BI Boost in 2003?

Business intelligence (BI) spending should increase this year over 2002 levels, with analytics vendors leading the pack, according to a new report from JMP Securities. "Our survey of 37 enterprises found that 43 percent of the respondents planned to spend more on BI software in 2003 than they did in 2002," says Patrick Walravens, managing director of enterprise application software with JMP. "This compares with 39 percent of the respondents that planned to spend more on overall software in 2003 than they did in 2002. Our survey suggests that BI spending will increase modestly in 2003, and leads us to be selective in our recommendations in the space." Walravens says that the companies leading the BI pack are those that provide information access solutions, analytical applications, and predictive analytics. "We believe information access will peak this year, analytical applications will peak in 2004, and predictive applications will continue to expand through 2005," Walravens says. Over the next four years the BI industry as a whole could grow to as high as $11.6 billion, which equals an annual growth rate of 15 percent, according to the report. Of those vertical sectors investing in BI software this year, Walravens says in the report that government and financial services are likely to spend the most. "The Department of Homeland Security, in particular, will be spending heavily on BI software to help prevent terrorism," he says. "We expect financial services companies to continue to spend on BI software in 2003, although the numbers of seats needed in some organizations has dropped dramatically, due to staff reductions." All this software can have a direct effect on how companies use their CRM systems, and Walravens says that BI can help companies drive more value out of CRM. "CRM vendors need to embed more BI technologies--especially the predictive analytics," he says. "Today CRM applications can tell you who your top ten customers were last year, but what these applications need to be able to do is tell you who is most likely to be among your top ten customers next year, and why."