Why Will 2009 be a Great Year for Business Intelligence?
or "Reasons To Be Cheerful if Your Job Involves BI"
The Economy is Awful
Around the world, governments have drastically slashed their growth estimates for 2009.
And according to a recent IDC survey, more than half of us believe that the current economic crisis will last at least a year.
Faced with all the mayhem, it’s not surprising that today’s New York Times Op-ed includes the phrase "Let’s not mince words: this looks an awful lot like the beginning of a second Great Depression."
Some forecasters see a fast recovery, but this may say more about newspaper performance incentives than the state of the economy (counter-intuitive headlines drive readership, so it was just about inevitable that such an article would be written, no matter how few optimists). And depressions often have short periods of optimism before settling in for long-term misery (sometimes poetically called the "dead cat bounce").
So is 2009 going to be an terrible year for us all? The answer is clearly no: the misery isn’t spread equally. You probably wouldn’t want to work in the finance or auto sectors in 2009, but IT — and particularly business intelligence — looks to be one of the best possible sectors to ride out the crisis.
IT Spending is Still Increasing
IT spending growth expectations have been slashed as CEOs demand cutbacks — but they remain positive. According to IDC, worldwide IT spending is expected to grow 2.6% in 2009. Much of this will be driven by emerging economies (Central & Eastern Europe, Middle East & Africa, and Latin America), but even the established markets of the US and Western Europe will see positive growth.
Gartner research agrees and predicts that even in a worst case scenario, IT spending will increase 2.3% in 2009, providing a better outlook than the spending cuts seen during the dot com bust.
Within IT spending, hardware and services are expected to be the worst hit, with negative growth. Software spending, on the other hand, is still predicted to grow at over 4% world-wide.
These numbers are backed up by a survey from the Society of Information Management (SIM) carried out in November that showed that only 19% of CIOs and IT executives expect to cut their budgets in 2009.
Why this optimism? It’s partly because IT spending is only loosely connected to the current economy. It’s driven much more by the underlying infrastructure cycles, and some big drivers of IT spending show no sign of slowing down: commerce and customer service via the Internet; interactive communication devices; and increasing IT investment in small and medium-sized businesses.
Compared to previous recessions, there’s also more awareness that scrimping on IT can have dire consequences down the road. Good times means that there’s enough to go around for everybody. Tough economic conditions, perversely, provide the best opportunity to innovate and grow market share significantly, as the less-prepared fall by the wayside. The Economist, November 2008:
"Paradoxically, a recession can be a fantastic time to launch innovations. For one thing, tougher times can make consumers reconsider many of their purchasing decisions, leaving them open to trying something new. For another, a less crowded marketplace makes it easier—and cheaper—to create awareness of a new offering."
Business Intelligence Spending Even More Robust
According to Gartner, Business intelligence has been the number one technology for the last three years running, and a SIM survey of CIOs and IT executives showed business intelligence as the #2 most important "application and technology issue" for 2009, after anti-virus protection.
IDC, in a market study published in November 2008, predicted BI that spending will grow at a rate of almost 10% over the next 5 years:
"The business analytics software market continued to grow despite acquisitions and mature product offerings… We expect a slowdown in growth in 2009, but the fundamental drivers of adoption remain strong and will help the market to recover to previously forecast growth rates in 2010."
Why is business intelligence such a bright spot? It’s because BI is more important than ever in tough environments — as organizations make cuts, executives will only get once chance to make the right strategic decisions — as the old phrase has it: "measure twice, cut once".
Rumored to be one of the top searched-for terms on their web site, Gartner picked business intelligence as a top strategic technology for 2009:
"Business Intelligence (BI), the top technology priority in Gartner’s 2008 CIO survey, can have a direct positive impact on a company’s business performance, dramatically improving its ability to accomplish its mission by making smarter decisions at every level of the business from corporate strategy to operational processes. BI is particularly strategic because it is directed toward business managers and knowledge workers who make up the pool of thinkers and decision makers that are tasked with running, growing and transforming the business. Tools that let these users make faster, better and more-informed decisions are particularly valuable in a difficult business environment." (emphasis added)
In an article called "Business Intelligence: A Bull in a Bear Economy", Madan Sheina of Ovum calls BI "recession proof technology":
"BI has proved to be an unusual segment of enterprise softwa
re in that it never seems to have a down-cycle. That’s because BI is a Janus-faced technology. If the economy is doing well then BI and data warehousing helps companies optimize their operations and grasp new and lucrative business opportunities before their competitors do. However, if the economy isn’t doing so well then BI becomes an effective cost-savings tool, allowing companies to squeeze greater cost efficiencies from their existing processes and resources, and identify and mitigate business risk." (emphasis added)
A Computerworld research white paper called "BI: Proven Tools for Competitive Advantage in Uncertain Times" reports (emphasis added):
"Turbulent economic times can impact expenditures and technology deployment plans. However, 42% of respondents expected their overall expenditures for BI tools and solutions to increase from 2008 to 2009. Even with the current state of the U.S. and world economies, respondents said they are extremely or very likely to invest or expand investments in BI in the areas of production reporting (48%), spreadsheets (47%) and ad hoc queries (45%)." (emphasis added)
Which Vendors Will Do Best?
It’s not clear who will benefit most from the BI spending growth in 2009.
On the one hand, people typically turn to established leaders in tough times. On the other hand, companies are reviewing their spending priorities, which may lead to opportunities for perceived lower-cost options such as open-source BI, or SaaS BI vendors (whether they actually turn out to be lower-cost is a longer conversation — and note that the leading vendors also provide SaaS BI options).
One study, at least, seems to show that SAP may be in a better position than its direct competitors:
"Companies seem more willing to spend on SAP products than those of other vendors, according to a recent UBS survey of the spending priorities of 100 CIOs. CIOs expected IT spending in general to decline about 2% over the previous year, according to the report. But when asked about demand for products from specific vendors, the CIOs expected to see spending increases in 2009 for SAP products but not for products from IBM, Oracle and Microsoft." (emphasis added)
So despite a weak economy, IT spending growth remains positive. Within IT, software spending is the healthiest. And within software spending, BI is a top priority.
So if your job involves business intelligence, you should bless your good fortunes in 2009, as you should can expect a (relatively) good year — because BI really does transform the way the world works.