The software markets for analytic applications, business intelligence (BI) and data warehousing (DW) tools are evolving and maturing. Recent trends such as database-embedded business intelligence, consolidated BI suites and a shift in focus by many specialty BI vendors from BI tools to analytic applications are signaling a new stage in the market. To capture, analyze and communicate these changes more effectively, IDC uses the term "business analytics" to refer to the overall market.
Business Analytics: The Big Picture
The business analytics market comprises software tools and applications for tracking, analyzing and modeling data in support of decision- making processes. The tools components of the market include data warehouse generation (i.e., extract, transform and load or ETL, and data quality tools), data warehouse management (i.e., databases and DBA tools), business intelligence, technical data analysis and spatial information management tools. The applications components of the market include customer relationship management (CRM), operations, financial and business performance management analytic applications.
Figure 1: Worldwide 2001 Software Revenue (in billions of USD)
As customer demand, internal development goals of software vendors and competitive pressures shape the business analytics market, four major trends are dominating the current landscape:
Specialization involves best-of- breed ETL, BI and analytic applications software vendors. These companies have a deep focus on the DW generation (e.g., Ascential, Ab Initio) or DW access tools (Actuate, Crystal Decisions*, Information Builders) or provide focused domain or industry-specific analytic applications (e.g., Fair Isaac, Cartesis, Reveleus). At present, these specialty vendors show few signs of crossing into segments of the business analytics market that are outside their traditional core expertise.
Focus on packaged analytic applications involves BI vendors (e.g., Cognos, SAS, Business Objects, Hyperion and SPSS), ETL vendors (Informatica) and ERP vendors (SAP, PeopleSoft and Oracle) that are increasingly providing prepackaged analytic applications.
Emergence of integrated database platforms for analytics involves relational database management system (DBMS) vendors (Oracle, IBM, Microsoft, NCR/Teradata, Sybase) that dominate the DW management market segment. Relational database vendors are embedding both BI and DW generation functionality into their databases, thus creating analytic platforms that include basic ETL, database management tools and utilities, and support for multidimensional analysis and data mining. In other words, these vendors are creating a complete platform layer for developing analytic applications.
Emergence of analytic application development platforms involves BI and ETL vendors (e.g., Cognos, Business Objects, Hyperion, MicroStrategy, Brio, Computer Associates, Informatica and Alphablox) that have moved into each other's market segments and have begun to provide development platforms that incorporate ETL and BI tools along with development templates and related systems administration tools. The goal of these vendors is to target analytic application developers who build custom or packaged analytic applications to suit the specific needs of end users. While some of these vendors also provide their own packaged analytic applications, the development platforms are attractive alternatives for organizations looking for some level of packaged components instead of purchasing disparate BI and/or DW tools.
Two Rival Types
The latter two trends concerning analytic applications development platforms are further discussed in this article. An analytic applications development platform usually combines some or all of the following software tools: warehouse or mart generation, database management, data presentation, security/user rights management, workflow, collaboration tools and templates and wizards that speed the development process. The goal of providing such platforms is to enable customers to implement their analytic applications more quickly. By developing on an analytic applications platform, IT departments or systems integrators can focus on their core competency of customizing analytic applications for their clients rather than "reinventing the wheel" of core BI and DW components.
Figure 2 presents a schematic of the two rival platforms for analytic application development. The first platform, analytic DBMS, is offered by the relational database vendors and includes a complete horizontal package that incorporates warehouse generation, management and access tools. The database vendors, who have traditionally dominated the DW management function, have moved more actively into the other two DW functions in recent years. Trends of embedding BI and/or ETL tools into the database are evident in many cases (Figure 2, a). One example of such a platform is Microsoft's SQL Server that includes multidimensional analysis, basic data mining and yet to be released reporting services, in addition to the company's data transformation services (DTS) ETL component. Another example is Oracle9i relational database that includes Oracle9i OLAP and Oracle9i Data Mining and can be supplemented with Oracle's Warehouse Builder tool.
Figure 2: Data Warehousing Platforms: Current Market Overview
The underlying goal of these database companies is to sell their database into the business analytics market to supplement the sale of databases for transaction processing environments. Relational database vendors position their analytic DBMS platforms for building analytic applications (Figure 2, b) and target both database administrators and application developers with their platforms.
