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Uncovering Growth Opportunities in the Transforming Business Analytics Market

by Jim Hare  |  August 12, 2016  |  Submit a Comment

This week I presented a webinar to help high tech providers understand the latest market trends, which segments are growing the fastest, and how to respond to take advantage of the opportunities. If you missed the webinar, you can watch on demand! Unfortunately, we didn’t get to answer all of the questions, so below are a few follow ups along with some interesting poll results.

BI and Analytics Market Opportunity Map

Much of the content from this week’s webinar presentation was based on ground-breaking research published earlier this year titled “Market Opportunity Map for BI and Analytics”. This research was designed to help enterprise analytics software and service providers understand which market segments offer the highest growth potential.  We analyzed the profitability and growth rates for over 11 different analytics segments including analytic applications, data discovery, advanced analytics, and enterprise-reporting.  We then created a graphic bubble chart to make it easier to visually compare and contrast the different segments.  The results and analysis are quite informative (and surprising) and have already helped several analytics vendors adjust their strategies to focus on the right segments. I HIGHLY recommend you read both the note and watch the replay of the webinar to understand the market opportunities and how to respond.

Biggest Obstacles Analytics Vendors Face

At the beginning of the webinar, we polled attendees to find out what was the biggest business obstacle within their organization. The majority of you said you have changes either differentiating your messaging or positioning (33%) or identifying the key decision-makers and budget holders (29%).  These poll results are fairly consistent with what we see in inquiry calls with high tech providers.  Many of the analytics vendors use very similar messaging and positioning making it difficult for end-users to sift thru the different offerings and select the right solution.  We just published a research note to help high tech vendors overcome the common messaging mistakes (see this note).

Poll Q1

Vendors need to take a bi-modal approach to how you build your product portfolio as well as how you go-to-market. We often talk about mode 1 and mode 2 for IT as a whole, and for BI and analytics.  Analytics providers need to understand that over 50% of the analytics budgets and decision-making is now with line of business (LOB) rather than IT.  LOB is looking for agile, flexible solutions that quick to deploy and easy for business users to use.  And, IT is looking for solutions that offer governance, reliability and control.  Historically, you could only do mode 1 – the slow, systematic, tightly governed reporting that is traditional BI.  Mode 2 is more agile and iterative.  You need both, but increasingly, as modern BI and analytic vendors improve their publishing and governance capabilities, we are seeing customers look for modern BI and analytic products that can do both mode 1 and mode 2.  This means you (as a vendor) need to make sure that not is your product bi-modal but that you have different messaging and value props for the business buyer along with different messaging and for IT.  If you aren’t familiar with the concept of bimodal, check out this note.

Vendors Adding More Advanced Analytics Capabilities

Our CIO survey results highlight that BI and Analytics is the top technology priority and has been for the past 9 out of 11 years. Analytics is at the core of every digital business strategy.  Organizations are looking for BI and Analytics that don’t simply offer descriptive analytics (e.g. reports/dashboards on historical data) but more predictive and prescriptive analytics to help business users make better, faster decisions.  In fact, Gartner predicts:  “By 2020, 80% of enterprise application vendors will compete on the sophistication of advanced analytics offered in their solutions.”

The poll results show that many of the webinar attendees (33%) are already responding to this need by adding more advanced analytics capabilities to their solutions. Whether you offer a BI platform or analytic application, adding more advanced analytics (predictive & prescriptive) needs to be part of your product strategy.

Poll Q3

Some Questions and Answers from the Webinar

We answered a number of questions during the live webcast. Here are some of the ones that attendees found useful.

Question: Which segments are growing the fastest?

Answer: Modern BI platforms which includes self-service data preparation, data discovery, and smart data discovery are the fastest growing segments followed by packaged analytic domain applications (sales & marketing) and advanced analytic platforms (used by data scientists).  Traditional BI platforms and CPM suites are the slowest growing segments. CPM Suites is in the middle of a transition with customers preferring to purchase SaaS-based solutions.  And, organizations are moving from traditional BI platforms that require upfront data modeling to platforms that are more modern, flexible, and agile.

Question: How important is cloud enabling our analytics solution?  Do you think that everyone should be cloud enabled by 2020?

Answer: Yes, we believe every analytics solution should either be cloud-enabled or running in the cloud.  Large organizations have a lot of data stored on-premise with a growing amount in the cloud.  This will require a hybrid approach making it possible for analytics to analyze data where ever it is generated.  Medium and small organizations, however, are running more of their applications in the cloud and are looking for analytics solutions that can run natively in the cloud closer to where the data is generated and stored.  We expect that by 2020, nearly 30% of the enterprise BI and Analytics software revenue will be from cloud-based solutions.

Question: Why does the “Exploration” quadrant have low profitability?

Answer: This quadrant is full of high growing companies that are generating a lot of cash flow and plowing their profits back into the company and investing in more sales, marketing, and engineering hires. As the vendors in this segment mature, we expect that profitability will be a focus.

Question: What are your observations on the impact of this on service providers, and what should traditional big data analytics service provides be doing to transform?

Answer: Service providers need to also transform and be looking at how they can “productize” assets they’ve created from engagements. They have the advantage of having domain and industry vertical expertise compared to many of the analytic software vendors.  End-user organizations are looking for quick ROI from analytics.  For example, possibly offering packaged analytics to solve specific domain or vertical business problems. Or even creating a custom analytic application builder that their consultants could use to quickly build analytic solutions for clients.  And, don’t forget to consider ways you can leverage and monetize anonymized data generated across different engagements.

 

Category: analytics  big-data  go-to-market  trends-predictions  

Jim Hare
Research VP
3 years at Gartner
24 years IT Industry

Jim Hare is a Research VP in Gartner's Technology & Service Provider group with primary focus on Analytics and Data Science. Read Full Bio




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