Business Intelligence software spend to boom in new era of accountability
Industry analyst and advisory giant, Gartner, estimates that total revenues generated by the worldwide Business Intelligence (BI) and analytics market will increase 5.2 percent from 2015 to 2016, totally $16.9 billion (US).
Increased demand for independent business access to fact-based insights
There’s a plethora of factors that have driven the rise and rise (and rise) of the global reporting and analytics industry over the last couple of years. In particular, Managing VP at Gartner, Ian Bertram, pinpointed the accelerated shift from IT-led to business-led analytics. According to Gartner, the BI and analytics market is in the final stages of a multiyear shift from IT-led, system-of-record reporting to business-led, self-service analytics.
“The shift to the modern BI and analytics platform has now reached a tipping point,” said Bertram. “Organizations must transition to easy-to-use, fast and agile modern BI platforms to create business value from deeper insights into diverse data sources.”
All businesses are analytics businesses
That shift has driven, and been the result of, previously unheralded cross-industry and cross-functional broad-based demand for BI. To explain this phenomenon, Gartner stated that “analytics has become increasingly strategic to most businesses and central to most business roles – every business is an analytics business, every business process is an analytics process and every person is an analytics user.”
By way of example, Bertram added that “It is no longer possible for chief marketing officers (CMOs) to be experts only in branding and ad placement”. Marketers need to be able to analyse customer habits and design campaigns based on solid quantitative data, as well as evaluate and justify financial outlay with data-driven evidence. Historically, many marketers and marketing practices have been run, and perceived as, a ‘dark art’ – vindicated by ‘gut feel’. However, the increased accessibility of analytics – with its ability to be used and shared pervasively outside the traditional confines of the IT department – has seen organizations demand more from their marketers. Is it any wonder, then, that a report compiled by Infogroup Targeting Solutions, Big Data’s Big Step: Analytics Takes Center Stage for Marketers in 2014, predicted that 88 percent of marketers would be practicing analytics-driven marketing before 2019?
But, this is a story not just familiar to marketers, but almost all professionals – sales, finance, HR executives and many, many more. And, it’s not just more professions and industries putting their practices under the analytic microscope, but more people within those functional groups within each organization.
According to Gartner, the realization that BI’s true benefit could be unlocked when utilized far outside the IT department actually resulted in a slowing of market growth in 2014 (4.3%). Gartner explained that as the expansion of business-oriented BI use cases increased, with purchase decisions moving from IT leaders to LOB (Line of Business) executives, a “structural shift” was triggered as “new investments in BI and analytics focused on advanced analytics, self-service data discovery and packaged analytical applications.”
However, since that readjustment was made, growth rates began to increase again, as have the forecasts. A report published by analyst firm Research and Markets, titled Global Business Intelligence Market 2015-2019, predicted that the global BI market would grow at a CAGR (Compound Annual Growth Rate) of 8.25% over the period 2014 ($17.90 billion) – 2019 ($26.78 billion). Similarly, Markets and Markets predicted the global BI and analytics software market to grow at a CAGR of 8.4 percent over the same period.
A number of research firms expect that growth rate to further accelerate into the future, with Technavio’s Global Business Intelligence Market 2016 – 2020 report estimating the global BI market to grow at a CAGR of 10 percent over the forecast period. The ERP Technicals School of Business has projected the global BI and analytics software market to reach $35.26 billion by 2022 – a CAGR of around nine percent for the forecast period 2014 – 2022.
Business driven BI triggers demand for Collaborative BI
This groundswell of BI business users, and therefore increasingly business-led purchase decisions (which has in turn impacted the development priorities of technology vendors), has triggered greater emphasis on Collaborative BI. For those playing along at home, Collaborative BI is the integration of collaborative capabilities, the type made popular by the world’s most ubiquitous social media platforms, within BI software.
Gartner refers to this emerging applications market as ‘collaborative decision-making’, or CDM.
“CDM combines social software with Business Intelligence,” explained Gartner in a research report. “This combination can dramatically improve the quality of decision-making by directly linking the information contained in BI systems with collaborative input gleaned through the use of social software.” Gartner continued, stipulating that while it’s feasible for organizations to replicate a CDM environment by pulling together existing social software, BI platforms and basic tagging functionality, “it will be far more efficient when software suppliers deliver ’out of the box’ CDM solutions”.
The continued emergence of Collaborative BI or CDM capabilities within BI platforms will drive increased business user demand, adoption and success – which, in turn, is spurring market growth.
Emergence of Cloud BI drives broader rollouts, new SMB implementations
Another important factor is the rise of cloud-based BI solutions, which empower organizations to achieve pervasive, highly scalable, BI rollouts with fewer technical and financial resource barriers than in the past. Although, the availability of Cloud BI isn’t just assisting enterprise-wide implementations. It’s also enabling SMBs (small to midsized businesses) to harness the decision-making benefits of BI. In the past, the cost, complexity and in-house expertise required to successfully manage an in-house (on premise) deployment prevented many organizations from purchasing enterprise-grade analytical applications.
A recent report published by Transparency Market Research – Business Intelligence and Analytic Tools Market – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2015 – 2023 – said that the “Business Intelligence and analytics market is considered to be the fastest growing segment in the Information Technology industry.” The study went on to pinpoint “increasing demand for cloud-based solutions” as one of the key factors “driving the Business Intelligence and analytics tools market”.
The aforementioned Technavio study stated that on-premise BI deployments “accounted for 86 percent of total BI market share during 2015”, but “the report anticipates this segment to witness a decline in its shares by the end of the forecast period” with “increased acceptance of cloud BI solutions by SMEs also boosting the growth of this market”. It also noted that America “dominated the [global BI] market during 2015, with a market share of around 56 percent”, and that “high adoption of cloud BI solutions in this region is the major growth contributor for this market”.
“The adoption of cloud services allows end-users to concentrate on core activities rather than managing their IT environment,” elaborated the Technavio report. “Cloud BI solutions enable applications to be scaled quickly, can be easily integrated with third-party applications, and provides security at all levels of the enterprise IT architecture so that these applications can be accessed remotely.”
The ERP Technicals School of Business backed Technavio’s market analysis, predicting that “Cloud based BI and analytics will be among the fast budding options within the coming years. The escalation of Business Intelligence with Cloud will enhance the growth rate by more than 80 percent annually in the next two years.”
Likewise, the abovementioned Markets and Markets study stated that “demand for cloud-based Business Intelligence and analytics software is accelerating due to its cost-effective and easy deployment features. Though there is notable traction of Business Intelligence and analytics software in large enterprises, emergence of SaaS delivery models has increased its usage in SMBs too.”
Understanding the changing requirements of modern BI implementations
With more, and more types of, BI use cases and users, combined with shifting purchase patterns, evolving technology as well as the increasing affordability of data storage and data analysis, the BI market is rapidly changing and becoming increasingly important to more people, organizations and industries than ever before.
“To get the full benefit of modern BI and analytics platforms, leaders must rethink most aspects of their current IT-centric, centralized analytics deployments, including technology, roles and responsibilities, organizational models, governance processes and leadership,” said Gartner’s Ian Bertram.
To help navigate 2016’s BI landscape, Gartner analysts will provide additional analysis and information on the outlook for BI and analytics at the Gartner Business Intelligence, Analytics & Information Management Summit in Sydney, Australia, at which Yellowfin will be exhibiting.