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CIOs should prepare for the battle between old BI and new BI

BI and analytics will experience rapid adoption in 2014 as BI vendors face a changing market.

A war is brewing in the business intelligence and analytics market. "We're about to see rapid adoption of BI and analytics in 2014 and going forward," said Gartner analyst Dan Sommer during his session at the Gartner BI and Analytics Summit. That's after years of slowed-down -- and even flat -- market share growth.

Dan SommerDan Sommer

But while the business intelligence (BI) and analytics market is on the brink of experiencing a "best of times" moment, it's also in the midst of a "worst of times" battle. The markets are going through major change, Sommer said, pointing to traditional vendors that are pivoting to keep from being disrupted by younger, more nimble cohorts.

Consider IBM and its restructuring announcement from earlier this year, Sommer said. The $1 billion move combined layoffs and the sale of some divisions with investments in analytics, cognitive computing and the cloud. At MicroStrategy Inc., former COO and co-founder Sanju Bansal left in 2013 only to resurface at startup Hunch Analytics. SAP also signaled a new strategy in 2013, announcing a research-and-development shift away from traditional BI to "advanced analysis and agile visualization."

Sommer expects the clash between old BI and new BI to continue. The way he sees it, three tipping points will eventually push the BI and analytics practice out of silos and across the enterprise. In their wake, both the BI and analytics market and the role of IT role will look different.

Tipping point #1: Data discovery will overtake old BI

Data discovery vendors specialize in rich visualizations and self-service dashboards that rely on in-memory data repositories and enable employees to do quick data mashups -- and they have the attention of a lot of companies. "In 2014, half of new license spend in BI will be driven by data discovery requirements," Sommer said.

One vendor, in particular, is leading the charge. Tableau Software, which went public last year, grew "at upwards of 85% in 2013," Sommer said. "No other vendor is coming close to those growth rates."

Traditional vendors, however, aren't taking the rush to these new tools lying down. They're building and integrating data discovery tools into their stacks, Sommer said. Leading analytics vendor SAS Institute Inc., for example, is replacing its enterprise BI platform with its data discovery tool, Visual Analytics.

The clash between old BI and new BI goes beyond tools. While traditional companies continue to sell to IT departments, new BI vendors are selling directly to the business. They're developing "land and expand" stories by selling a few seats to the business and growing by word-of-mouth. The "IT vs. the business" sales approach isn't new, but Sommer believes the competition between old and new BI vendors has entered a new phase.

Tipping point #2: Cloud BI makes its move

"In 2014, half of organizations will consider cloud BI deployment," Sommer said. He believes this, in part, is due to data gravity, a term coined by Dave McCrory, CTO of Basho Technologies Inc. As data gathers mass, it creates a stronger gravitational pull and "attracts" applications and services to it rather than the other way around.

Why is BI/analytics market share slowing down?

Gartner announced earlier this month that market share for BI continues to slow down, dropping about 10 points in the last two to three years. So how is it that the BI and analytics market is on fire while actual spending on it is slowing down? Dan Sommer, Gartner analyst, attributes the decline to the three C's:

1. Economic conditions: "What's fascinating to see is that no region is growing faster than 15% in 2013," he said. The market growth for BI is roughly the same across the board. "All of those big bets large vendors made in, for example, emerging markets," he said, "that didn't seem to pay off" last year.

2. Constraint: IT budgets continue to be capped. "If we normalize IT budgets back to 2003, we see the budget is almost the same as it was 11 years ago," he said. Additionally, as CIOs saw in 2009, the IT budget is vulnerable to market sensitivities.

3. Confusion: Gartner predicts big data confusion will keep BI and analytics spending to single-digit growth until 2016. Currently, businesses are investing more in database management and data integration tools than in BI and analytics tools, according to Sommer. "When hot areas start taking off, it's all about evangelism, which means it's all about a services play," he said. "That 10x services-to-software gap will narrow over time to 3x, like we see in more mature areas."

As Sommer put it, "Where their data sits is where the analysis will sit." Cloud BI has lagged in adoption because cloud-based data hasn't yet accumulated enough mass. But it will. As more and more data sources shift to the cloud and momentum around technologies such as and Workday build, so too will the ecosystems that support those technologies. That doesn't mean all -- or even most -- of BI will move to the cloud. The on-premises data warehouse is still a cornerstone for businesses. "As long as that's the case, we think most of the analysis layer will be on-premises," Sommer said.

