushing for the advanced analytics agenda, including predictive modeling and automated real-time analysis and others attempting to embed analytics into everyday work processes though facilitating BI functionality in office productivity suites or enterprise application suites, often in the guise of business performance management.

The adoption and the impact of on-demand BI will be limited by the data storage structure demands and, to a lesser extent, concerns regarding the data security and integrity. However, those BI vendors that are offering an on-demand application have added another element to their differentiation strategy.

As a result of these developments, Datamonitor expects that the global business intelligence market, which was worth just under $4 billion in license revenue alone in 2006, will double in value by the end of 2012.

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