Spending on business intelligence and performance management is expected to balloon as companies seek to bring financial data and operational metrics to the corporate masses, according to a new study.
Posted Mar 30, 2007
North American businesses will spend $23.9 billion in 2007 on BI and performance management (PM) solutions, according to a new report by AMR Research. The report, which separates spending into software, hardware, labor, and integration services for BI and PM, notes that spending is expected to increase by nearly 9 percent this year.
AMR found that the majority of spending will be on BI tools, with organizations dishing out $6.6 billion on these systems. Dashboards and scorecards will garner $5.5 billion in 2007, as companies look to track KPIs and view how an organization is performing across multiple departments.
Rounding out the remaining $11.8 billion will be analytic infrastructure, such as data warehouses and data stores; planning, budgeting, and forecasting applications; and analytic applications; on which companies will spend $4.3, $4.1, and $3.4 billion in 2007, respectively. "We are nowhere near the BI and PM saturation point," says John Hagerty, vice president and research fellow at AMR Research. "The vast majority of companies say they will expand their purchases this year. While BI tools are still the largest area of spending and could be considered the meat and potatoes of this space, analytics applications as well as dashboards and scorecards are growing at a healthy rate."
Though overall spending is strong, 18 percent of companies report that a lack of resources to work on BI and PM is the primary challenge impacting expansion within their business. Even so, organizations report they plan to spend less on external services this year, offsetting scarce consulting resources with significantly higher internal headcount spending.
Historically, corporate PM can trace its origins to the finance department, and was originally associated with analytic applications for finance, budgeting, statutory reporting, and planning. Simultaneously, BI emerged as the tool of choice for reporting operational metrics for departments such as HR, sales, and operations. It was only a matter of time before vendors and customers alike realized the synergies between the two. As a result, according to Hagerty, is that BI and PM have become two sides of the same coin, and should be executed in one broad strategy. As companies look to put financial data into the hands of departmental managers, and place increased emphasis on embracing operational metrics, they're using BI to bring PM to the masses. "We continue to see the breakdown of the walls separating BI and PM. Customers don't notice such harsh distinctions between the two categories, and are making deployment and purchase decisions accordingly."
Oracle's announcement of its intent to purchase Hyperion on March 1 signifies this growing trend, Hagerty says. "Oracle positioned this acquisition as an extension of its overall BI strategy." The acquisitions won't stop there; Hagerty speculates that SAP, IBM, and HP might be "likely acquirers in this market space," he says. "Business Objects, Cognos, MicroStrategy, and Information Builders are potential targets, among a host of smaller players."
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