Megavendors take over business intelligence market

Gartner's 2008 Magic Quadrant report on business intelligence was released in early February and concluded that "Megavendors" are beginning to dominate the BI market. "In less than one year, Microsoft, Oracle, SAP and IBM will have gone from accounting for a quarter of the market to owning over two-thirds of it," the report noted.

This process was brought about by a series of huge deals:

These transactions represented the tipping point where the market shifted away from independent specialists such as Business Objects and Cognos. Suppliers such as ProClarity and Outlooksoft that initially prospered in the growing mid-market have effectively disappeared, leaving only the giants at the top end and smaller specialists offering low-cost entry points to BI.

"Future BI investment decisions," Gartner prediced, "will be tethered much more closely to strategic sourcing and stack-led factors, and will be more influenced by organisational relationships with application and infrastructure vendors."

Gartner's Magic Quadrant reports are hotly anticipated for their ratings of suppliers' completeness of vision (X-axis) and ability to execute (Y-axis) in different technology markets. The assessments also carry a lot of influence with corporate software buyers. A comparison with the 2007 Magic Quadrant chart illustrates the key market movements as Gartner sees them. One of the most significant shifts was Microsoft's rise towards the top-right "Leaders" quadrant, where it climbed above established players such as IBM-Cognos and SAP-Business Objects in its ability to execute.

Along with the arrival of Web 2.0 techniques, software on demand and open-source BI, Microsoft's maturing BI strategy is credited with making analytical technologies much more accessible.

Lying at the heart of Microsoft's portfolio is Excel, which is familiar to millions of users and positioned as the basic interface to BI data. The expanded memory capabilities of Excel 2007 and deeper integration with SQL Server and Microsoft's new PerformancePoint Server performance management suite played a major part in the company's improved ranking in this year's BI Magic Quadrant. As noted by Gartner, Microsoft's bundling and pricing of its BI products also makes them an economically attractive offering. Users approached by Gartner's researchers gave Microsoft good ratings for product quality and the overall BI "platform" will continue to support third party application developers.

SAP did not fare so well in Gartner's analysis. It's Business Objects acquisition came too late to influence the Magic Quadrant rating, so the two companies are ranked separately. While Business Objects remains in the Leaders quadrant, SAP remains a "Challenger", due mainly to uncertainties surrounding its product strategy, Gartner said.

The online digest of this year's BI Magic Quadrant report predicts that 2008 will see the "consumerisation" of information, as users become more skilled at using and manipulating data. Thanks in part to Microsoft's influence, BI tools will become more standardised, and new facilities such as data visualisation should emerge.

Gartner suggested that growth might dip for some suppliers while they rationalised their product lines, but the pressure to invest in technologies that drive business transformation would continue to fuel growth in the BI market.

Finance-led performance management initiatives and the use of BI tools for non-financial applications such as CRM or supply-chain analytics have the potential to improve decision making and operational efficiency, and drive the top line and the bottom line, the authors noted.

"Organisations are continuing to progress along the BI continuum, from analyst/user-driven BI applications, to strategy-driven ones, to process-driven applications," they wrote, adding that small and midsize companies were also becoming an important target market for BI vendors.