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BI Ecosystem: Survival of the Fittest and Most Focused
27 January 2003
Kevin Strange, Betsy Burton

Document Type:  Article Top View
Note Number:  AV-19-2672
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Business intelligence market consolidation is forcing enterprises to closely evaluate their vendors. Two valuable Gartner tools, Vendor Ratings and Magic Quadrants, help enterprises mitigate risks.


Although some business intelligence (BI) vendors reported revenue growth in 2002, overall preliminary revenue figures indicate that the market has experienced a small decline; and the BI market is not immune to increasing spending pressures in IS organizations. In addition, we continue to observe market consolidation. Given the difficult current market and economic conditions, enterprises need to understand where their vendors sit in this malaise.

In this Spotlight, we look at a number of BI and data warehousing vendors and evaluate how well they are managed and how ready they are to weather current market and economic pressures. Gartner's Vendor Rating methodology clearly and concisely identifies opportunities and risks with respect to a given vendor (see Table 1 and "Criteria for Gartner's Vendor Rating Methodology").

Table 1

Business Intelligence Vendor Ratings as of 27 January 2003

Vendor Rating Last Update
Ascential Promising 5 September 2002
Business Objects Positive 27 January 2003
Cognos Positive 27 January 2003
Computer Associates
• Business Intelligence
Caution
Caution
18 December 2002
Crystal Decisions Positive 27 January 2003
Hyperion Solutions Promising 27 January 2003
Informatica Promising 3 September 2002
Information Builders Promising 27 January 2003
NCR
• Teradata Division
- Worldmark MPP Servers
- Teradata DBMS
- Analytic CRM Applications
Promising
Positive
Promising
Strong Positive
Promising
27 January 2003
Oracle
• Oracle Warehouse Builder
• Oracle BI Tools
Positive
Promising
Caution
21 November 2002
27 January 2003
12 August 2002
Sagent Technology Strong Negative 27 January 2003
SAS Institute Positive 27 January 2003

Source: Gartner Research

Looking at these vendors, we see four distinct types of vendors emerge from this list.

Small and Vulnerable

These are the small and struggling vendors. For whatever reason — most often internal issues — these vendors are having difficulty creating a focused strategy with enough momentum to gain traction in the market. They are weak and vulnerable to attacks from competitors. For example, Sagent Technology has been struggling for several years to provide a strategy that can resonate with clients (see "Vendor Rating: Sagent Technology Struggling to Get Well"). Sagent originally had a broad strategy that provided an end-to-end solution, but it lacked the ability to compete against more-focused, best-of-breed extraction, transformation and loading (ETL) and BI platform tool vendors.

Other vendors in this segment include Brio, Microstrategy, Proclarity, Evolutionary Technologies and Hummingbird.

Focused and Swift

The second group consists of small to midsize, but focused, vendors. This group includes:

For the most part, each of these vendors is clearly focused on delivering BI solutions, but can "fly under the radar" of the big vendors. What has made these vendors successful is their focus on the market and a lack of dominant BI competitors. Although Hyperion and Informatica are in this category, they have been distracted in their attempts to expand their offerings outside their core products. Hyperion has struggled to deliver products outside its core competency, a situation it is attempting to correct by returning to financial applications and by putting less emphasis on its infrastructure (Essbase). Informatica is still struggling to provide BI tools and applications that complement its ETL products, which has caused some issues with execution.

Strong and Focused

This group consists of large, but very focused, vendors. They know what market they are going after and have the strength and breadth to respond to market and competitive pressures. Examples are SAS Institute and NCR's Teradata Division. Each has approximately $1 billion in annual revenue and has focused on BI and data warehousing. This focus has allowed these vendors to gain opportunities and customers in difficult times.

SAS has built on its successful analytical product, with extensions to the core to provide ETL applications (see "Vendor Rating: SAS Institute Raises Its Business Profile"). NCR's Teradata Division has taken a slow, but methodical, road toward increasing market awareness with a focus that helps it understand the market and its competitors very well (see "Vendor Rating: Focus on NCR's Teradata Division"). Since its transformation from a proprietary software and hardware platform, NCR has emphasized delivering a platform that can scale for large and complex data warehouses.

Large and Opportunistic

The final group consists of large and unfocused vendors, and includes Oracle, Microsoft, IBM and Computer Associates (CA). These vendors have a lot of strength and power, but are largely opportunistic in the BI market. Oracle and CA have strategic initiatives and products that cover a number of different application areas. There are some signs that Oracle is beginning to focus more strategically on BI, but it has yet to execute its strategy as well as other vendors have done (see "Oracle's Warehouse Builder ETL Tool Continues to Improve" and "Oracle BI Tools and Strategy: Limitations Require Caution").

