The business analytics market is continuing to grow, according to a new report from the IDC. But some strategic acquisitions and the need for short-term projects with predictable return on investment means the top vendor title is now up for grabs.

Oracle continues to dominate the business analytics market, which overall is still growing at 10% per annum as the economic slowdown forces organisations to look closely at cost cutting as well as customer acquisition and retention.

Over the next five years, sales in the business analytics space are expected to continue to rise at a compound annual growth rate of 7.2%, according to a new report by International Data Corporation (IDC). IDC divides the business analytics software market into four primary segments: analytic applications, business intelligence tools, data warehousing platform software and spatial information analytics tools.

The top 10 vendors account for 66% of the software revenue from business analytics, leaving the remaining 34% a competitive battleground for hundreds of independent software vendors worldwide. "Some provide a single tool or application, while others offer software that spans multiple market segments," said IDC. "Some of these vendors are highly focused on specific business processes and/or industries, while others offer horizontal technology applicable across the market."

Fight for the top

In 2008, Oracle - which has product offerings in all four segments as defined by IDC - led the overall market, followed in order by SAP, IBM, SAS and Microsoft, the report said. Rounding out the top 10 were Teradata, Fair Isaac, Informatica, Infor and MicroStrategy, respectively. 

But Oracle may not have such a dominant position for much longer. "It will remain to be seen if Oracle can use its leading position and yet lower than some of its key competitors' reliance on business analytics software to its advantage in its go-to-market strategy," the IDC report noted.

SAP's standing was boosted by its 2008 acquisition of Business Objects and also had the greatest momentum of any of the vendors. "This indicates that despite trailing Oracle in size and share, SAP more than compensated for it in revenue in 2008," IDC said. "SAP also had the second-highest diversity confirming its broad portfolio and standing in the individual segments of the market."

"We are pleased to see IDC validating our leadership in the combined performance management and analytic applications market, and showcasing how our growth rates display the incredible momentum of customers flocking to enterprise performance management solutions from SAP," said Sanjay Poonen, executive vice president and general manager, SAP BusinessObjects Performance Optimisation Applications.

Acquisition boost

IBM's position in turn was boosted by its acquisition of Cognos. "IBM was third on the diversity ranking, fourth in momentum, and had a less than 25% reliance on business analytics software," IDC said. "The latter is due to IBM's significant presence in various application development and deployment, systems software, and collaborative applications market, which do not directly contribute to the business analytics revenue."

IBM, which plans to buy business analytics company SPSS for $1.bn in cash to boost its profile further, expects its analytics business to grow by around 15-20% from next year, accounting for $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. "I think we're moving in the right direction. We believe this is going to be a growing business and that it will grow faster than application-oriented hardware and software services.”

SAS, the only company in the top five to be exclusively dedicated to the business analytics market, came in fourth position. IDC noted: "The company leads in the advanced analytics tools segment and is within the top two vendors in two other market segments."

Microsoft came next with a mixed result, driven by its position in data warehousing and BI. "Microsoft was fifth on the diversity ranking but third in momentum," IDC said. "The latter indicator is a testament to the company's strong growth rate in the business analytics market in 2008."

Major projects a thing of the past?

IDC argues that the major enterprise business analytics projects may be thing of the past, predicting a rise in incremental projects short term as budgets will only be available for initiatives with predictable return on investment. “Broad, organisation-wide projects are likely going to be rare in the short term," IDC said. "There will likely be more, lower-priced, department-level deals across all segments of the business analytics market."

Other likely developments will include a greater move toward software as a service SaaS and open source technology, particularly in the BI tools segment of the market.