The second platform is offered by the BI, ETL and specialty analytic applications platform vendors that have crossed into each other's market segments (Figure 2, c). Examples of such crossovers include Cognos DecisionStream, Business Objects Data Integrator and SAS DataFlux (all based on acquisitions of ETL tools by BI vendors). Over the past few years, many of these BI vendors have, in fact, entered the analytic applications market with packaged domain and/or industry-specific software products (Figure 2, d). Examples of such applications include SAS Supplier Relationship Management, Cognos Financial Analytics, BusinessObjects Customer Intelligence, Informatica Supply Chain Analytics, Hyperion Planning and SPSS PredictiveMarketing.
However, following on the heels of packaged analytic applications, several of these vendors also released analytic applications development platforms that combine various data management tools and development templates and wizards (Figure 2, e). Note that Alphablox has been providing such a platform for several years. Examples of such analytic applications development platforms include Alphablox, BusinessObjects Application Foundation, Cognos Series 7, Informatica Analytics Delivery Platform and Hyperion Essbase XTD Application Framework.
In effect, these vendors established a middle layer between standalone BI and DW tools and completely prepackaged analytic applications. By combining various data management, security and collaboration tools with templates and wizards, these platforms are targeted at application developers looking for faster development and deployment cycles for analytic applications.
The interaction between the players of each platform bears further analysis. On the one hand, there is competition between the two camps for the minds and wallets of end users, application developers and systems integrators. On the other hand, partnerships abound between the players of both platform groups. The partnerships are partly necessitated by the analytic applications development platform vendors' reliance on the underlying DBMSs as data repositories. Conversely, the analytic DBMS platform vendors often find themselves without best-of-breed warehouse generation and access tools and look to BI and ETL vendors to provide tools that integrate with their databases. A notable distinction between the two groups is the analytic application development platform vendors' emphasis on cross-database DW generation and access capabilities, while the focus of analytic DBMS platform vendors gravitates toward their own databases as the sole target.
Which analytic platforms are likely to dominate the market in the future?
Two scenarios as shown in Figure 3 call for closer analysis. The first scenario would preserve the current status quo. The relational database vendors continue to provide their current platforms, encompassing tools from the three segments of the DW market. Look for the relational database vendors to continue to improve their OLAP, data mining, reporting and warehouse generation services embedded in the database. It is likely that such improvements will come primarily from internal development efforts rather than from acquisitions. This process will not happen overnight and competition from best-of-breed point solutions will remain strong. In addition, database vendors will continue to provide more sophisticated warehouse management tools with improved performance and more automation.
Figure 3: Data Warehousing Platforms: Future Outlook
The second scenario for the database vendors would involve moving up the prepackaging continuum to provide templates and analytic applications (Figure 3, f). In this case, individual vendor strategies will differ. The likelihood of IBM providing packaged analytic applications is lower than that of its main rivals. For example Oracle, which has a substantial applications business and has been providing analytic applications, is likely to continue in that direction. Microsoft, on the other hand, could target the analytic applications development platform market in addition to targeting the packaged analytic applications market through its Great Plains applications division.
For the analytic application development platform vendors, the direction is to provide increasingly specialized packaged analytic applications, along with seamless data integration and presentation for disparate relational databases. The value-add of these vendors will be in their ability to package process- and industry-specific content around their tools to provide even more prepackaged applications (Figure 3, g).
In the final analysis, the competition between the two platforms is not likely to result in a zero-sum outcome. In the near term, the two rival platform models will coexist out of necessity. However, market consolidation is likely to occur over the intermediate time frame. Oracle, Microsoft and Teradata all of which have their own applications businesses are more likely to continue a move into analytic applications. At the same time, except for SAS, which has its own relational database, none of the BI or ETL vendors are likely to enter the warehouse management market.
As the two platform models compete for market share, end users are likely to benefit as new features will find their way into the platforms. Certain vendors are already placing more emphasis on data quality, a crucial building block of successful analytic application implementations that has often been overlooked. Some recent acquisitions suggest that more data quality functionality will be incorporated into the next generation analytic platforms (e.g., SAS acquired DataFlux and Ascential acquired Vality).
Expect other analytic platform-embedded features, such as workflow, collaborative, security and visual development tools, to further improve in the upcoming versions of the platforms.
* Editor's Note: Business Objects recently announced plans to acquire Crystal Decisions; acquisition expected to close in the fourth quarter of 2003.
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