Europeans Increase Investment in Business Intelligence Apps

ClickZ Stats

Updated · Oct 25, 2001

Vendors of business intelligence applications stand to gain a sizable share of the European corporate wallet in the coming years, despite closely scrutinized IT spending, a study by Datamonitor found.

Business intelligence (BI) applications include solutions for CRM, financial analysis, enterprise resource planning (ERP) and supply chain management (SCM). According to Datamonitor’s report, corporate investment in such applications by European firms will increase 37 percent in the next year. Although Datamonitor expects spending to be slow in the short-term, it expects BI sales to regain momentum toward the end of 2002.

Datamonitor found that most large companies have already successfully gathered valuable data about customers, suppliers and operational performance via their investments in ERP and CRM solutions, but few have actually moved on to the next stage — making use of the data to improve daily decision-making. By investing in BI applications, corporations will be able to improve the speed, ease and quality of decision-making within the enterprise to create a competitive advantage in sales, advertising and marketing. Such solutions will provide all users, from front-line staff to CEOs, with access to corporate information (query and reporting), a simple-to-understand interface (data visualization) and some level of deeper analysis of information/data and trends (OLAP and data mining).

Assuming a market recovery at the end of 2002, Datamonitor predicts investment in BI software by European enterprises will quadruple, from $1.09 billion today to $5.8 billion in 2005 — an average annual increase of almost 40 percent. Britain and Germany account for 40 percent of the market, and although they will continue to dominate, France, Benelux (especially the Netherlands) and Scandinavia are set to become much more prominent.

CRM and financial analysis will be the principal BI applications that attract dollars from European firms. Currently, 40 percent of BI software is used to analyze and disseminate financial data (e.g., what is the profitability of a given product in a market). But the fastest growing application of BI will be for supply SCM, which will represent $1.2 billion by 2005, up from $164 million in 2000.

“Data analysis has moved out of the Black Chamber, where Ph.D. analysts make sense of the data and forward the results to executives,” said Datamonitor analyst Andreas Kolind. “The challenge is no longer one of technology. It has become one of changing organizational cultures to one where data is no longer guarded by a department and instead shared across the company.”

Datamonitor predicts that higher education and government will increasingly look to BI to improve decision making within traditionally bureaucratic organizations. The fastest growing industries for BI solutions between now and 2005 in Europe will be high technology and entertainment, followed by healthcare and utilities sectors.

The key vertical markets for BI solutions are financial services (41 percent), communications (14 percent) and manufacturing (10 percent). Together these three industries make up and will continue to account for almost two-thirds of total vendor revenues in 2005.

Reprinted from CyberAtlas.

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