Telco business intelligence, analytics landscape changing

Telecom service providers need tools to better analyze data about their customers to fend off competitors, and they are increasingly turning to larger vendors like SAP, IBM, Oracle and Microsoft to fulfill their needs.

That’s one of the key conclusions in a new report from Gartner Group, "Market Share: Business Intelligence, Analytics and Performance Management Software, Worldwide, 2009,” which found the market share of those “mega-vendors” grew from one-fifth to two-thirds, as telcos and other verticals move to “stack-centric” buying behaviors.

“A lot of organizations on the buy side are starting to focus on strategic buying from one or a few large vendors that have made BI a part of their portfolios,” said Dan Sommer, senior research analyst, Gartner and co-author of the report. “IT departments are shifting to stack-centric buying behavior, where they concentrate on buying from a few strategic vendors that are prominent in their architectures.”

He cites that the economic downturn and the drive to reduce churn through improved customer experience has pushed thin-margin sectors like communications, financial services and retail to try to become smarter about using their information for “differentiating” purposes. “We see that communications is the third-fastest growing industry sector in BI and analytics,” said Sommer, who noted that Gartner predicts a 9% annual growth rate over the next five years in BI and analytics. “Communications companies need help as they try to identify their most profitable customers and services to drive personalization strategy,” he added.

Overall, the top BI and analytics vendors in the communications industry include Oracle, SAP, IBM, SAS and Microstrategy, Sommer said.

In addition to these players, there is a breed of “BI specialists” cropping up and doing well. “In our magic quadrants, we see that there are up-and-coming ‘small footprint’ companies that rate highly in customer satisfaction and product quality,” Sommer said, although he was quick to note that “product excellence does not necessarily tie to market growth.”

Companies such as ClickTech, LogiXML and Tibco Spotfire are gaining, he said, because lines of business are increasingly taking over the responsibility of buying BI solutions for work groups. “The trend toward ‘departmental buying’ has been triggered by freezes on multimillion projects,” said Sommer, explaining that more tactical BI solutions that have a “lighter footprint” enable fast deployment, visualization and ease of use for business users looking to bypass IT to get work done.