Big Players Crowd Business Intelligence Software Market

In fact, an Oracle ad that ran in The New York Times Monday touted its claim that the company's application server now has "built in business intelligence."

While customer relationship management deployments and other complex IT schemes come under increasing fire for not living up to expectations, business intelligence is winning a can-do reputation. A study by Nucleus Research, a Wellesley, Mass., market researcher, found that CIOs and IT managers surveyed "consistently reported that BI solutions -- designed to support reporting, scorecarding, analytics, and querying functions -- led both to boosts in employee productivity and to faster decisions based on better data." And a report by researcher IDC found that BI solutions earn a median return on investment of 112% within a year.

In addition, some IT managers argue that buying a unified suite from a company like SAP or Oracle results in lower integration costs and a unified user interface -- no small advantage when budgets are tight.

Meanwhile, the market for business intelligence capability is growing, despite the continuing slump in IT spending. A report by market researcher Gartner Dataquest forecasts that spending for BI software will be $2 billion this year, growing to $2.3 billion, a 15% increase, by 2005.

Hearing Footsteps

Bernard Liautaud, CEO of Business Objects, acknowledges the increasing competitive heat, but says the Microsofts, SAPs and Oracles of the world may find the tasty BI market a tough morsel to swallow. "You must be database and application neutral to succeed," he said in an interview. BI offerings that favor one vendor over another won't do the job in today's heterogeneous environments, he argues.

Still, Liautaud is pushing Business Objects to become somewhat broader by offering additional analytics capabilities. Currently analytical applications account for less than 10% of the company's licensing revenue -- or $21 million in the fourth quarter. By year's end, he expects to increase that number by 50%, while overall revenue increases by 10%.