Business analytics—a market in transition
Open source BI solutions are also going to raise awareness of BI functionality within the developer community. Even if the efforts don't generate direct software revenue for their supporters, the increased awareness is going to benefit those ready to capitalize on the need for robust BA solutions. Open source BI tools will also assist their vendors to sell their own commercially licensed version of the same products.
Over the longer term, open source BI software may develop into a stronger competitive force. However, unlike in the operating systems or database markets where open source technology addresses a vast mass market, the BI market is not large enough or generic enough to support significant open source offerings in the foreseeable future.
Mergers and acquisitions
Merger and acquisition activity is expected to continue. Vendors lacking a diverse product portfolio are going to seek out specialty vendors to expand their market potential. Companies with slow momentum and low marketshare are going to consider expansion or divestiture as the BA market becomes more competitive.
Convergence of structured and unstructured data analysis
Many vendors are working on new solutions that will further broaden the scope of their existing solutions beyond the BA market. A key emerging trend in the market is the convergence of traditional BI tools and unstructured content access and analysis tools (including search technology). In fact, it's quite likely that some of the emerging BI applications will closely resemble common online community sites with the associated functionality for graphs, tables, search, comments, notes, ratings and other collaborative community features.
It is also clear that search as a ubiquitous interface has the potential to be embraced by many more users than BI tools, which historically have required more training. As such, the search technology has the potential to displace traditional BI tools in certain information retrieval use cases.
The BI market's 15-year cycles
Business intelligence is a key component of the overall business analytics market, and just as security technology is something organizations must have to survive, so is BI technology something organizations need to succeed. However, BI as a set of tools and concepts for managing organizational and individual performance still has a long way to go in reaching all the necessary people and processes in companies, government agencies, hospitals and universities.
IDC research into the BI market has identified that it moves in 15-year cycles. The first of those periods, from 1975 to 1990, was characterized by production reporting on mainframes as well as statistical tools. Companies such as SAS, IBI and IBM began in the BI market during the early years of that cycle.
The second 15-year period, from 1990 to 2005, saw the beginning of the "modern era" of BI, characterized by easier-to-use, client/server-based BI tools from vendors such as Business Objects, Cognos and Hyperion. Eventually query, reporting and OLAP technology migrated from client/server to Web-based architecture with the development of broad suites of BI platforms.
When we look back in a few years, we'll see that 2005 was another turning point in the BI market and the beginning of the new wave of investment in BI by organizations in all industries. The current market cycle is expected to last until 2020 and will be focused on expanding the reach of BI to more users both inside and outside the organization, along with a move to automate more decision processes by combining query, reporting and advanced analytics functionality.
As the BI market matures, the focus of organizations, BI software vendors and systems integrators is changing. To date, the BI market has concentrated on delivery of information to analysts and managers. Progress has been made in delivering information faster and through various means (e.g., reports, dashboards and alerts on PDAs). However, analysts and managers represent only a relatively small portion of an organization, estimated at about 15 percent to 20 percent of employees. In fact, IDC believes that the market for reporting and OLAP tools for power users and analysts has reached a level of maturity that cannot sustain the growth rates of the past in terms of new license revenue.
But what about the rest of the organization? Whether we're talking about information workers with higher levels of freedom to decide about their daily workflows and processes or line-of-business employees who may be restricted by systems and policies in how they perform their duties, a vast population exists whose BI requirements have not been met.
The next wave of BI will reach out to those employees as well as other organizational stakeholders such as suppliers, partners, customers and government agencies to improve information delivery and decision support functionality for all. As this trend develops, the availability and scalability requirements of BA solutions will evolve.
BA technology must evolve to address the needs of the ever-broadening audience of users. As more data becomes available for analysis and more users expect to receive decision support based on that data, the scalability and availability requirements of BA systems are becoming more robust. IDC research shows that already today, more than 40 percent of organizations indicated that if their BA systems go down for just a few hours, there will be significant material impact on their operations. At this point, BA systems have not yet reached the requirements of operational systems; however, the trending is toward a convergence of availability requirements between analytics and operational systems.
That shift in market focus can be only partially addressed through existing BI software, which, as already mentioned, was created with the analyst or power user as the intended audience. Clearly a frontline employee will have limited use for an OLAP or an ad hoc query tool.
Business drivers for the next wave of business analytics
In fact, to address the needs of frontline employees and line-of-business managers, organizations must redefine and expand what they mean by BI. The expanded vision of BI must take into account not only the technologies involved but also business drivers and performance management methodologies. Those drivers include the following:
BA can help drive consistency in decision making. It's important to make correct decisions, but often it is also important that decisions are not made arbitrarily (i.e., that different employees follow similar decision processes, which can be audited or