Study: Data Warehousing Continues Growth; Pace Slows as Industry Ages
"When you are young, you are growing at a faster percentage," said Peggy O'Neill, industry analyst for Dataquest's Worldwide Database and Data Warehousing Software program. "As the industry gets bigger, it is going to grow less, percentage-wise."
The study included data-quality software and warehousing administration tools, data-mining software and business intelligence (BI) tools, such as low-end query and reporting tools and more advanced analytic products. O'Neill attributed the growth to interest in the BI market, which helps marketing executives and direct marketing executives access and analyze data.
"Data warehouses make it easier to use [BI] tools," she said, "because since they let you consolidate all of your [company's] data in one place, users can merge their order-entry, customer and product databases into one database that can be accessed at the same time and viewed with a BI tool."
"People buy these tools because they want to understand their business a little better," O'Neill said. "They are a mature class of tools that have helped data warehousing, and vice versa."
O'Neill said BI tools accounted for 82 percent of the data-warehousing market in 1997. According to the study, low-end query and reporting tools and online-analytical processing (OLAP) viewers were the largest component and accounted for $786 million in license revenue, up 10 percent from 1996. OLAP viewers let users view precanned reports or databases but don't allow them to drill down to another level or manipulate them. According to Dataquest, IBM and Information Builders Inc. dominate the low-end OLAP categories principally with tools deployed on mainframes. They are followed by Cognos Corp., Business Objects Inc. and Seagate Software Inc.
Higher-end OLAP tools -- those that let users access large amounts of data or manipulate live data and analyze it online -- grew 45 percent in 1997, to $443 million in license revenue. According to the study, Oracle led the field with a 20 percent share of the market, up from 14 percent in 1996. It was followed by SAS Institute Inc. (16 percent), Arbor Software Corp. (13 percent), SPSS Inc. (10 percent) and MicroStrategy Inc. (8 percent).
O'Neill said Oracle's Express OLAP server appeals more to companies' analytic or finance departments. MicroStrategy, Vienna, VA, and Information Advantage, Eden Prairie, MN, she said, are the leading vendors of relational OLAP tools, which are used predominantly for database marketing.
Jim Davis, program manager of data warehouses at SAS, Cary, NC, agreed that BI tools are driving the data-warehousing market. Computer costs are dropping, he said, which makes data-warehousing solutions more affordable to a larger group of people.
"If you look back historically, there were [data-warehouse] users with tools, but they were at the mercy of the IT department and their legacy systems," Davis said. "Now, since prices are lower, legacy systems can be off-loaded into data warehouses, so decision-support users and marketers can more easily get what they need from a data warehouse."
The data-mart sector grew 205 percent to $61.6 million in 1997, from $20.2 million in 1996.
O'Neill said data marts will continue to be used by end users, but the software manufacturer data-mart market is saturated, and "all the people who are going to enter the market with a product have shown up by now." For example, during the first half of 1998, there were no new data-mart vendors who introduced a new product, as opposed to last year, when a "bunch of them were coming out of the woodwork."