Performance Management Spending Will Increase
Performance management (PM) spending will increase to $23 billion in 2006, according to AMR Research's report "Trends in Performance Management Spending, 2006." This will be paralleled by strong growth in BI, a subset of performance management. The BI market is expected to grow 10 percent in 2006, reaching $6.35 billion by the end of this year, according to the report.
AMR Research defines PM as the infrastructure to store, organize, and prepared the system of record for enterprise reporting and analysis, which includes data warehouses, data cleansing, extraction, and transformation. Subsets of PM include BI, analytics applications, and planning, budgeting, and forecasting applications.
Survey respondents continued to place strong emphasis on dashboards and scorecards as companies seek to merge BI with management reporting applications. Of the 200 companies AMR surveyed, about 80 percent indicated that dashboards and scorecards were important when it came to tracking KPIs. "It's not surprising," says John Hagerty, vice president, research. "As companies strive to expand the use of PM across the business, dashboards are appearing in all manner of forms."
The study indicated that spending on analytics is expected to drop by 4 percent in 2006. Hagerty says this statistic can probably be blamed on companies not understanding the difference between BI and analytics. "We were surprised by that. I think the problem is people are mixing BI with analytics. Many companies are investing heavily in data management and are being exposed to new vocabulary."
According to the study, about 75 percent of companies surveyed are currently involved in some level of PM standardization across their business. "A big part of that is customer management," Hagerty says. "Many customer enquiries are veering more into this areas. Companies are investing in BI and analytics to learn more about who they're selling to."
The continued growth of PM has lead to a more competitive market for vendors in 2006, according to Hagerty. Twenty-three percent of companies said they would prefer a software-as-a-service or an on-demand purchase option when it comes to selecting a PM product. In addition, customers are forming into three buying camps: best-of-breed solutions from companies like SAS or Hyperion, solutions from enterprise providers, such as Oracle and SAP, and technology platform providers. "SAP is coming out with a number of new analytic solutions this year; as is Oracle, based on Siebel software," Hagerty says. "Companies like SAS fill a nice niche, but they're going to feel the pull from the traditional enterprise providers. Customers want to standardize on a single platform."
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