2010 Gartner Magic Quadrant for Business Intelligence Platforms

(Source: Extracts from Gartner RAS Core Research Note G00173700, Joseph Feiman, Neil MacDonald, 29 January 2010, RA1 04012010. For more information or to purchase this article, please visit www.gartner.com.)

In 2009, megavendors held almost two-thirds of business intelligence platform market share. But impatient business users increasingly turned to pure-play BI platforms, particularly those of small innovative vendors, to fill usability and time-to-value needs unmet by the larger vendors.

Market Overview

The market in 2009 was defined by the David and Goliathian struggle that occurred between resilient BI pure-play vendors and ostensibly omnipotent megavendors. The frenzy caused by major BI platform market consolidation in 2007 and 2008 gave way to a postacquisition hangover in 2009 in which megavendors’ customers reported greater overall dissatisfaction due, in large part, to the often messy postacquisition “digestion” process. Yet, despite megavendor acquisition “growing pains,” stack-centric buying led by applications and information infrastructure dominated BI platform investment decisions in 2009 with the top five vendors controlling 75% of the market. At the same time, however, based on the research conducted for this report and interactions with Gartner customers over the year, there is significant, if not euphoric, satisfaction with, and accelerated interest in, pure-play BI platforms. This is particularly true for smaller, innovative vendors filling needs left unmet by the larger vendors. To understand this paradox, it is necessary to consider a number of factors that are driving the BI platform buying decision today:

  1. Growing bifurcation of stack departmental BI buying. Market bifurcation continues toward strategic IT-led stack- centric buying based on dominant applications or information infrastructure stacks on the one hand, and business and department buying on the other hand. Pressured by new economic realities and the need to quickly demonstrate business value, business users – often with an enterprise BI standard in place – are increasingly turning to innovative, pure- play vendors offering highly interactive and graphical user interfaces built on alternative in-memory architectures to address their unmet ease-of-use and rapid deployment needs. The perceived benefit is so compelling that business users are making this choice, despite the risk of creating fragmented silos of applications and tools.
  2. Last year’s Visionaries become this year’s Challengers. Driven largely by business user buying, the data discovery tool architecture pioneered by last year’s Visionaries (for example, QlikTech [QlikView] and Tibco Software [Spotfire]) and new Magic Quadrant entrant Tableau is now becoming much more accepted in the industry. Organizations are rapidly embracing the idea of providing data to end users and empowering them with an ability to navigate and visualize the data in a “surf and save” mode as an alternative to a report-only architecture. Threatened by the success of these vendors (and adding to their credibility), traditional BI platform vendors are attempting to imitate them with easy-to- use interactive visualization alternatives (for example, Microsoft with PowerPivot, SAP with SAP BusinessObjects Explorer, IBM with IBM Cognos Express, and Information Builders with WebFocus Visual Discovery) often incorporating in-memory technology. This imitation, coupled with a growing recognition by user organizations that data discovery tools can be used as full-functioned BI platforms for a broader range of BI platform capabilities and use cases (beyond rapid prototyping), justifies the significant move of these vendors from the Visionaries to the Challengers quadrant. A “Z”-shaped movement in the Magic Quadrant from the Visionaries to Leaders quadrants is typical, as a vendor that may have been visionary in a specific segment becomes subject to a broader visionary lens and expanded buying requirements. The response of the traditional BI vendors to these new market Challengers will accelerate in 2010 and will likely lead to further industry consolidation, while at the same time putting pressure on Challengers that don’t improve their enterprise capabilities and continue to innovate.
  3. Acquisition transition takes its toll on customers. Customer turmoil from acquisitions typically follows a life cycle. Initially, there is significant customer concern because of uncertainty about product road maps and commitment. This is followed by the actual execution of the acquisition transition in which support, contracting, pricing, sales territory alignments and products are often changed. This transition process takes time and is not easy on customers. Successful acquisitions at some point complete the transition and reach a new “normal” for customers. While Oracle, which acquired Siebel and Hyperion in 2005 and 2007 respectively, seems to be successfully exiting the back of this curve, as shown by significantly improved Magic Quadrant customer survey results this year over last, weak customer survey results for IBM and SAP suggest that they are still in the throes of this transition. This heightened level of customer dissatisfaction revealed in the customer survey is reflected in these vendors’ Ability to Execute positions.
  4. Shift from measurement to analysis, forecasting and optimization. While reporting remained the dominant style of information delivery of BI in 2009, the increased proliferation of interactive visualization tools pushed the power of data analysis and discovery into the hands of a larger number of users than ever before. Moreover, driven in part by the economic downturn, the need for more accurate forecasts and optimized business processes, and to identify leading versus lagging indicators, was on the rise. In response, IBM acquired predictive analytics market leader SPSS in the only major acquisition by a BI platform vendor in 2009. At the same time, many pure- play vendors (Information Builders, Tibco Software [Spotfire], MicroStrategy) and most of the megavendors (SAP, IBM, Microsoft) either introduced or matured capabilities to make statistics, predictive analytic models and forecasting algorithms more consumable in reports, dashboards and analytic applications. These advances constitute important steps toward increasing the availability of predictive analytics to business users beyond the traditional statistician installed base. This shift in market center for predictive analytics has also resulted in a narrowing of Completeness of Vision leadership between SAS and many of the other BI market players.
  5. Economic conditions driving interest in low-cost alternatives. BI spending remained firm in 2009 as organizations turned to BI to survive the worst downturn in modern history. While projects to improve decision making, identify operating efficiencies and risk, and attract new customers more cost-effectively continued, the need to do more with less – more quickly – increased interest in lower-cost options. Beyond Microsoft, the traditional low-cost BI platform, organizations showed an increased willingness to consider open source for their enterprise BI platform deployments, and interest in BI embedded both in packaged analytic applications and in business process platforms, and, to a lesser extent, in alternative deployment models, such as software as a service (SaaS). In response, this report includes commentary on some alternative vendors in these categories, which, while not meeting the inclusion criteria for the Magic Quadrant itself, offer a viable alternative for some organizations with specific requirements.
In the wake of the merger and acquisition turbulence of 2007 and 2008, 2009 continued to be a year of transition, particularly for SAP and IBM. Business users in particular showed a growing impatience with the time to deploy and complexity of traditional enterprise tools, which led to a rise in departmental buying of alternatives. Looking forward, 2010 is likely to be a critical year in which ease of use, time to value, scale and performance, and total cost of ownership will dominate the BI market narrative, while the ability to mesh the newly proliferated departmental silos with enterprise deployments will be a critical IT challenge. As the tough economic environment continues through 2010, new opportunities will emerge to build new sources of growth and business value. The ability of BI to identify and optimize these opportunities will be under greater pressure than ever to deliver results.

Forecast

Gartner’s view is that the market for BI platforms will remain one of the fastest growing software markets despite the economic downturn. In tough economic times, when competitiveness depends on the optimization of strategy and execution, organizations continue to turn to BI as a vital tool for smarter, more agile and efficient business. According to Gartner’s annual survey of CIO technology priorities, BI remained among the top five priorities in 2009 (and it was No. 1 in each of the previous four years). That said, however, the recession, commoditization and consolidation are expected to reduce BI platform growth from more than 20% in 2008 to single digits in 2009 and beyond. The BI platform market’s compound annual growth rate (CAGR) through 2013 is expected to be 6.3%, while the combined BI, analytics and performance management market’s CAGR is expected to be 8.1% through 2013.
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