The business intelligence/data warehouse market is generally perceived to be in glowing health, with steady rather than wild growth predicted by most analysts e.g. 8% growth a year was a recent IDC figure. However there are many separate sub-segments here: data quality. ETL, data warehouse platforms, appliances, analytic tools, BI tools, data mining etc, and not all are in the same state. I have written before on how most people in a large company do not need, or indeed want a BI tool, something that people selling enterprise licenses for BI tools do not want to hear. In the late 1990s a lot of large companies went crazy with their IT budgets, and purchased huge blocks of BI tool licenses that often ended up as “shelfware”. Some consolidation in this sub-industry followed, with Brio being bought by Hyperion and Business Objects buying Crystal. However at some point I wonder whether gravity will reassert itself and companies will realize that only 5% of their staff actually need BI tools, while probably they already own many more than this, often from different vendors (a survey I conducted in Shell in 1992 counted 27 separate BI vendor products in use, and that was just within one company). The conventional wisdom is still the “democratization of BI”, with powerful BI tools spreading throughout a corporation, but I believe this vision is fundamentally wrong. Technology companies seem to struggle to grasp that just because they build something clever, it doesn’t mean people will buy it unless they actually perceive value from it. If one day I see a shelf-stacker in a supermarket puzzling over the latest shelf-stacking patterns on his BI tool I will admit I am utterly wrong about this.
But not today. Early signs of inflated expectations falling to earth appear in the latest results from Cognos, who have developed an enviable reputation in recent years but seem likely to end the quarter 19% down year over year in revenue terms, and 6% down over the previous quarter, and only three deals over one million dollars in the quarter. License revenue down 32% year over year cannot bode well for any software company, though with operating margins of 18% Cognos is clearly still doing pretty well on the profitability front (all those yummy maintenance revenues). There may have been some company-specific problems e.g. its latest software version 8 seemingly has yet to set the world alight. However it will be very interesting to see whether this is actually something deeper, with corporate buyers making better use of what they already have. Hyperion appears to be in rude health, but its products are mostly rather higher up the value chain (financial consolidation, budgeting) and it is unclear how sales of Brio are actually going. One interesting thing I noticed recently was one of our major customers (a household name) switching away from BI vendors and standardizing on the Microsoft tools (Analysis Services, Excel, Reporting Services etc) which have been steadily creeping up in terms of functionality. Since most users use only a tiny fraction of the features in a BI tool anyway, piling on yet extra features to stay ahead of Microsoft may not actually work. This may be an isolated case, but perhaps the cracks are starting to appear in the BI edifice?