We are in the business of helping B2B technology and data services companies to sell, acquire, and raise capital. One of our focus areas is known as enterprise data & analytics, which encompasses firms providing advanced analytics, big data, business intelligence, data management, and information services. We regularly publish a newsletter with updated m&a statistics focused on the space – you can see the latest here: March 2016 EDA Market Update.
Last week, in order to stay abreast of the latest trends in the space, some of us from Marlin & Associates attended Gartner’s Business Intelligence (BI) and Analytics Summit. It was fascinating – not only did we meet with dozens of players in the space (leaders as well as several highly innovative startups), we also came away with a new appreciation for where the market is going.
The BI market is large – with approximately $16 billion spent on BI solutions in 2015. It’s getting bigger and evolving as businesses realize the value of using more sophisticated data and analytic software tools to improve business decisions.
Source: Gartner
For the past two decades, a few large software “megavendors” have dominated the BI space – IBM (Cognos), Microsoft (SQL Server Reporting), Oracle (Hyperion), SAP (Business Objects) and SAS (Visual Analytics). These megavendors aren’t going anywhere, and continue to pour money into R&D and m&a to bring new, valuable products to market. These megavendors control two-thirds of spending on BI solutions; they will fight to maintain their position.
Source: Gartner
At the same time, the space is evolving quickly – there are more young, aggressive companies than we can remember trying to take on the incumbents. These newer firms recognize that many current BI applications require significant IT support, custom configuration, lengthy implementation, and stringent data governance. Such companies are looking to make BI easier, more intuitive, and less expensive. The chart below shows just a few of the players that we regularly see in the space.
Source: Marlin & Associates
Many of these BI providers (new and old) have begun to pivot their focus from being IT-centric (think legacy megavendor systems) to more business-user-centric, with self-service analytics (think Logi Analytics, Qlik, Tableau) as demand increases for agile analytics that are “fast, easy, and beautiful,” as coined by Tableau. These newer, self-service BI solutions come with several advantages: the price points are lower, implementation is fast, and the buying decisions come from the business, not from IT. Some of the more innovative BI platforms are focusing on simplifying the analytical and decision making process for the business-user, bridging the gap between visual data output and the execution of business decisions. The megavendors are following suit, adopting and launching self-service BI solutions: IBM (Watson Analytics & Cognos Analytics), Microsoft (Power BI), and SAP (Lumira).
VCs have taken notice of the potential for more BI disruption and are aggressively funding startups in the space. Between Q2’14 and Q2’15, VCs deployed more than $2.6 billion in BI startups.
Source: CB Insights
From an m&a perspective, the industry could not be riper for consolidation – there is rapid innovation, a plethora of new entrants, risk of disruption among the megavendors, computing capacity that is growing exponentially, and digital data that is growing at even faster rates. It is all coming together to reshape the way modern businesses make decisions. This makes for a robust seller’s market, and that makes our lives as advisors more fun.
