Wave of consolidation in BI and analytics space

• BI and analytics market worldwide
• A wave of consolidation in the BI and analytics space
• Factors driving the consolidation

Business intelligence and analytics are a combination of two segments; business analytics (BA) and business intelligence (BI). While business analytics uses past data through statistical analysis, data mining and quantitative analysis to identify past business trends and then optimise the present to improve future performance. Business intelligence collects and analyses past and current data to get insights for better-informed business decisions and then run operations according to customers’ demand and create new strategic opportunities for growth. Technically, both are tackling the same business problems, but BI provide current insights on business operations for improvement, whereas BA gives predictive analysis by using past data to improve productivity.  In simple words, BI is needed to run current business and BA is needed to see what is in the future to take actions accordingly.  The worldwide business intelligence and analytics market have witnessed continuous growth in the past few years due to the increasing demand for real-time data analysis and enterprise resource planning (ERP), a growing trend of big data and internet of things and a need to gain insights into customer behaviour. Business intelligence and analytics continue to expand rapidly in order to meet new organisational requirements for deeper analytical insights, accessibility and agility, shifting the market from IT-led or system-led to business-led. According to Gartner, the global business intelligence and analytics market are expected to reach $ ~25 Bn (2021) from $ ~18 Bn (2016).

In today’s era data is the new oil. In recent years, big data have gained significant importance and companies have started exploring analytical and intelligence tools to get a hold on the huge data set with higher volumes and varieties to get meaningful insights. Moreover, due to cost-effectiveness and ease of use, these BI and BA tools have gained a grip on the market. Many big tech companies have either developed or are continuously developing their own BI offerings or are making BI offerings stronger by acquiring competitors or other technologies available in the market. This consolidation wave has started about a decade ago when the market witnessed some of the major acquisitions like SAP’s acquisition of Business Objects, IBM’s acquisition of Cognos and Oracle’s acquisition of Hyperion. The US holds the major BI and analytical market share and thus in 2017, when new tax laws came into effect under President Donald Trump’s government there was widespread speculation that large tech companies could repatriate large chunk of money stored offshore. As expected; the market saw the next wave of consolidation with 10 big M&A deals last year alone valued at $87 bn. The year 2019 is sailing in the same boat with two big acquisitions to date among many others; Google’s acquisition of Looker and Salesforce’s acquisition of Tableau.

There are multiple factors that play around when it comes to acquisition, especially in analytics and BI spaces as the market is full of pure-play vendors with changing next generation and cloud-driven dynamics. Some of these are.

• Innovative technologies and global expansion: start-up or other tech companies use highly innovative technologies in cloud and analytics sector, wherein large companies sitting with significant cash on their balance sheet acquire these new innovations to enable them to stay ahead in the market and even exploit new markets.
• Overabundance of vendors: some of the business analytics and intelligence space, especially self-service visual analytics have grown crowded and need refreshments as virtually every BI tool has adopted ease of use style feature and thus losing sufficient market share. BI vendors require better visualisation and integration offerings and as a result, the market is experiencing mergers or acquisitions to keep them in turf with some additional unique offerings.
• Create multi-platform services: by acquiring BI and analytics companies, while many tech companies are making their core platform stronger, others are creating multi-platform services to add on revenue. For instance, cloud providers can derive direct revenue from data and analytics services but more importantly, they can use these services to broaden the scope and offerings in their core platform revenue.
• Expansion from a single product to diversify offering: in a competitive market, companies offering diversified products through acquisition in order to add value to the rest of their portfolio if they are unable to develop this in-house. Accessing market share is much quicker for companies that acquire rather than those that build through own research and development.

In the coming years, the world is expected to generate a massive amount of data than it did in the past. According to KPMG, the global data sphere is anticipated to be 10 times by 2025 (163 ZB) from what it was in 2016 (16.1 ZB). Tapping into this massive data flow creates a huge opportunity for the advancement of the world economy. But these myriad data sets are created by companies often in a spontaneous and unstructured manner and thus, driving the need for BI and analytics tools to ensure data source, volatility, speed and to analyse the data for patterns or predicative characteristics. Further, from a broader perspective, the BI and analytics market looks quite crowded if one considers the number of players present in the space as well as the depth and breadth of their functionality and offerings. Nevertheless, a huge opportunity still exists as the market is yet to attain maturity with respect to an understanding of the business requirements, fast-tracking with a persistent advancement in technology alongside its adoption and penetration level from consumers. Televisory believe that new players would continue to emerge with unique and innovative products, while large companies will continue to seize market opportunities by creating an advance offering and/or by acquisitions. Amid all this, DATA continues to be critical for businesses and software, regardless of consolidation.