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Analytic Solutions – A European Perspective
The business intelligence and analytics markets have flourished in past years, and even during the last two years which have been characterized by tough market conditions, the markets showed respectable growth rates. Analytic software is used in many large European organizations today, and the medium- size and to some extent small organizations are following.
In the beginning, business intelligence was focused on establishing more effective ways of delivering information to employees. The analytic solutions were built by specialists and only a few people had access to and used the solutions. Today's analytic solutions have moved beyond merely improving information delivery to focusing on business process improvement guiding users on a recommended series of steps for making a specific type of decision. The Web plays an important part in turning many business people into information consumers and in making the analytic solutions accessible for a large number of people.
The Makeup of the Markets
Large global companies - mostly U.S.-based - dominate the Western European business intelligence and analytics markets. However, two European-based vendors, SAP and Business Objects, are among the market leaders in most countries across Europe, and vendors such as Armstrong-Laing, Cartesis, CODA, Frango, Kalido and MIS AG play important roles in the analytics markets in specific Western European countries.
The players in the European business intelligence and analytics markets come from various backgrounds:
Until just a few years ago there was a clear distinction between vendors who provided build and buy solutions. The business intelligence tools and database vendors offered the "raw materials" - data warehousing tools - for building analytic solutions, and the applications vendors - whether in the enterprise or analytics area - provided buy solutions in the form of packaged analytic applications. Now that many vendors provide both business intelligence tools and analytic applications, the picture is not so clear-cut anymore.
Analytic Solutions Market Size and Outlook
Until 2001, the European markets for analytic solutions showed consistently solid growth rates - in most cases year on year growth was higher than 20 percent. However, 2001 and 2002 proved to be challenging years for most analytics vendors, and the average market growth rates declined sharply - to 5 percent for the data warehousing tools (build) market and 13 percent for the analytic applications (buy) market in 2001. Yet, compared to other areas of the IT and software industry this is still considered respectable growth. However, preliminary numbers for 2002 indicate that the yearly growth rates decreased even further, and the outlook for 2003 looks similar to the expected results for 2002, with the rebound in the analytics markets forecast for the end of 2003 or beginning of 2004. As companies once again put budget money aside for implementing analytics projects to access and analyze data and get a complete view of the business, growth will pick up again.
Some of the factors and market segments that will drive growth in the analytic solution markets in Western Europe over the next years are:
Over the next five years, growth is forecast to be slightly stronger for the buy market for analytic solutions - represented by packaged analytic applications - than for the build market - represented by data warehousing tools - as shown in Figure 1.
Country Differences: Status and Outlook
When looking at the adoption and usage of analytic software in countries and regions across Western Europe, some clear differences stand out.
The U.K., Germany and France are the early adopter countries for analytic software. German companies have a strong ERP and applications tradition, which also has translated into a major interest in analytic applications. The U.K. market is often the first market that U.S.-based companies enter in Europe, and a large number of U.S. analytics vendors are well established there. France has traditionally been an early adopter country and front runner in Europe when it comes to the usage of business intelligence, which also explains the country's early adopter status for analytic solutions.
Likewise, the presence of strong local vendors has an important impact on the adoption rates for analytic software. Germany, France and the U.K. have significant local players in the business intelligence and analytic applications areas, including Business Objects, Cartesis, SAP, MIS AG, Misys, Armstrong-Laing and Kalido.
Analytic software has also found a good foothold in the Nordic and Benelux regions with many projects being implemented, and there is demand for more advanced solutions.
In Southern Europe, Spain is beginning to see healthy growth in analytic software, whereas Portugal and Greece are still at an earlier stage of adoption of analytic technologies. Some of the larger vendors that have seen an increased interest in business intelligence and analytics in Spain are making serious efforts to penetrate the market, but only few vendors are serving the Portuguese and Greek markets via direct offices.
Growth in analytic solutions revenue is forecast to be healthy in all Western European countries and regions over the next five years, but France, Switzerland, Sweden, the U.K. and Germany are forecast to experience the highest growth.
Guidance for Successful Projects
The following are some of the factors that vendors of analytic software as well as companies embarking on analytic solutions projects should consider to leverage the market opportunities and assure a successful implementation.
Definitions: Build Versus Buy
Companies can choose different approaches for acquiring the analytic solutions they need. Solutions can either be built using data warehousing tools or bought as packaged analytic applications. IDC segments the market for analytic solutions into two categories shown in Figure 2.
IDC believes that the current state of the build market is a predictor of the future state of the buy market, as increased demand for a specific type of functionality or technology leads the vendors of analytic software to develop packaged analytic applications that provide such functionality. Many vendors that started out as pure- play business intelligence tools vendors, including Business Objects, SAS and Cognos, have now added packaged analytic applications to their product portfolios. Some of these applications are based on internal development whereas others are the result of acquisitions. The move from business intelligence tools to packaged analytic applications is a natural step for these vendors, as their playing field of the software market is becoming more mature.
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Christina Steensboe joined IDC's European Software Group in 1999, and she currently manages the European Business Intelligence and Analytic Applications research service. In this role, Steensboe provides coverage of the business intelligence, analytic applications and data warehousing markets in Western Europe from both the supplier and end-user perspectives. She has published numerous research documents addressing the latest market trends and future directions in the business intelligence and analytics markets across Europe. Additional information on IDC's research and consulting opportunities is available on www.idc.com. You can reach her e-mail firstname.lastname@example.org.