Critical Analysis of Expansion Strategies of SAP, IBM, Oracle and Microsoft in the area of Business Intelligence

Critical Analysis of Expansion Strategies of SAP, IBM, Oracle and Microsoft in the area of Business Intelligence

N. P. Singh (Management Development Institute, India) and Mohammad Jaffer Nayeem M (JDA Software, India)
Copyright: © 2013 |Pages: 22
DOI: 10.4018/978-1-4666-2782-6.ch008


Business Intelligence (BI) industry has emerged as a high growth area. Recognizing this fact, both pure play vendors as well as big application and infrastructure vendors are trying different strategies to increase their market shares. The paper starts with a discussion of BI industry since 2002 to understand the underlying dynamics of the BI industry. It is followed by analysis of BI growth strategies of big four application and infrastructure vendors—SAP, IBM, Oracle, and Microsoft—to get a bigger pie of the market. The paper also analyzes the customer reactions to the new BI paradigm, impact of the acquisition on BI market and concluding remarks on the acquisition of pure play vendors by big four.
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The matured state of an industry is characterized by its five characters. First, the industry consists of large number of players in the market - some of them being small but niche (pure play vendors) whereas others big who derive the market. Second, the industry is experiencing proclivity of consolidation within and outside its domain. Third, the industry has passed through emerging and growth phase. Fourth, industry has low price to earnings ratios (P/E) and high dividend yields. Fifth, the key strategy of industry is based on cost-cutting to stay ahead of margin erosion (Stone, 1992; Grant, 2005). Further, mature industries have less scope for product and process innovation but have considerable opportunities for strategic innovation and differentiate through complementary services such as strategic co-innovation by WIPRO, Satyam Mahindra, Infosys (Indian IT Company) with IBM/Cognos, Microsoft, Oracle/Hyperion, SAP /BO, SAS, Informatica ( (Sahni & Carter, 2008). The BI industry falls in the category of mature industry because it has almost witnessed these five characters and also strategic innovation during the last two decades

Since the 80’s when the term “Business Intelligence (BI)” was coined for a category of software tools developed to help business decision making, the market as well as sophistication in the features of BI software tools has grown tremendously. Vesset et al. (2005) put the revenues of BI industry at $5.7 billion for the year 2005. Swoyer (2008) reported that growth rate for 2006 and 2007 was in double digit and the market size easily topped $7 billion figure at the end of 2007. Weier (2009) reported a growth rate of 22 percent in 2008 for a market of size $8.8 billion at the end of that year. According to Forrester Research the BI market will touch the figure of $12 billion by 2014. However, Business insights (2010) predicted that by 2013 BI market will be $13 billion. Whatever may be size of the market, it will certainly be dominated by SAP, IBM, Microsoft, Oracle and SAS. The share of different vendors is presented in Table 2. The amount of BI buyouts is given in Table 3. Based on this data it can be inferred that BI industry will grow better than overall growth of IT spending.

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