Gartner Scopes Business Intelligence Market for 2004
Corporate Governance laws often lead to less transparency instead of more European market forecast to grow at 8.2% CAGR until 2007
Amsterdam, Netherlands 3 February 2004 — Speaking at its annual Business Intelligence conference in Amsterdam, Gartner today outlined four key forces driving growth in the Business Intelligence (BI) marketplace, and advised on the roadblocks that typically inhibit successful BI initiatives. Gartner also warned that many enterprises, by ignoring managerial process reform allied with BI solutions, risk complying with only the letter and not the spirit of new corporate governance regulations in most European countries.
"Corporate Governance laws often lead to less transparency instead of more", said Frank Buytendijk, research vice-president for Gartner. "Executives have become liable for the quality and timeliness for external reporting. They can either embrace transparency or limit exposure. Many managers instinctively desire a return to information distribution on a need-to-know basis to better control information streams, together with less responsibility delegated to lower levels of management. However, significant competitive benefits will accrue to organisations that seize the opportunity to adopt an open information culture. BI initiatives, if accompanied by an appropriate change in management processes and culture, can help them achieve this transformation."
Market size and growth
Gartner said the European BI market will continue to stabilise in 2004, growing at 7.3 percent with a compound annual growth rate (CAGR) of 8.2 percent until 2007.
"Europe's BI market looks like it will show healthy growth over the next few years," Fabrizio Biscotti, software market analyst at Gartner commented. "However, as a trend Europe still lags the US in adoption of BI technology. Additionally, we are seeing that embedded BI, which is additional BI functionality sold on top of other products such as ERP systems or databases, is growing faster than standalone BI systems. This trend will continue and represents a significant threat to the traditional BI vendors."
The UK will remain the largest European BI market by license revenue, forecast to grow by 8.6 percent from $157m in 2002 to $238m in 2007. This will be driven by the strength of the UK Financial Services sector, and the number of UK-based European headquarter functions. Germany will experience a CAGR of 7.8 percent until 2007, and with projected revenue of $148m by that time will continue to be the second largest market in Europe. SAP's dominance in the German ERP market together with its aim of selling BI functionality on top of its ERP products, represents a significant challenge to standalone BI vendors. France, while typically an early-adopter of BI technology, will remain in third place with a CAGR of 7.8 percent between 2002 and 2007 to reach a total value of $121m in 2007.
Market drivers
Gartner said there are four key drivers forcing companies to seek a clearer view of the internal workings of their businesses. However, it has also highlighted the roadblocks they must be aware of that typically inhibit successful execution of BI initiatives.
Regulations: Sarbanes-Oxley in the US, The Combined Code on Corporate Governance in the UK and similar new regulations in other countries are forcing companies to be more open and timely in their external reporting. This requires an unprecedented ability to access current and detailed information from within the organisation.
Unfinished ERP business: Many organisations in the nineties turned to Enterprise Resource Planning (ERP) systems to improve processes. However, despite improvements in back office operations, managerial processes were left largely untouched. These processes, such as annual budgeting, have now started to break down - taking longer, costing more and becoming less connected to the business.
Need for better controls and metrics: The weak economy has required organisations to minimse their room for error in spending. Precision execution is required, which in turn requires precision metrics and controls. Data overload will also drive this need. Gartner believes that by 2012, enterprises will need to deal with thirty times more data than in 2002. Humans will not be able to keep up and therefore better metrics are needed to condense data into more meaningful information.
Competitiveness: Removing delays in internal processes enables enterprises to compete using up-to-date information. By achieving, through increased process speed, key strategies such as operational excellence, product innovation or customer intimacy, they start becoming what Gartner calls "Real-Time Enterprises". However, reduced cycle times demand accelerating managerial processes. Both require up-to-date information.
Market Inhibitors
Office Politics: Middle managers fear that standardised BI data and analysis will expose or threaten their power as they can't hide behind their own data and analysis. This often leads to covert and overt sabotage of BI initiatives.
Short-term thinking: The current business culture favours short and straightforward projects. This leads to rapid but small returns on investment, but his patchwork approach leads to significant IS issues in integrating different systems and challenges the ability of BI solutions to gain a whole-company view.
Hidden Costs: BI implementations can lead to substantial savings. Initially, however, they often also reveal large hidden costs. This does not incentivise managers to endorse BI initiatives.
Change Management: A full-blown BI initiative has a high impact on management - similar to the scale of an ERP implementation. Many organisations have already implemented several of these "mega-projects" and managers are often skeptical of the likely benefits
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About the conference
For more information about Gartner's Business Intelligence Summit 2004 held at Hotel Okura, Amsterdam 2-3 February, please visit www.europe.gartner.com/bi or contact Carina Swedemyr on + 46 624 6324, email: carina.swedemyr@gartner.com.
About Gartner:
Gartner, Inc. is the leading provider of
research and analysis on the global information technology industry. Gartner serves more
than 10,000 clients, including chief information officers and other senior IT executives
in corporations and government agencies, as well as technology companies and the
investment community. The Company focuses on delivering objective, in-depth analysis
and actionable advice to enable clients to make more informed business and technology
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visit www.gartner.com.
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