We recently published our third annual Wisdom of Crowds Business Intelligence Market Study® to identify the nature and rate of change in the BI market. In this year’s study we also addressed technology and usage issues, perceptions of the success of BI initiatives, intentions concerning BI technologies. In the questions addressing business intelligence vendors, we added a focus on the buyers’ perception of the integrity of the vendors, and we added a new “High Growth” marketing segment identifying vendors growing well above the industry average. The study reveals a dynamic market that is changing.
Here are some of the big findings I noted this year.
Who is driving the BI market?
Line-of-business is very actively engaged in driving the business intelligence market right now and, in many cases, more so than IT. Five or six years ago IT was far more dominant, but the tide has been turning for the past three years and it is now much more of a user-driven marketplace.
In fact, we’re seeing the emergence of two BI “markets.” One is “classic” BI driven by IT, which focuses on data warehousing and self-service. The other is the user-driven or business-driven variety, which is much more aligned with social, collaboration, cloud, mobile and, to some degree, Big Data. These two worlds are somewhat disparate in nature.
The user-driven aspect is turning the market upside down in many ways, as has been pointed out in many articles around mobile, social, and Big Data. Many IT organizations seem to be somewhat stuck in the BI of the past.
Although adoption of BI is almost evenly split, with 45 percent from IT, it’s important to note that budgets are shifting away from IT towards end-user departments.
As line-of-business unilaterally invests in tools, the number of tools will continue to rise. This may cause a lack of enterprise coordination surrounding metadata and semantics and presents an ongoing problem to organizations seeking information consistency.
I think there’s a clear role for IT here, but it’s not in choosing the solutions or creating reports for users. Users can do that for themselves, and it will allow them to get the most value from data. IT needs to focus more on governance and managing the infrastructure.
Midsize businesses weighing in
The 2012 survey, which had 859 completed, qualified participants, revealed a substantial increase in the numbers of midsize businesses (1,000-10,000 employees) deploying BI. There is more technology out there that is less expensive and more accessible to them, so they’re starting to weigh in. The business intelligence market is no longer just the realm of huge corporations that can afford to build out the infrastructure and have the internal resources to do so.
BI penetration improving
One of the things that surprised me is that penetration remains relatively low. We’ve seen improvement over the last years, but it’s not happening as quickly as we expected. Only 20 percent or fewer users within most organizations have access to BI tools. And there are some very large enterprises (10,000+) that have only a handful of users that have access to BI tools.
The proliferation of multiple BI tools in an organization is noteworthy. The growing independence of line-of-business functions investing in BI has resulted in organizations being unaware of all the tools in use. Nearly half of the study participants from the largest organizations reported the use of four or more tools.
End users want a solution that’s going to help them right now. They don’t want to have to wait for lengthy projects that are expensive to conclude before they get any value. They want something that is very usable, very intuitive, and that allows them to develop an understanding of the business in a way that they weren’t able to do before. If they could do that with two cups and a string, that would be OK. They’re focused on getting a job done this quarter, or this week, or this day and don’t get hung up on any particular technology or architecture.
A lot of the tools out there that are seeing so much growth, which we would put into a High-Growth category, are not really Web creatures. They are desktop applications that are easy to use. Download a free version of it first, and load data into it. The immediacy of a tool is driving adoption.
The number of competing tools adopted throughout an organization is becoming a challenge. In a perfect world, with strong governance, it would be OK to bring whatever tools users want because they would have to interact with the data in the manner mandated by IT and top management. Sadly, that’s not what’s happening in most cases.
Instead, the proliferation of tools is causing very discrete views of the business, and organizations end up with situations where individuals come into a management meeting trying to describe the same business in very different terms. That’s not healthy because they end up spending a disproportionate amount of time arguing about the veracity of the data vs. dealing with whatever the reality is and how to address it.
What percentage of BI initiatives achieve success?
Only 41 percent of respondents “completely agreed” that their business intelligence initiatives have been successful, but that’s an improvement over a couple of years ago. As we slice that data by size of organization, we find that smaller organizations reported more success than larger organizations. They are more able to quickly deploy BI and achieve the business benefits faster because of their lower level of organizational complexity. However, it is encouraging to see that 83 percent of the largest of organizations have seen some measure of success with BI.
When we combine the respondents that believe their BI initiatives have been either “successful” or “somewhat successful,” we end up with 89 percent. Only 11 percent of respondents reported really bad outcomes.
To be strategically successful at business intelligence requires going beyond a department and fundamentally changing the way people work enterprise-wide. Getting your arms around that level of change management, especially in large organizations, is like herding cats.
I think that most executives bringing BI tools into an organization don’t realize that success requires changing the culture of the organization in order to get real benefits from these tools. If they do realize it, it’s hard to do and really requires visionary leadership. There are leaders and there are visionaries, but there are not many visionary leaders.
Nothing happens quickly in this world. It’s like the ocean warming and cooling. It just takes a long time to see a significant change. Organizations are like that. But mobile, and especially the iPad, has actually been an important catalyst in driving the value of BI.
Users’ opinions of BI vendors
For the most part (89 percent), participants stated they would be willing to recommend their vendor and are happy with the technology but there is room for improvement.
However, the number of participants that stated they would not recommend their BI vendor jumped from five percent last year to 11 percent this year. That’s a pretty healthy jump. (Notably, the number of participants is larger this year than last year.)
