Business Intelligence software looks to future

Business Intelligence software looks to future

Applications that actually answer questions rather than just present mounds of data is the key driver of a market set to grow 10 percent in 2006

Monday, January 16, 2006

Michael Kahn
SAN FRANCISCO: When Hewlett-Packard Co. was looking for ways to make money from its sharper image display technology, the company relied on a piece of smart software to help it find the most profitable answer.
The application quickly sifted through opportunities, in much the same way a venture capitalist might do, and calculated high margins in large-screen televisions made that the market to target, HP executive Ralph Morales said.
The program from a company called SmartOrg marks a growing trend in the estimated $7 billion business intelligence (BI) software market for applications that can predict the financial impact of future decisions. "You have all these great plans and you can only do a couple," Morales said. "You need something that is fast and quick to sort through the potentials."
Traditionally, large companies have used software from leading vendors such as Business Objects, Cognos Inc., Hyperion Solutions Corp. to mine mountains of information stored in databases and use the data to detect marketing trends and patterns.
But analysts say applications that actually answer questions rather than just present mounds of data is the key driver of a market set to grow 10 percent in 2006 or about twice the rate of the business software industry in general.
"Increasingly you are seeing applications being developed that will result in some sort of action," said Brendan Barnacle, an analyst at Pacific Crest Equities. "It is a relatively small part now, but it is clearly where the future is. That is the next stage of business intelligence."
Analysts also say as companies realize business intelligence software can churn out much more than just data, demand for the tools will grow. This will draw more attention to the market and could fuel further consolidation.
Barnacle said BI's major names may look to strengthen their positions by acquiring smaller vendors, while the biggest players like Oracle Corp. and IBM search for targets to help them compete in a specialized area. Business Objects Chief Executive John Schwarz, whose company has been the target of Oracle takeover rumors, said many big companies do not effectively exploit business intelligence tools.
This combine with the fact that very few small-or medium- sized companies make use of business intelligence software, provides plenty of opportunity.
"There is almost no penetration of business intelligence," Schwarz said of the concentrated use of such software among big companies. "As you look at the market opportunity it is a huge one going forward." Schwarz said tools that predict business trends and answer specific questions about the future represent a great area of interest but do not yet generate a large amount of revenue.
Instead, these types of applications, which are often narrow in focus, can often prove a great showcase for the technology to convince companies of the importance of business intelligence software.
"The predictive analysis is the sexy wedge of the business intelligence market, which is very useful to sell the value of business tools to the chief executive," Schwarz told Reuters.
Yet John Hagerty, who tracks BI software makers for AMR Research, sees users beginning to demand tools to help divine the future as part of an insatiable thirst for more information on their businesses.
As in the case of HP, he said, companies increasingly want more than just the capability to ask the right questions, the want technology that can do it for them.
"You are seeing this whole awakening in companies to make present decisions," Hagerty said. The mantra for many users is becoming: "'Tell me where I want to go and how to get there.'"
© Reuters