*Snapshot on the Business Intelligence Market*

That’s the title of a brief piece by Valerie Valentine in the July/August 2011 edition of Information Management Magazine. The snapshot under scrutiny is the recently released Wisdom of Crowds Business Intelligence Market Study from Dresner Advisory Services:

As users become familiar and comfortable with BI tools, they are more often buying and deploying BI without direct IT support, which puts them “in the driver’s seat,” says report author Howard Dresner. Indeed, BI market growth is being driven by small to midsized enterprises with little or no IT support for product selection and implementation, Dresner says.

I’ve previously argued that the ‘integrated solutions’ marketed by commercial software vendors can be understood in terms of a four-stage life cycle: starting as an innovation, getting instantiated as an application, being integrated into a platform, and finally included in a technology bundle. Looking at the most recent Gartner Magic Quadrant for Business Intelligence platforms, it’s clear that the majority of vendors in the leaders quadrant have reached stage four. The last decade has seen a great deal of vendor acquisition, such that many of the leading BI platforms are now owned by megavendors. The BI platform an organisation buys from IBM, Microsoft, Oracle, or SAP today is essentially a commodity: part of a bundle of – albeit expensive – technologies comprising a package deal. The main driver of the purchase could be anything from ERP to RDBMS to hardware. The ‘add to my shopping cart’ model of buying BI software is now an option.

It’s worth understanding who exercises this option. Purchases of this nature are often global deals procured by head office IT functions with the blessing of the C-suite. As such, it’s inevitable that gaps will open up. The functionality needs of devolved, localised users won’t always be met by group IT’s centrally planned, standardised, policy-driven technology platform. Nor should be expect incentives to align.

“The ‘emerging’ vendor category seems to be an area where business users are choosing solutions more often than not,” says Dresner, where products can be downloaded or subscribed to quickly, easily and inexpensively.

The ‘emerging’ Business Analytics vendors are in their element selling to business functions rather than IT operations. Being pure plays, they typically have more agility than the megavendors – local pricing flexibility, lighter installation footprints, tighter focus. This enables them to stay under the cost and compliance radars of IT departments. Their market is thus comprised of the small to midsized enterprises identified by Dresner, and in addition, autonomous business units within larger organisations. The ‘departmental sale’ is sometimes derided by bigger vendors as a ‘point solution’. I don’t personally know, but I would guess this is where vendors like MicroStrategy and QlikTech have been achieving their growth.

Dresner advises organizations to take a more active role in planning, managing and evolving their BI portfolios. “The BI initiative should be jointly owned, where everyone’s got ‘skin in the game’ so to speak, and everyone has to have a sense of everyone else’s priority. My advice for IT is to get aligned.”

Implicit in Dresner’s advice is that, the more powerful the IT function relative to its business customers, the more likely it will be to buy its Business Analytics electronic infrastructure from a megavendor, shopping cart style.

Related Analyst First posts:

• Integrated solutions
• Solution buying
• IT support
• Measuring the Business Analytics software market
• Paying for software is buying insurance