But the shift is under way if you follow the money, Sommer said, pointing to the millions of dollars venture capitalists recently invested in cloud BI startups. Birst Inc. raised $38 million, Looker raised $16 million, and GoodData Corp. raised $22 million during the second half of 2013. But none of those compare with Domo Inc. In February, the SaaS BI startup raised $125 million and is now valued at $825 million. All for a tool "no analyst has ever seen," Sommer said.

More mature vendors are making the move as well. Jaspersoft Corp. introduced utility-priced BI on Amazon Elastic MapReduce last fall, and Tableau is ramping up its cloud BI product Tableau Online.

Tipping point #3: The business will match IT dollar for dollar

"Half of all BI and analytics spend will be business-driven in 2014," Sommer said. For CIOs, that means being prepared to move away from the "stack-centric worldview" and welcoming new applications, if not new vendors.

Everyone is looking to get in on the action, Sommer said. Oracle, SAS and FICO are providing domain-specific applications for customers. Systems integrators, on the other hand, are "buying packaged IT to have quicker engagement with the customer," he said. Even data service providers such as The Nielsen Co. and Thomson Reuters want a seat at the business table.

It won't be long before analytics applications offered by data service providers will be indistinguishable from analytics applications offered by software vendors, Sommer said.

The result: BI and analytics become personal 'data conversations'

As these tipping points play out over the next couple of years, BI and analytics will infiltrate new corners of the business. Data will "become more personal, more granular" and easier to use. Employees will soon have access to data they need to do their jobs and data that reveals how they can do their jobs better, Sommer said.

Vendors are looking to capitalize on the redefined self-service trend. Several have plans to roll out new collaboration features. Storyboarding, or as Sommer referred to it, "PowerPoint for BI," is one example of this. It's "a major piece that all vendors are chasing right now," he said, referring to Yellowfin as "an early pioneer." QlikTech, Microsoft and Tableau are in the process of developing similar techniques, he said.

BI reports will give way to "data conversations." IBM's Watson Analytics relies on natural-language, question-answering technology to create opportunities for employees to actually talk to their data. Will it take off first in the consumer space, as so many other tech trends have? "We don't know yet, but it's one we're watching closely," Sommer said.

Let us know what you think of the story; email Nicole Laskowski, senior news writer, or find her on Twitter @TT_Nicole.

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Who will win the BI war?
It is simple, first of all, we have to pay attettion to Business Users, because the new tools (New BI) are focused to make their lives more effective and easy ! That´s it !
If new BI can deliver on its promises -- equivalent capability to old BI, more agility, less maintenance, lower cost -- then it's only a matter of time before it wins out (or at least forces old BI to adapt to compete). But to PCrespo's point, maybe it's not even worth distinguishing between "old" and "new" BI; if a platform meets a company's need for reporting infrastructure and insight, the "how" is irrelevant.
WHEN new BI delivers on its promise, then they will take old BI down.
I agree with you Atte, on whats relevant.
Betting on a dark horse. One with 'late speed'
More nimble and quicker to setup and implement. Focus on delivering Business users a clear and "easy to visualize" view of their most important data and analytics. Data Discovery is the new way business will take to improve intelligence.
They have the experience and will adapt their products to meet the new requirements. Plus, they have a large installed base
Old vendors like SAS don't get how users want to use their data ... the other 'old' BI play that will live forever is the humble spreadsheet. When all else fails in getting access to corp data, Excel saves the day !
The sheer power of user driven BI will drive their adoption.
Tipoint Point #1 starts out with a couple of serious misrepresentations: "Data discovery vendors specialize in rich visualizations and self-service dashboards that rely on in-memory data repositories and enable employees to do quick data mashups".
In-memory data repositories are a side show, limited in their overall relevance. Whether or not a data analytical tool keeps data in memory, lets it reside on disk, or uses some combination of data location strategies is far down the list of things that matter. Self-service dashboards are a silly example of what makes the new generation of tools valuable, rather it's the tools' ability to support free form data data exploration leading to discovery that matters much more than the ability of the tool to give someone the ability to create less-functional dashboards with it. And finally, it's not data discovery that's important, it's information and insight discovery that means something to the person who's looking at the data.
Executives used to want graphs and charts, for business trends according to known causality, rules and relationships. Now the system must discover these. From two orders of magnitude larger and faster data. In real time.