Researchers are predicting more consolidation in the business analytics market. Stuart Lauchlan examines why and looks at the likely major players.
Expect a fresh round of consolidation in the business analytics market following IBM's planned takeover of SPSS. That's the prediction of analyst firm Forrester Research, which reckons SAP will be the first major vendor to make such a move.
In the next year, a range of top business intelligence (BI) vendors will either merge, partner or buy-up many pure-play analytics vendors, such as KXEN and Angoss, according to Forrester. Reporting, querying, dashboards, and OLAP don't provide enough predictive insight for today's market needs, and make it difficult to find anticipated patterns, the analyst firm said.
"Any BI vendor that fails to realign around a strong predictive focus will find itself on the sidelines of this new era of future-facing analytics," according to the Forrester report 'Business Intelligence Polishes Its Crystal Ball', co-authored by James Kobielus, Boris Evelson, and Leslie Owens. "IBM's acquisition of SPSS marks an industry tipping point. In the advanced analytics segment, the deal is having the same impact that IBM's Cognos buy had on the BI market.”
SAP singled out
Forrester particularly singles out SAP, saying the vendor will make a deal "soon," and could even submit a competitive bid for SPSS. SAP is already planning to buy SAF AG, a German company that makes analytics software aimed at retailers and wholesalers.
One obvious target would be SAS, one of the last remaining independent analytics companies with a turnover in excess of $2.26bn and a massive installed base that would be hugely lucrative for any predator. But SAS is privately-held and CEO Jim Goodnight has shown no signs of being willing to entertain the idea of selling out to anyone.
For its part, Forrester doesn't see SAS as a likely target for SAP's expansionist amibitions as there is “a huge overlap” in product offerings. But it goes on to suggest that a firm such as Hewlett Packard, EMC or – inevitably – Oracle shouldn't be ruled out of the running.
IBM in the spotlight
Nor should anyone rule out the idea of IBM building on its SPSS takeover with further incursions into the market. "There are still plenty of opportunities in the next generation of BI for IBM to go after, such as free-form in-memory analytics (QlikTech), end-to-end BI life-cycle management (Kalido), guided search (Endeca), and many more,” noted Forrester. But it added: "IBM will have its hands full integrating SPSS's solutions and professional service capabilities completely with its own diversified BI, data warehousing, and other analytics offerings.”
IBM expects revenue at its analytics business to grow by around 15 to 20% from next year on, as the fledgling unit wins more contracts. The analytics business is likely to account for more than $2bn in revenue in 2010. "I'm feeling a positive lift in momentum in terms of our signing and our sales," said Fred Balboni, who heads the unit. "We believe this is going to be a growing business and that it will grow faster than application-oriented hardware and software services.”
According to market researchers International Data Corporation (IDC), IBM in 2008 held a 0.5% share of the $1.5bn worldwide advanced analytics market. Combined with SPSS, IBM will have a 14.5% share of the market, trailing only SAS Institute's 33% share.
There has already been a wave of consolidation in the BI market. In October 2007, SAP announced it would acquire Business Objects, and a month later, IBM said it would acquire Cognos. Oracle has also made a move as part of its wider, ongoing acquisition spree by snapping up Hyperion.
