News Stay informed about the latest enterprise technology news and product updates.

Compliance, maturity drive CDI growth

The market for CDI software continues to explode, doubling last year, with more record growth expected until 2010, according to Gartner.

Driven by numerous enterprise demands and buoyed by rapidly maturing vendor offerings, the customer data integration (CDI) hub software market is expected to grow to $410 million by 2010, according to a recent Gartner report.

"Compliance is definitely a big driver of this," said John Radcliffe, Gartner analyst and author of Market Share and Forecast: CDI Hub Software, Worldwide, 2004-2010. "One fundamental [Sarbanes-Oxley requirement] is, if it is a public company, to report to Wall Street how many customers you have; because people are making investment decisions as to whether your customer base is going up or down. If you have no idea how many customers you have because you have acquired different companies, then you potentially have a compliance issue there."

Other factors driving investment in CDI software include privacy regulations like the Can Spam Act and "do not call" registries.

More on CDI

Gartner sizes up CDI field

Capitalizing on CDI

"You've got obligations, not quite on the same level as the CFO going to jail if they run afoul of Sarbanes-Oxley," Radcliffe said. "But if you are not complying with some of the data privacy regulations these days, the company is potentially going to get fined. It's going be … very negative for PR and company branding."

Companies are also migrating away from homegrown CDI applications that are either too rigid, outdated or not conducive to a services-oriented architecture (SOA) initiative.

"The people that have been building it -- they're getting to the stage where they are finding, 'well, we're a bank or insurance company, we're not supposed to be building this kind of infrastructure. We should be buying this sort of infrastructure,'" he said.

A push for an alternative to CRM will also propel market growth as organizations realize their systems are not sufficient. In the past, enterprises relied on CRM to provide the elusive, single-customer view. According to the Gartner report Demand-Side Factors That Will Drive the Adoption of CDI Hubs in 2006, while CRM sales and customer service systems improved overall business functionality, the data was still being split among the different structures, creating more data silos.

This compelled the vendors to review the capability of their offerings.

"In late 2003, those big names, Siebel, Oracle, SAP, they all decided over a period of months that the previous story of solving this totally with their suites was really not going to fly anymore and they needed an additional approach … which was to propose an e-central CDI system," said Radcliffe.

"E-central" became a three-legged approach to CDI, Radcliffe said, with the data model, integration capability and data quality. "If you don't have one of the legs, then the thing will fall over," he said.

Despite still being a relatively small and immature market, CDI is in a high-growth phase, according to Gartner. New license revenue for CDI software reached $70 million in 2004, up more than 100% from the previous year, and is expected to exceed $100 million for 2005.

Radcliffe said that in such an environment, the vendors are constantly looking to improve their goods. "They still have further to go in terms of having sort of no-risk or minimal-risk with implementation. These people are still learning and are still finding out the limits and the boundaries of some of these products."

In 2004, the major players, DWL, Initiate Systems, Oracle and Siebel, made up 50% of the market, according to Gartner. That still leaves plenty of room for the niche players, Radcliffe said.

"The small companies, the ones that are out there -- say Initiate Systems and Siperian -- they are getting very healthy growth in 2005 and going forward into 2006," he said "Then there are a number of new players coming in, people like DataFlux. And a number of MDM players are also getting involved in this market as well."

Dig Deeper on Enterprise business applications

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.