At one of my recent Friday #BIWisdom tweetchat sessions, I posed two thought-provoking questions to the tribe:
- Can independent business intelligence vendors survive against software providers that provide BI capabilities in the context of other applications?
- Will there be massive consolidation in the BI market during 2014?
They plunged into the tweeted discussion with differing viewpoints.
First came tweets touting independent BI vendors’ critical distinctions. They provide focused analytical capabilities and the ability to think outside the enterprise box. Really serving users requires agility, and independents have the advantage there. Independent vendors can create data-specific services (such as weather apps or Twitter analytics) that complement mainstream BI. They create value by expanding the walled garden whereas mega vendors create value by building higher walls.
Someone tweeted that innovation is necessary for increasing penetration of BI solutions in organizations, and smaller independents are in a better position to innovate. Others chimed in: The emergence of new vendors suggests gaps left by the existing vendors — gaps in usability, functionality and cost.
Their first conclusion: Independents are absolutely necessary for pushing the incumbents. And independents fill niches faster. However, that makes them better targets for acquisition.
But not so fast …
Some of the tribe countered with a view from the other side: Larger organizations can likely bundle consulting services along with other software sales. Larger organizations can provide better end-to-end BI — and a one-stop shop if all the software is theirs.
They expressed concern that if customers prefer a one-stop approach, the independent vendors eventually will be acquired or go out of business.
What’s wrong with this picture?
Several of the #BIWisdom participants tweeted that an integrated or bundled solution is great for vendors because it makes marketing much simpler, but they concluded that it doesn’t truly benefit the customer. “End users don’t want to swivel-chair between applications,” someone tweeted.
Others added that not many enterprises these days can use a one-stop shop because they no longer maintain centralized control of software, thanks to the cloud and consumerization of IT.
Where the dollars flow
Someone tweeted that “with 90 percent of the BI stack being below the surface, I think the independents will always be there.” Another tweet pointed out that the 90/10 ratio means independents often struggle with how to demonstrate their value.
Another participant tweeted that “it’s amazing that, even with continuous acquisitions, organic independents keep emerging. The BI solution spectrum allows new independents to find niches, play and succeed.”
The tribe’s conclusion: The BI spectrum is wide enough to keep inviting incoming vendors to take market share. And the amount of money for more investments in the BI space is vast.
Imminent danger of being acquired?
They agreed that acquisitions in 2014 will change the BI vendor landscape, but their opinions differed on the degree of acquisitions.
- “Over time I believe there will be massive consolidation due to the importance of context within other applications.”
- “I predict little to no consolidation in 2014. Startups can still have faith and smaller established players will do OK.”
- “The current number of SaaS and mobile BI vendors is not sustainable. I think consolidation will begin in 2014 and accelerate in 2015.”
- “Smaller players don’t have the customer base, which is a reason for acquisition. But there is too much growth left on the table for serious consolidation to take place yet.”
Bottom line: I agree that there is plenty of opportunity for new BI vendors. We’ll be watching several factors in 2014. How will the existing vendors compete against the startups? Will they offer more catered solutions to customers? Which of the newer vendors will become the preferred choice by the end of 2014?
Currently business intelligence is a growth market with a growing number of vendors. I’m personally aware of over 100 BI vendors. And valuations are high right now, so there aren’t many “bargains” for acquisitions. I believe the market growth will outgrow the amount of vendor consolidation we’ll see in 2014.
Howard Dresner is president, founder and chief research officer at Dresner Advisory Services, LLC, an independent advisory firm. He 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. He hosts a weekly tweet chat (#BIWisdom) on Twitter each Friday. 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.