In IDC’s latest annual report, it gives the size of the “data analysis” market, which includes data warehousing, business intelligence and generally anything analytic, as being worth a chunky USD 16.5 billion in software (systems integration related to this would be greater than this), up 11% from last year. They also reckon that this market will grow at a healthy clip of 10% a year for the next five years, based on the fact that “analysis” is now one of the top two spending items for IT executives.
Recently I pointed out that the specialist players in what is more commonly called the business intelligence market grew revenues at 23% in calendar 2005 over 2004, though the IDC figures include the BI offerings of the industry giants Oracle, SAP, IBM and Microsoft, as well as a broad set of other companies and categories e.g. data mining offerings.
A large and growing market not only causes the behemoths to want to gobble up smaller players with good technology, as Oracle recently did with Sunopsis, but in principle should interest venture capital firms to back innovative start-ups in the area. However VCs seem too starry-eyed at the moment over social networking web sites to want to return to anything as tedious as enterprise software, with all its long sales cycles, costly software development and grumpy and conservative enterprise buyers. Still, fashions change, and who in 2002 (when venture firms turned firmly against the internet in the wake of the crash) would have been betting that a web site company set up in 2005 for consumers, with no obvious mechanism for making money, would be snapped up just over a year later for USD 1.65 billion? Perhaps it is time to get ahead of the curve and look ahead to when enterprise software will be fashionable again. Any VCs feeling brave?
