BI Challengers: Disrupting the Mega Vendor?

March 6, 2011
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I recently wrote a post on my predictions for BI in 2011.  I received lots of feedback about my thoughts with most of it focusing on my prediction that some of the niche BI players will start to disrupt the BI market in 2011.

I recently wrote a post on my predictions for BI in 2011.  I received lots of feedback about my thoughts with most of it focusing on my prediction that some of the niche BI players will start to disrupt the BI market in 2011. Based on that feedback I thought a follow up post to dig a little deeper on the topic was in order.

Let’s start with a little basic market analysis.  Last year, Qlik Technologies (QLIK) went public, and the results were incredible.  According to this Motley Fool article, the stock was the #6 IPO of the year and was up 158%.  Not a bad first year and even better when you consider the market conditions.  Looking at the other public BI vendors in the market, we can see that when measured by P/E ratio Wall Street is expecting aggressive growth in the market.  Even at giants like SAP and Oracle the market has factored in considerable growth to the stock price.  Looking at the revenue for the contenders, it is clear they are nowhere near the mega vendors in terms of size. Even so, their rapid growth and projected future growth is one indication that we should not ignore these companies.

The chart below shows the P/E (TTM) and Revenue as of 1/17/2011.

Company

P/E

Revenue

Tibco (TIBX)

49

184M

Qlik Technologies (QLIK)

43

50M

Actuate (BIRT)

24

39M

MicroStrategy (MSTR)

23

114M

SAP (SAP)

23

4B

Oracle (ORCL)

23

8.5B

IBM (IBM)

13

24B

Microsoft (MSFT)

12

16B

 

Unfortunately, companies like Tableau and LogiXML are not public so I was not able to get financial information for these organizations.  One interesting data point worth mentioning is that Tableau had 34 job openings posted on their website, which may be an indicator of growth, and on the flip side,LogiXML had only 2.  ** Update 1/18/2011:  LogiXML reached out to me to clarify the 2 job postings listed on their website indicate the type of roles they are looking for and not the number of resources they expect to hire.  They are very excited about their growth and have hired 15 resources in the past 2 months.  They are also planning continued hiring in 2011. 

From an analyst perspective I looked at the Forrester Wave and Gartner Magic Quadrant for their takes on the BI market and found it to be consistent with my basic stock market analysis.   Gartnerhad Tableau, Tibco and QlikTech in the challenger quadrant, while Forrester had QlikTech and Actuate in the strong performers group.  The analysts clearly highlighted these companies as market challengers and expect them to continue to grow.

The mega vendors are selling to the IT enterprise, while companies like QlikTech and Tableau are targeting the business and bypassing IT. Their tools are quicker to stand up, more intuitive and don’t need the configuration, support and hardware that the bigger players require. I see this path of selling BI to the business as a grass roots movement that starts at the departmental level.  As the business becomes more comfortable with the tools there will be pressure to scale the installations from departments to divisions and so on, all the while encroaching on the larger BI installations footprint.  As organizations try to scale, it will pressure these new players to build software that can handle enterprise data.  In the meantime, with multiple departmental BI solutions being installed it will also create more pain as we try to reach the BI utopia of “the single source of the truth”. 

In summary, the stock market projects the niche BI players to experience significant growth, and the analysts at Forrester and Garter have them nipping at the heels of the mega vendors.  When I pair this information alongside my own experiences as an Information Management consultant I come to the conclusion that we are headed for a year of change in the BI space.  Perhaps the whole BI pie is growing larger, leaving space for everyone to grow or maybe we are poised to see a disruption in the BI market as the pure play vendors continue to charge ahead.  Either way, it is going to be an exciting year in the Data Management and Business Intelligence space