The issue is not usually with the technology. It’s usually because there was an incident of some sort that was particularly frustrating for the user organization. It might be an issue on the sales side, but very often it’s a service support issue. And I’ve seen some situations where the vendor is taking it on the chin because of a third-party consulting partner that they’re working with.
While most measures of industry performance declined somewhat over 2011, a majority of users believe vendor integrity is “good” or “excellent.” However, 25 percent stated their vendor’s integrity was “average” or worse.
The study findings around areas of satisfaction and dissatisfaction suggested limited industry progress over the last three years. In general, the industry is doing OK. But on the product side, one of the areas where they continue to get dings is integration with third-party capabilities. Of course, as technology continues to move on, a vendor can’t do everything; but that is where they tend to lose the most points.
Another big area of dissatisfaction is the availability of online training, online documentation and online discussion forums. Folks want 24×7 support, so they want resources available online. This is an area of improvement for many vendors.
One of the greatest areas of user dissatisfaction is value for the price. I believe this is due to two causal factors. First, the cost of ongoing maintenance (26 percent or more) is an issue. Second, there some interesting new lower-cost alternatives that are getting a lot of press in the marketplace. I think this growing awareness of cheaper alternatives, which might be just as good or better, has caused the study’s value-for-pricing metric to change this year.
Vertical BI adoption
In our 2010 and 2011 studies, there was not a lot of difference among verticals as to BI adoption. But this year retail is a standout. This industry has experienced a real groundswell of investment in BI, and a lot of that is around mobile. Mobile BI has transformed the retail industry in a big way.
I have spoken with some retail organizations that are investing untold millions in mobile devices, BI, and the infrastructure to support that. Also, there is a sense or expectation or immediacy. Retailers see it as a real game-changer and are making a huge investment in all levels, on the infrastructure side, on the application side, and on the device side.
Many participants indicated that “data mining and advanced algorithms” are a relatively high priority for their organization; this resonated most strongly with the healthcare segment. Thirty-nine percent of the healthcare participants stated that data mining is critical to their organization.
Business intelligence can create great value for healthcare organizations, so it should be among the most active verticals. Some organizations, such as Cleveland Clinic (as noted in my last book), are active, but it isn’t industry-wide yet. It requires a visionary leader who sees the value of business intelligence and can really get the organization focused on it. Cleveland Clinic has had some great successes across the board around physician access and better outcomes due to its BI investments.
The next big thing
Interestingly, although many study participants indicated that initiatives around “collaborative support group based analysis” are a priority, the reality is that collaborative efforts are often not successful. I think collaborative BI could be the next really big thing. But the way that most folks collaborate in BI today is through email. We all recognize it’s very inefficient, but it’s available and we’re comfortable with it.
Organizations that have been very successful with business intelligence to date see collaborative capabilities as a way to take it to the next level, allowing conversation to drive consensus and improve understanding across the enterprise.
Most organizations don’t have a good idea of what best practice is around business intelligence because we don’t document it and don’t go back and look at it again.
Collaborative technologies could allow people to make better decisions much more quickly by bringing in all the relevant resources and also to document that.
If an organization already has a culture that embraces collaboration, automating it makes perfect sense. Of course, if it doesn’t have a collaborative culture, the best technology in the world probably won’t change things. But we do see a lot of the vendors investing in collaborative capabilities, and I suspect we’ll see even more so moving forward because that would be a real added value or a valuable feature for customers. We’ll be releasing a focused Collaborative BI Market Study next month.
Advice for BI vendors
If I could give only one piece of advice to BI vendors, it would be: Make sure you provide products that have the ultimate user in mind. A lot of vendors have become so married to the IT organization for classic BI. But in a user-driven marketplace, you need to focus on giving the business users value; you have to empower them to do things for themselves. That’s where the market’s going, and vendors need to be in the forefront supporting that.
Advice for BI customers
It’s really exciting that the world is really changing, and it’s changing a lot of dimensions all at once, which makes it so confusing. We’ve had an explosion in adoption and an explosion from an architectural and technological perspective, which can be disconcerting to users. And it’s not going to settle down anytime soon.
It’s like the “Wild West.” There are so many companies springing up, innovating freely because they don’t have an installed base of customers. And that raises the bar significantly for everybody. It’s really healthy when we raise the bar from a technological perspective and a business model perspective because that’s where the new things and new capabilities really come to the surface.
The business intelligence “Wild West” will settle down eventually. In the meantime, it’s more difficult to make long-lasting choices. But ultimately it creates a better market, a better industry and a better environment for the business users that use these tools.
The 94-page report on the 2012 Wisdom of Crowds Business Intelligence Market Study® is available on Amazon.com in Kindle, paperback, and iBook formats. The report includes BI vendor rankings, market segmentation by industry, key BI initiatives, perceived success of BI initiatives and key reasons for success or failure, BI tools by function, and more.
The Wisdom of Crowds Business Intelligence Market Study™ was conceived and executed by Dresner Advisory Services, LLC, an independent advisory firm, and Howard Dresner, its president, founder and chief research officer. Howard Dresner is one of the foremost thought leaders in Business Intelligence and Performance Management, having coined the term “Business Intelligence” in 1989. He has published two books on the subject, The Performance Management Revolution — “Business Results through Insight and Action”, and “Profiles in Performance — Business Intelligence Journeys and the Roadmap for Change.” Prior to Dresner Advisory Services, Howard served as chief strategy officer at Hyperion Solutions and was a research fellow at Gartner, where he led its Business Intelligence research practice for 13 years.