Market Magic Quadrants

To round out the vendor discussion in this Spotlight, we've updated several Magic Quadrants. In the data warehouse database management system (DBMS) market, vendor positions have not significantly changed, but leading vendors are competing intensely for market share and opportunities (see "Data Warehouse DBMS Magic Quadrant: Battle Intensifies"). The importance of developing strategic BI applications continues to be one of the few bright spots in the IT landscape.

The Magic Quadrant for the larger of the two BI markets — enterprise BI suites (EBIS) and reporting — has shown little change from previous versions. This area continues to be highly competitive (see "BI Magic Quadrants: Excitement in a Flat Market"). Cognos and Business Objects continue to be the main competitors, with Crystal Decisions making its move into the Leaders quadrant on the Magic Quadrant.

In the BI platform market, Microsoft sits on the edge, ready to become a leader in a market that does not have any leaders. There is a challenge, because the illusion of industry standards plagues this market, with few vendors placing bets on what standard will win. Many vendors use the platform as a technology ploy to sell their packaged BI applications.

The ETL market is suffering from a number of difficulties, including the economic slowdown and decline of IT spending (see "ETL Magic Quadrant Update: Market Pressure Increases"). Some vendors in this market are sharpening their focus and are attempting to deliver BI tools and applications. In addition, more-significant infrastructure vendors, such as Oracle, are refining their offerings to provide quality alternatives to the pure-play ETL vendors. This market will continue to see further consolidation during 2003, with additional vendors exiting due to financial considerations.

Features

"Vendor Rating: Sagent Technology Struggling to Get Well" — Sagent had a rough 2002, and its survival may depend on finding a buyer. By Ted Friedman

"Vendor Rating: Business Objects" — Business Objects' forays into new areas face challenges. By Howard Dresner

"Vendor Rating: Cognos Raises Its Stake in the BI Market" — A strong player in the enterprise business intelligence suites market, Cognos is placing its bets on packaged financial business intelligence applications. By Howard Dresner and Frank Buytendijk

"Vendor Rating: Crystal Decisions Makes Clear Progress" — Crystal must continue to round out its product line and develop its marketing channels to compete globally with Cognos and Business Objects. By Bill Hostmann

"Vendor Rating: Hyperion Solutions Returns to Its Roots" — Hyperion has successfully refocused on its core market in business intelligence applications, but its older products are showing their age. By Frank Buytendijk and Lee Geishecker

"Vendor Rating: Information Builders Transforms Gradually" — Information Builders' current focus and direction places it in a solid position in the business intelligence market. By Betsy Burton, Howard Dresner, Jim Sinur, Ted Friedman and Benoit Lheureux

"Vendor Rating: SAS Institute Raises Its Business Profile" — SAS's complex BI platform is most optimal on a large scale as a corporate standard. By Frank Buytendijk and Gareth Herschel

"Vendor Rating: Focus on NCR's Teradata Division" — NCR's Teradata Division continues to do well from product technology and financial perspectives. By Kevin Strange, Andrew Butler and Gareth Herschel

"Oracle's Warehouse Builder ETL Tool Continues to Improve" — Oracle keeps improving Oracle Warehouse Builder through regular releases. By Ted Friedman

"Data Warehouse DBMS Magic Quadrant: Battle Intensifies" — Amid tough competition, enterprises must carefully evaluate the DBMS technology that will best support their needs. By Kevin Strange

"BI Magic Quadrants: Excitement in a Flat Market" — The business intelligence market will continue to be dynamic as vendors jockey for visibility. By Howard Dresner, Bill Hostmann and Frank Buytendijk

"ETL Magic Quadrant Update: Market Pressure Increases" — Extraction, transformation and loading vendors' license revenue declined in 2002, but commoditization poses a greater threat. By Ted Friedman

Recommended Reading and Related Research

"Vendor Rating: Computer Associates Product Details" — Computer Associates has significant revenue, position and installed base in the enterprise management markets. By Betsy Burton, Kris Brittain, Debra Curtis, Bill Gassman, Mark Nicolett, Raymond Paquet, Cameron Haight, Ray Valdes, Michael Blechar and John Pescatore

"Microsoft Pursues BI: Opportunity Is Clear, But Vision Is Not" — Microsoft offers point products in the business intelligence market. By Bill Hostmann