October 8, 2010 – Although expectations have dampened with a down economy, interest and investment in business analytics should grow by 7 percent per year through 2014, according to an annual report from the International Data Corporation.

But integral to maintaining that interest – especially with the recent explosion of attention to cloud computing and Software-as-a-Service – is to steer more money into innovation, said Dan Vesset, IDC vice president of business analytics research and the lead analyst on the report.

In “Worldwide Business Analytics Software 2010-2014 Forecast and 2009 Vendor Shares,” IDC analysts cut predicted expansion in business intelligence and analytics markets by about 3 percent from a similar review from 2008. However, mainstream acceptance of analytics as a business tool, particularly by top-level executives, has kept the industry in the black during the recession, says Vesset.

Recently, with emerging shifts in business toward cloud computing and SaaS – industries which are expected to register about 20 percent in annual growth through 2014 – related analytics needs should put the BI market in good shape for the next decade, Vesset says.

“The fundamentals of demand continue to be the same [for analytics] and, in fact, it is increasing because of awareness of these technologies, especially at the top level of organizations where top executives are more aware. They’re asking people who work for them to look into [BI solutions] and for expansions” of spending and research, Vesset says.

Much of that interest since the recession has been analytics as a means for cost savings and direct attention to customer needs, while the cloud market growth has been mostly from a shift in interest and investment from present BI customers, according to the report.

Vesset says that dedication to innovation in analytics spending by vendors and users could give both a competitive advantage, and likened the situation to the one faced by many companies after the 2001 dot-com bubble burst.  

Advances in data warehousing and high profile use of customer analytics by companies like Amazon and Google are recent examples that businesses are pointing to as connections between initial investments in analytics and better BI to financial reward, the analyst says.

“The key to moving forward is to ensure ROI, because at the end of the day, if it’s just perceived as another technology, businesses won’t be investing just because of that,” Vesset says. “It has to lead to actions. If technology can show positive, real returns – more money in commercial settings or benefits for nonprofits, the public sector – then people start buying into this. And it has to happen in the next few years.”

The report from the Massachusetts-based market intelligence provider is tallied through reviews of market revenues and information garnered from thousands of end-users, vendors and systems integrators.

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